(e)  No decision should be take 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 policyu 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 plans, (3) to
eliminate self-suffenciency 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 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 dismantlement, 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.
 
 
CH