THE UNDER SECRETARY OF STATE                
 
                         WASHINGTON                         
 
 
                            -2-                             
 
 
The recomendations of the Kilgore Subcommittee with respect to reform
of the structure and control of German industry, although more drastic
and positive in tone, are not markedly at variance with the views of
the Department.  In the Department's draft memorandum on the economic
treatment of Germany it was recommended we should attempt to reach an
agreement with the British and Russians regarding control of large
German industrial firms and the elimination of Nazi industrialists from
positions of influence, and it was proposed that we should advocate a
policy more drastic than the British now favor but less drastic than
Russia might be inclined to apply. The Kilgore suggestion that as many
as ten thousand leading industrialists require punishment seems rather
extreme.  With respect to the breaking up of industrial combinations
and cartels, it remains to be seen how far Britain and Russia will go
along with American views on this subject and the need must be kept in
mind for a maximum degree of uniformity of policy between the three
Powers.
 
 
The Kilgore recommendations for dismantling of the munitions,
metallurgical and chemical industries is much more drastic than the
proposal contained in the Department's draft which recommended:
 
 
       1. The destruction of all socialized facilities used for the
manufacture of land and naval armament and all types of aircraft, and,
 
 
       2. The transfer of such German capital equipment as can be
promptly put to effective use in liberated countries during the initial
period of rehabilitation.  While a considerable portion of the capital
equipment of' the metalurgicalical and
 
 
chemical