The Chairman

by Kai Bird

  The Truman administration had been inching toward the consolidation of a West German state for at least two years, although knowledgeable men inside the administration were well aware that such a move would provoke the Soviets to consolidate their hold on East Germany, a much smaller and less industrialized zone. In November 1947, Marshall had privately warned his colleagues that the Soviets would probably respond by asserting their control over Czechoslovakia as a “purely defensive move.”3 Neither Marshall nor Kennan believed the subsequent Czech communist putsch of February 1948 presaged a hot war. A few officials had felt otherwise—in particular, James Forrestal.4 But his had been a minority view. McCloy’s attitude was more representative; he had always favored military preparedness, and so supported the Truman administration’s defense buildup. But, like Kennan, he discounted any intent on the part of the Soviets to wage an aggressive war in Europe so soon after they had sustained such horrific losses in the war against fascism. To his mind, the pressing issue of the moment was not the Kremlin’s intentions in Europe, but Washington’s. What did the West intend to do with Germany? A stable Germany would do much to contain the growing frictions between Washington and Moscow.

  Four years after the end of the war, the Western Allies were ambivalent about the Germans. McCloy shared that ambivalence. Revelations of the Holocaust had marked the Germans indelibly as a people responsible for singular crimes against humanity. These memories would not fade. The slightest evidence of German nationalism was dissected in the Western press for evidence of neo-Nazi resurgence. At least on paper, deNazification regulations still barred hundreds of thousands of former Nazi Party members from positions in the government or from leading any large industrial concerns. In the American zone, German businesses were subject to decartelization policies; such great industrial and chemical combines as the I. G. Farben empire were slowly being carved up into smaller companies. In varying degrees in the American, French, and British sectors, the occupation authorities in 1949 were still carrying out a program of dismantling major German industries. German machine tools, steel plants, synthetic-oil plants, and a wide variety of other factories were being shipped back to England and France or simply destroyed.

  But pressures were rising to end all but the most cosmetic of these occupation policies. For one thing, the occupation was costly. West Germany, cut off from its grain-producing provinces to the east, could not feed itself. The British had to impose bread rationing on their own people, something unnecessary throughout the war, in order to feed Germans in the British sector. The British and Americans together were spending some $700 million a year to support their troops in Germany and administer the country.5 The Americans were pouring millions of dollars of Marshall Plan aid into Germany to get the economy functioning at a basic level. By 1949, some officials in the Truman administration believed that many of the occupation’s more stringent features—such as the dismantling of German plants—had become counterproductive. One could not simultaneously punish Germany and rebuild her economy.

  Each step that General Clay had taken toward restoring the German economy in the period 1947–49 had inevitably stimulated an impassioned debate back in America on the political future of Germany. From Moscow’s perspective, any revival of Germany under the umbrella of the Western occupation forces warranted immediate defensive measures. Not only might a West German state pose a potential military threat, but it would end forever Soviet hopes of obtaining any substantial reparations from the Ruhr industrial basin. In June 1948, General Clay had decreed a currency reform in the Western sectors of Germany designed to bring the economy off the debilitating and costly black market that had developed in the postwar years. The Soviets saw the currency reform as a major step toward creating a separate economic and political unit out of the Western sector. Within days, the Soviets had imposed a land blockade on the Allied sectors in West Berlin. If the West had decided to create a West German state, the Soviets felt compelled to take similar steps in the East. Berlin would naturally become the capital of any such East German state, and therefore the Allies would have to withdraw from their enclaves in the city. This, at least, was the message the Soviets intended to convey with the blockade.6

  In Washington, the message was read as a brazen violation of Allied agreements reached at Potsdam. Truman would not negotiate under such circumstances, and the subsequent airlift into Berlin clearly demonstrated Washington’s determination to hold on to Berlin. To underscore the point, Truman sent a squadron of B-29 bombers reconfigured for atomic weapons to air bases in Britain.7 (Atomic bombs themselves were not sent.) Confronted with such resolve, the Soviets backed down, and on May 12, 1949, just a week before McCloy’s appointment as high commissioner was announced, they ended the blockade. By that time, the political blocs dividing Europe had hardened. The North Atlantic Treaty Organization (NATO) had been founded in April, and a consultative body of West German politicians authorized by Clay had drawn up a constitution of “Basic Laws” to govern a future West German parliamentary state.

