(e) No decision should be taken on the possible partition of Germany (as distinguished from 
territorial amputations) until we see what the internal situation is and what is the attitude of 
our principal Allies on this question.  We should encourage a decentralization of the German 
governmental structure and if any tendencies toward spontaneous partition of Germany arise they 
should not be discouraged.  
 
     (f) Economic Objectives.  The primary and continuing objectives of our economic policy are: 
(1) to render Germany incapable of waging war, and (2) to eliminate permanently German economic 
domination of Europe.  A shorter term objective is to require the performance by Germany of acts 
of restitution and reparation for injuries done to the United Nations. 
     To achieve the first two objectives, it will be essential (1) to destroy all factories 
incapable of conversion to peaceful purposes and to prevent their reconstruction, (2) to enforce 
the conversion of all other plants, (3) to eliminate self-sufficiency by imposing reforms that 
will make Germany dependent upon world markets, (4) to establish controls over foreign trade and 
key industries for the purpose of preventing German rearmament, and (5) to eliminate the position 
of power of large industrialists and land owners.
 
     This government has little direct interest in obtaining reparations from Germany and no 
interest in building up German economy in order to collect continuing reparations.  However, the 
U.S.S.R. and a number of ther states which have been victims of German destruction and exploitation 
may press claims for German production and labor service for rehabilitation and construction.
 
     Extensive controls over industry and foreign trade will be essential during the immediate 
period of demilitarization and dismatlement, as well as during the period of reparations.  After 
this phase, a system of control and supervision of German industry and trade will have to be 
worked out in the light of world security developments.  This system should be of such a character
that the victor powers will be able and willing to enforce it over a considerable period.
 
     It is of the highest importance that the standard of living of the German people in the 
early years be such as to bring home to them that they have lost the war and to impress on them 
that they must abandon all their pretentious theories that they are a superior race created to 
govern the world.  Through lack of luxuries we may teach them that war does not pay.