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feat of really great proportions. It probably will be blown up into something about 4 or 5 times what it was last year, or 3 or 4 times what it was last year. That gave us enough trouble, as you rememberthe Whitsuntide demonstration that we had then.

We were able to counteract some of the more definite objectives of that Whitsuntide affair. They did not take over the city by any means and we put a lot of preparation in to see that they would not. And we will do the same thing this time, although our problem will be complicated by having that many more youngsters up there to cope with in August, than we had in May 1950.

(Discussion off the record.)

AMERICAN PORTION OF JOINT ACTIVITIES

Mr. COUDERT. Before you go on with your statement, I wonder if I might ask you one or two questions?

Mr. McCLOY. Yes, Mr. Coudert.

Mr. COUDERT. Mr. McCloy, in your efforts to carry out the public activities, referring to the joint activities, does a greater part of the burden fall on America?

Mr. McCLOY. A great part of the burden falls on us, but it is a program of all three; we are carrying perhaps the lion's share, I think, but the British and the French have their programs as well as we have ours. I do not believe they put as much into them as we doand we extend our efforts into their zones as well as ours. (Off record discussion.)

Mr. McCLOY. But, in addition, our activities extend throughout all the zones. They are perhaps more concentrated. If we feel that something should be done, for instance, to help a university that is doing something our efforts may extend even beyond our own zone. In that way, largely because we have more funds at our disposal, that is, counterpart funds, we have been able to distribute our activities throughout Germany, which we feel serve our interests beyond any direct control.

PROGRESS IN RESTORING GERMAN ECONOMY

You

I think there is no use sketching the details of the developments that have taken place since our occupation in 1945. We have made. complete records from time to time; General Clay before me, and I, since I have been in the position, have made and published very complete accounts of what we have done, and the results I think are beginning to show themselves. Certainly today Germany is far different from what it was in 1945. It has begun to function socially. A very large part that was nazism has been cleared away. have the Government with an operating system, and from the days of the beginning until the present time, and mainly over the last 2 years, it has really shown signs of political maturity. Production has moved to a rather astounding figure. It is now 136 percent of what it was in Western Germany in 1936. There is still a dollar gap, but that is narrowing. In the meantime, with the growing political development in Germany, we have restricted and limited specifically the power of controls and extended safeguards; we have limited our areas of interference to a very large degree, that is, interference with

the German Government to a very large degree, so that it is only in the very important and fundamental aspects that we are prone to exercise our authority.

We have done all of this in spite of the ruins that were about us. When I say "we," I do not mean only the United States by any means, for the energy and industry of the German people has been the first factor, but I venture that it would have been utterly impossible without the aid which we were able to inject into the community.

We have done it also in the face of the very extraordinary phenomenon in the immigration of from 9 to 10 million, roughly, from the east to the west zone, with the tremendous housing lack that has existed, which has added a burden and has produced probably one of the worst problems we have had to meet.

We have had a lot of unemployment, but the surprising thing is that it has not been worse, when you consider the increment in the normal population. The unemployment is around 1,350,000. We put a good bit of the Marshall plan counterpart funds into housing, as well as into the rehabilitation of industry, and this, together with the native German industry, as I say, has shown results. They have been measured also by the steady decrease in unrest and steady drop in Communist influence in Western Germany in spite of this enormously increased and stepped-up propaganda.

POLITICAL SITUATION

I do not know that we have got the full effect of the increased propaganda effort which may become evident in another 6 months or perhaps a year. But there has been an attendant improved economic condition, a very marked adherence of West Germany to the western community as distinguished from their enmity to the east; in spite of the fact that they are very much influenced with the idea of German unity. They do not like to see themselves cut off from their brothers in the east. The very instinct of West Germans is to be, if it is at all possible, allied with the East German zone.

I have spoken of the growing political maturity of the Western German Republic. There are from time to time some very expressive debates in the Bundestag with the confusions which are apt to take place in an emergent order, dealing with many burning issues, and today it seems that almost every issue in Germany is a burning issue; but they are debated on a rather high plane.

That does not mean everything is going well in Germany. There are some very discouraging developments. There are economic situations to be met; situations of uncertain fiscal problems. It remains steady, but it is on a very shaky basis. There is, practically speaking, no reserve behind the currency, no reserve beyond the industry of the people and the general feeling that the United States supports the economy. But in terms of gold, or foreign exchange reserves, the reserves are nil.