  It was clear that a turning point in the Cold War had been reached. The “German problem” was about to be decided. Not everyone in the Truman administration was strongly disposed toward creating a West German state. George Kennan believed such a state would inevitably become the focus for nationalist and irredentist forces and would “be neither friendly nor frank nor trustworthy from the standpoint of the Western occupiers.”8 He advocated a unified, demilitarized, and neutral Germany, and he thought this was something the Soviets would be willing to negotiate. Walter Lippmann was taking the same line in his influential column, arguing that the partition of Germany, and therefore Europe, was “transitory.”9 But this view was in the minority; the Truman administration, McCloy included, was too suspicious of Soviet intentions and unwilling to relinquish West Germany to an uncertain neutral status. Moreover, many Americans, not to speak of most French citizens, questioned whether Germany should ever again be united, under any circumstances. McCloy, who as a child had been exposed to a popular tum-of-the-century loathing of Prussian militarism, and who had seen his country dragged into world war twice by the Germans, held similar reservations. Though he was persuaded that a rational U.S. policy required that the West Germans now be built up, he nevertheless had to “fight back his revulsions.”10

  In May 1949, desperate to maintain some semblance of four-power Allied control over Germany, the Soviets requested another meeting of the Allied foreign ministers. Dean Acheson called in a select group of State Department reporters for an off-the-record briefing. He felt he could be absolutely frank with these men, all veterans of the diplomatic beat, and he told them essentially what he told McCloy: “Our fundamental attitude is to go ahead with the establishment of a Western government [in Germany] come hell or high water.” If the Soviets proposed unification of East and West Germany, unification would have to take place under the just-promulgated Bonn Constitution. The United States would reject any proposal for all-German elections. If the Russians wanted unification, they would first have to have elections in East Germany supervised by all four powers. Only then would the Allies allow the West Germans to enter into negotiations with the East on unification. Acheson knew that such conditions, which would lead to the creation of a unified Germany firmly in the Western bloc, would not find acceptance in the Kremlin.

  More than any other event, this fundamental decision—that it was better to live with the risks of a Cold War with the Soviets than to unify Germany under Soviet terms—set the Cold War in concrete: as long as the Soviets felt compelled to respond to the creation of a West German state with one of their own in the East, a prolonged period of East-West animosities and suspicion was guaranteed. Both Washington and Moscow were willing to pay this price rather than risk the creation of a unified Germany aligned with either bloc.11 Kennan’s alternative for a neutral, permanently demilitarized Germany makes clear that there were choices. And those who disagreed with Kennan, including Acheson and McCloy, realiz
ed that the course they had embarked upon with Germany was problematic. There was always the danger that, after the West Germans had been restored to economic health and full sovereignty, the bonds of culture, language, and economics would create unrestrainable nationalist forces dedicated to unification. Over the next four decades, McCloy would occasionally express doubts over the two-Germany policy and marvel that it had lasted. In 1949, his assignment was the creation of a modern parliamentary state with a free-market economy. It was not an easy task. As he and Ellen began packing up their belongings for the trip to Germany, he grinned at a reporter interviewing him for a cover-story profile in Time and quipped, “No doubt about it, it’s going to be a windy corner.”12

  The job as America’s “proconsul” in Germany was the most prominent position McCloy had yet occupied. For the first time, his name was to become familiar to an audience beyond the East Coast Establishment of New York bankers and lawyers and foreign-policy makers in Washington. The portrait drawn of him in Time was of a self-assured, energetic man whose reasonableness in all things made him adept at dispelling tensions in human conflict. “McCloy has learned to gauge how far people can be pushed, to hold out in good humor but dogged firmness through protracted debate.” That he was a Republican who had worked in Democratic administrations was another sign of his reasonableness. He believed in the free market, but that did not mean, he explained to Time, that the “government should not operate in certain important social fields.” It was just “important to keep a force opposed to the monolithic state. If you destroy the incentive and initiative of free enterprise, you bring everything down to a low, undistinguished level of life.” Some New Deal liberals were “totalitarians” when it came to placing controls on the economy, but on foreign-policy issues he thought some old-guard Republicans were less “enlightened” than many Democrats. A more succinct summary of the Establishment’s political outlook in 1949 could not be made.

