Memorandum by the British Paymaster-General
Quebec, 14th Sept 1944
Mr. Morgenthau said he had been discussing with Lord Cherwell his proposals on the economic disarmament of Germany and would like him to give his impressions of these.
Lord Cherwell said he had, of course, not had time to read the papers or study the proposals in detail but he was definitely attracted by the possibilities set forth. So far as he understood it the intention was to hamstring Germany’s capacity for making war by taking whatever machinery was usable from the Ruhr and other areas in which industry capable of making war-like weapons was concentrated, and handing it over to the numerous countries she had devastated. The Ruhr and perhaps the other areas in question would be then placed under an international authority which should decide whether and when and to what degree industries of this type should be allowed to be re-built there. If the Germans were deprived of the possibility of making steel on a large scale as well as certain types of chemicals and electrical machinery, she would not be in a position to produce the armaments required for modern war. She would, of course, not starve. Her exports would be reduced and she might therefore go short of certain materials. But her standard of life would still undoubtedly be higher than it had been under the Nazis – when so much national effort was put into preparations for war – even if she was unable to establish the same high standard she enjoyed for some time before that. The consequence that her export markets would become available for the UK and USA did not seem a disadvantage.
The Prime Minister said that he thought there was a good deal to be said for this approach to the problem. We were entitled to make sure Germany could not commit wanton acts of aggression and the Russians would probably in any case insist on obtaining any machinery available with which to restore the factories which Germany had ruined in her advance into Russia.
Mr. Morgenthau said that he could see no other way in which we could be sure of preventing the rearming of Germany. Great productive capacity was necessary for modern war and it could not be built up secretly. The removal of all the machinery and facilities should be undertaken as soon as possible, say, within the first six months of our troops entering the Ruhr. Thereafter this region should be put under international control which would see that it was not exploited again in the way Germany had used it to prepare the wanton acts of aggression she had committed.
The President said that he did not think it would be an undue hardship to require Germany to revert towards an agricultural status such as she had enjoyed up to the latter part of the last century. She had shown she could not be trusted with all these facilities for making weapons.
The Prime Minister said he was converted to the idea that we should explore this line of approach and see whether concrete suggestions could be worked out to ensure security and which it might be hoped would secure the approval of the United Nations.
Memorandum by the British Paymaster-General
September 14, 1944, 11:30 a.m.
Top secret
Record of conversation between the President and Prime Minister at Quebec on September 14, 1944
The Prime Minister said that when Germany was overcome there would be a measure of redistribution of effort in both countries. He hoped that the President would agree that during the war with Japan we should continue to get food, shipping, etc., from the United States to cover our reasonable needs. The President indicated assent.
He hoped also that the President would agree that it would be proper for Lend/Lease munitions to continue on a proportional basis even though this would enable the United Kingdom to set free labour for rebuilding, exports, etc., e.g., if British munitions production were cut to three-fifths, U.S. assistance should also fall to three-fifths. The President indicated assent. Mr. Morgenthau however suggested that it would be better to have definite figures. He understood that munitions assistance required had been calculated by the British at about 3½ billion dollars in the first year on the basis of the strategy envisaged before the OCTAGON Conference. The exact needs would have to be recalculated in the light of decisions on military matters reached at the Conference. The non-munitions requirements had been put at 3 billion dollars gross against which a considerable amount would be set off for reverse Lend/Lease. The President agreed that it would be better to work on figures like these than on a proportional basis.
The Prime Minister emphasized that all these supplies should be on Lease/Lend. The President said this would naturally be so.
The Prime Minister pointed out that if the United Kingdom was once more to pay its way it was essential that the export trade, which had shrunk to a very small fraction, should be re-established. Naturally no articles obtained on Lend/Lease or identical thereto would be exported [FDR: or sold for profit]; but it was essential that the United States should not attach any conditions to supplies delivered to Britain on Lend/Lease which would jeopardize the recovery of her export trade. The President thought this would be proper.
To implement these decisions the Prime Minister suggested there should be a joint committee. It was held that it would be better to appoint an ad hoc committee for this purpose on an informal basis in the first instance which could be formalized in due course. Pending its report the United States departments should be instructed not to take action which would pre-judge the committee’s conclusions, e.g., production should not be closed down without reference to Lend/Lease supplies which it might be held should be supplied to Britain. The President thought that the committee should be set up and suggested that Mr. Morgenthau should head it representing him, and that Mr. Stettinius, who had taken such a large part in Lend/Lease, should also be a member.