Recently we have had outcroppings of a neo-Nazi development, which developed in Lower Saxony, with the appearance of a political party known as the SRP, which emanated in the main from former Nazi officials. This is in a community where there were a great many refugees with very poor housing facilities; where there are large

unemployed groups; and generally it had been, before the war and during the war, rather the center of fanatical nazism. The party polled-and this is in the British zone-the party polled 11 percent of the vote; it holds 16 seats in the Landtag. 85 percent of the vote was clearly against this party; there was nevertheless more explicit expression of neo-nazism than we have had before in this part.

The German Government was quite concerned about it and abolished a surprising number of organizations that the SRP had erected in form of strong-arm teams or squads. After a constitutional court is erected, I feel that further action will be taken by the German Government against the party; and this judgment is confirmed by the concern that was aroused in Germany. It really worried the Germans that this group was still around. The movement did not seem to have wide approval, and I am sure that the results in Lower Saxony, where the large proportion of the vote emerged in this form, would not have emerged in the other zones-particularly in the American Zone. There is a lot of the authoritarian old doctrine, the national pattern of thinking, still about. But on the other hand, there is much vigor in the international concept, and this is particularly true among the youth. You will find more expression of liberal viewpoints now, I think, in Germany; particularly is that evident in the press, which is a good press. It is critical, and generally speaking free. It is about as healthy a press as I think Germany has had at any time, and certainly it is a far better press than any it had during the Nazi times.

There is the constant example in Berlin, which is a very comforting one to the United States particularly, where the people are determined to protect their liberty and to oppose Communist aggression.

Generally speaking the spirit in Germany is very encouraging. That is due in great part to the protection that has been given to their interests, and they have responded in a very good way.

OVER-ALL PROGRAM FOR GERMANY

I should like to return to a point I first made about the extent of our program; our dollar program is roughly $24 million. That is a decrease of $3 million over last year. Last year we were appropriated $27 million. This year we ask for $24 million.

But in addition to that we have for 1952 a total of 224.1 million deutschemarks, the equivalent of about $53.3 million to which we add the $24 million that we are requesting, making a total of $77.3 million for our total program, in dollars and dollar equivalents. That does not include the economic aid program.

Last year we had $382 million for Western Germany in economic aid.

Mr. GARY. That is GARIOA?

Mr. McCLOY. No; that is ECA. It was all put together last year; ECA and GARIOA aid for Germany were merged into one program, and that amounted to $382 million. And, the counterpart of that, which is generated as deliveries of economic aid are made, we will use for various purposes; the equivalent of $125 million of ECA and former GARIOA counterpart will go to western Berlin alone. Other economic aid counterpart has gone into various forms of economic aid, rehabilitation of plants.

So that, when we come to you for this $24 million appropriation, we have to discuss more than the $24 million. We have approxi

mately $77 million in deutschemarks, exclusive of the aid program that we have to administer. We have that broken down, in the figures that have been presented to you in dollars and deutschemarks, into the several categories: "Occupation activity," "Public-affairs activity," and "Administration activity."

Mr. WIGGLESWORTH. If they are added together, they run up to something over $300 million, according to my figures.

Mr. McCLOY. That is the main part.

By the same token, we have in terms of personnel for 1952, 1,583 Americans; but we employ 11,783 Germans. That represents a reduction of a very substantial number from 1951, a decrease of 325 Americans and 4,192 Germans.

This gives you, I think, some idea of the scope of the operation when you consider the dollars and the deutschemarks for both Germans and Americans.

Mr. GARY. Do you have a page in the justification giving that breakdown?

Mr. WOLFE. Page 103 shows the breakdown of the 224.1 million in deutschemarks.

Mr. GARY. I think we might insert that table in the record at this point.

(The statement referred to may be found on page 216.)

ECA PROGRAM IN GERMANY

Mr. WIGGLESWORTH. How much ECA is included in respect to 1952?

Mr. WOLFE. That is without reference to ECA aid in 1952, the 74 million deutschemarks of it comes out of German occupation costs, and 150 million deutschemarks out of the counterpart, derived from previous ECA or GARIOA aid.

Mr. McCLOY. Which is carried over.

Mr. WOLFE. That is carried over.

Mr. McCLOY. We do not purport to include the ECA. We have not got it yet.

Mr. WIGGLESWORTH. You had the equivalent of $125 million.
Mr. McCLOY. For 1951.

Mr. WIGGLESWORTH. Out of ECA.

Mr. WOLFE. For 1951; $382 million ECA aid in 1951. The counterpart will amount to about 1.5 billion deutschemarks. 550 million deutschemarks were spent in Berlin. That is the equivalent of about $125 million.

Mr. WIGGLESWORTH. So, you really have about $125 million under ECA?

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TABLE VII.-Summary of High Commissioner for Germany deutschemark financing by activities

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