  Time introduced its readers to a fifty-four-year-old man it described as “indefatigable.” On family vacations in the Adirondacks, Time said, McCloy would be up to go fishing at 4:00 A.M., and later in the day would drag his family up Iron Mountain for a long, invigorating climb. “After a hike with him,” Ellen McCloy joked to the Time reporter, “we all come home on our hands and knees.” He was a man who abstained from both coffee and tea, but had an occasional Scotch and soda. He still smoked cigars, but never at home, where Ellen had forbidden him. When he traveled, he took along a copy of the Oxford Book of Verse. He was a voracious reader, starting early in the morning, when he made a habit of propping a book up by the bathroom mirror so he could read while shaving. He regularly staged “reading debates” for himself, whereby he read four or five books simultaneously, all on the same subject but from different points of view. Now, he was reading up on Germany. Ellen told a Time reporter visiting their yellow brick Georgetown home, “He always worries over a new job.”13

  The U.S. Senate unanimously confirmed McCloy’s nomination in mid-June, and afterward he told reporters that he hoped the Germans were not “following false gods again.”14 He went to the White House, where Truman gave him characteristically simple marching orders: “Mr. McCloy, call them as you see them and we will support you.”15 A week before leaving for Europe, he checked in with his colleagues at the Council on Foreign Relations, who honored him with a dinner at Pratt House.16 In New York, he made arrangements for his mother, Anna, and his aunts to be taken care of in his absence. Among other things, Acheson promised to have a young naval officer from a nearby base look in on Anna, who was a healthy eighty-five-years of age. Ellen and the children would travel to Germany by ship in July. On June 30, Ellen, the kids, and Anna saw him off at the airport, where he boarded a U.S. Air Force plane bound for Paris and Frankfurt. As he got on the plane, he told The New York Times that his goal was the establishment of a democratic Germany. “The American people should understand there can be no solution in Germany in three months, six months or a year. These are long range problems and they are building a new economic and a new social life. It is my opinion that things are never as bad as they seem, nor as good as they seem. . . . Even if progress is made in ten years, it is good.”17

  On stepping off the plane in Frankfurt, he was asked by reporters when he planned to assume his duties; he replied lightheartedly, “I guess right now. I’m here.”18 The very next day, he took off for West Berlin, as if to underscore the U.S. commitment to the city. Though the blockade had been lifted more than a month earlier, the United States was continuing to operate its airlift, which had now flown in some two million tons of supplies. As military governor, he was greeted on the tarmac by two military bands, one white, one black. After the ceremonies, he held his first formal press conference and told reporters that he hadn’t decided where to place his headquarters, but that he imagined he would have a “spot in Bonn, certainly a base in Frankfurt,” and would routinely visit Berlin.19

  Reporters were struck by his easy informality, which contrasted sharply with the military decorum and precise answers they had received from General Clay. Newsweek described him as “short and plump, wearing a dark-brown suit, white shirt, and striped tie, his balding dome gleaming under the klieg lights, McCloy made a striking contrast with the memory of the trim, slight soldierly Clay.” He fingered heavy tortoiseshell reading glasses as he stood talking to reporters. Whereas Clay always had crisp, concrete answers, McCloy spoke slowly and often hesitated, before confessing that he was not familiar with a particular matter. When asked whether he had any hopes for the unification of Berlin, he paused, grinned, and said simply, “I have hopes.”20

  From Berlin, he took off on a hectic, ten-day swing through West Germany, meeting dozens of German and American occupation officials. But as far as the reporters could tell, aside from this display of whirlwind activity, McCloy was making no newsworthy decisions. While he made himself accessible to the press, it quickly became evident that either he really had nothing to say or he was playing things close to his chest. By the end of the month, the new high commissioner was beginning to get a bad press. The tone of reporters’ questions became “markedly unfriendly,” and the Washington Star suggested that his relations with the press had “deteriorated alarmingly to the point of open resentment.”21

