ECONOMIC POLICIES TOWARD GERMANY
                  
                               SUMMARY
 
1.   Our eventual objectives with respect to economic 
treatment of Germany should be (1) abolition of German 
self-sufficiency, and (2) elimination of the instruments 
for German economic aggression.
 
          For a prolonged period of control and surveillance, 
however, economic policies with respect to Germany will
have to be largely based upon other objectives, namely, 
(1) reduction of Germany's economic war potential, and
(2) assisting the economic reconstruction and develop-
ment of the victorious countries.
 
          The following policies recommended for adoption in dis- 
cussion with British and Russians:
 
     a. We should advocate allied acceptance of large 
         responsibilities for guidance and reorientation 
         of German economic life, including prevention 
         of an unmanageably chaotic economic situation 
         in the initial period after defeat.
 
     b. Economic disarmament should include prohibition 
         of the manufacture of land and naval armament 
         and all types of aircraft; destruction of special-
         ized facilities for their manufacture; establish-
         ment of controls to detect any forms of surrept-
         itious preparation for war.
 
     c. Consideration should be given to selective prohibitions 
         upon the manufacture of key industrial items and 
         of broader restraints on exports within the field 
         of metals, metal products and chemicals.
 
     d. During the early post-defeat period, the occupa-
         tion authorities should take no steps to provide 
         a higher living standard than is required for 
         prevention of disease and disorder. Agreement 
         should be sought on definition of this minimum 
         and the measures to be taken, if necessary, to 
         assure such a minimum.
 
     e. We should favor conversion of remainder of German
         industry to peacetime production, particularly
 
                                                                reparation