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     3. Decentralization - The Department of State recommends 
that encouragement be given to a return to federal decentrali-
zation, including the division of Prussia into several medium-
sized states, but it would oppose the imposition of a decentral-
ization more sweeping than that acceptable to moderate groups.
 
     Such an action, like an imposed partition, would provide a 
ready-made program for nationalistic agitators. A decentraliza-
tion extensive enough to make the central government of the Reich 
harmless would, in all probability, render it unable to cope 
adequately with the social and economic problems which must be 
resolved in the interest of internal stability.
 
          A return to wide provincial autonomy might again offer to 
undesirable elements an advantageous means of capturing the 
various state governments, as happened prior to 1933, when the 
National Socialists gained control of several of the smaller 
states and carried on their terroristic agitation in complete 
immunity from Reich interference.
 
           Decentralisation, even if successfully imposed, is not 
necessary as a security measure and would not of itself be an 
insurmountable barrier to unified national action if at some 
future time the German people wanted to organize their forces 
for new aggression. The military effectiveness of Germany under 
the cumbersome Bismarckian constitution might illustrate this 
observation. It remains to be remarked that the traditional 
democratic groups in Germany have generally favored a greater 
unification of the Reich.
 
     4. Steps in Political Reconstruction - While the character 
of developments in Germany cannot be foreseen, the Department of 
State believes it desirable to formulate a tentative and general 
policy toward the political reconstruction of Germany. It there-
fore recommends that the process be begun, when military neces-
sities permit, by the establishment of democratic self-government
in local communities rather than by the reconstitution of a national 
federal government. Decision as to when local governments could 
be joined into provincial units and when the provincial units 
could form a Reich government would, under this plan, depend on 
the success with which the Germans took the several steps in 
building sound institutions and developing reliable political 
leaders.                        
 
          The Department of State believes that, in this process of 
positive reconstruction, external influence should be limited 
to the encouragement of popular self-government and should not 
be exerted to determine the precise form of government to be 
established. At the same time it is a dictate of security that 
the victor powers, and after them the international organization, 
should reserve the right, and be prepared to intervene in Germany 
to prevent the re-emergenoe of dangerous nationalistic activities
                              and