  In the War Department or at the World Bank, he had always dealt one-on-one with a few select opinion-makers—a Walter Lippmann, a James Reston, or a Joe Alsop. But in those elite relationships the rules were different, and McCloy now found that dealing with a pack of the working press in large press conferences was a different matter. He needed help. His rapport with the press did not improve until later that autumn, when Arthur Sulzberger lent him the services of a New York Times reporter named Shepard Stone. The smooth-talking Stone spoke fluent German, knew a wide range of German personalities, and was adept at handling his former colleagues.

  Stone began to turn things around the first day he arrived in Frankfurt. He walked into the Allied High Commission for Occupied Germany (HICOG) headquarters just as McCloy was beginning a press conference. Standing at the back of the room, he listened as a reporter asked the high commissioner if he had received a letter from Adenauer. McCloy had indeed just received such a letter, on a matter of some passing controversy. But because Adenauer had phoned him that morning to say he was withdrawing the letter, McCloy had promised the chancellor not to speak of it to the press. When questioned by a reporter who obviously knew that such a letter had been sent, McCloy stuck by his promise. The press conference ended with many reporters grumbling that McCloy had been less than truthful. Afterward, he asked his aides, “Did I do the right thing?” They assured him that he couldn’t have handled it in any other fashion. He then turned and asked his new press adviser if he agreed. Stone replied, “Well, Mr. McCloy, I think you made a mistake. You never tell an untruth to a newspaperman.” If you had just said ‘No comment’ everyone would have understood.” McCloy replied, “I think you’re right,” and immediately c
alled in the reporter and offered an apology. From that day on, things improved.22

  Actually, in the first month of McCloy’s tenure, the press had missed a major story. Prior to McCloy’s arrival, the U.S. military government had deferred a decision on whether to promulgate a “General Claims Law” providing some 850 million deutsche marks in compensation to victims of Nazi repression. Clay had favored the law, but his deputy, Major General George P. Hays, had decided the proposed law should be held up until the new German parliament (Bundestag) could be elected in August. Harry Greenstein, Clay’s and now McCloy’s adviser on Jewish affairs, took the matter to the new high commissioner. He protested that the German Bundestag would never pass such a controversial bill so early in its existence. All McCloy’s other advisers and the British military governor, General Brian Robertson, were opposed, but McCloy found Greenstein’s arguments persuasive. He also had on his desk a “Dear Jack” letter from a member of the Warburg clan, Edward M. M. Warburg, chairman of the American Jewish Joint Distribution Committee, based in New York. McCloy had known Eddie as the younger brother of his old friend and frequent tennis partner Freddie Warburg. Instead of entering the family banking profession, Eddie had taken over many of his late father’s positions in various Jewish philanthropic institutions. Warburg now wrote McCloy that it had come as a “real shock” to learn that the bill had been deferred to the Bundestag.23 McCloy did not want to ignore a plea from a Warburg; on July 18, less than three weeks after arriving in Germany, he decided to promulgate the law under his powers as military governor.

  Greenstein was pleased that McCloy had seen fit to overrule General Hays and all his other advisers. He wrote him, “While the embarrassment to you in reversing a decision may be temporary, the injustice to the victims of Nazism will be permanent if the present decision is permitted to stand. Fundamentally, as you so very well put it, the issue is a moral one.”24 That’s how McCloy saw it, as a moral and political issue, not a military matter. He told Greenstein that, during his recent ten-day inspection of the U.S. sector, a leading German figure had shocked him by saying, “I hope, Mr. McCloy, you will forget the Auschwitzes and the Dachaus and other concentration camps, and think in terms of the new Germany we are trying to rebuild.” McCloy had replied, “So far as I am concerned, I cannot forget the Auschwitzes and the Dachaus and I do not want the German people to forget them either. If they do, they will start their new German state in an atmosphere of moral degeneration and degradation.”25