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Chapter II

From Nazi Expropriation
to U.S. Control



As the harsh winter of 1944 - 45 turned to spring, World War II drew to a close in Germany with American troops making a series of gruesome discoveries. On April 4, 1945, units of the 4th Armored Division and the 89th Infantry Division of the U.S. Third Army entered the concentration camp at Ohrdruf, near Weimar, and the soldiers were overwhelmed by the terrible odor of decaying flesh. No briefing about Nazi atrocities could have prepared them for what they saw: railroad cars packed with corpses, piles of incinerated skeletons, and emaciated prisoners unable to make their way out of their squalid barracks. Over the next four weeks, other American troops liberated more concentration camps, parts of a vast network built to imprison Jews and other enemies of Nazi Germany.1 "It is not an exaggeration to say that almost every inmate was insane with hunger," reported Captain J.D. Pletcher of the 71st Division Headquarters after his visit to Gunskirchen, a subcamp of Mauthausen.2 Supreme Commander Dwight Eisenhower, who entered Buchenwald the day it was liberated, later noted: "I never at any time experienced an equal sense of shock."3

Nazi policies of discrimination, persecution, and extermination had an economic agenda, as well. Allied units advancing through German territory came upon large stores of valuables, such as gold, artwork, the currency of several countries, securities, and precious metals, that the Nazis had stolen and then stashed away in concentration camps, barns, mines, castles, trains, factories, banks--wherever they thought they could find them again at an opportune moment. Following Germany's unconditional surrender on May 8, 1945, the Allies banned Hitler's Nazi Party, confiscated its assets, and supplanted its authority over Germany and Austria. The victorious Allies promptly took control of assets stripped from victims of the Nazi regime and from the countries invaded by Germany as well as legitimate German property kept safe from Allied bombers.


Nazi Victimization

"The Science of Race"

Total control over the instruments of state between January 1933 and May 1945, and the suspension of most constitutional constraints on executive powers, enabled the Nazis to extort and steal the properties of their enemies. The methods used by the Nazis against their internal and external enemies built upon their racist ideology and brought unprecedented material devastation and human suffering, victimizing millions of people across Europe.

The Nazi ideology exalted a mythical master race, of which the Aryan Germans were the superior example. This "culture-creating" race also included the English, Dutch, and Scandinavians. "Culture-bearing" races (Asians, Latins, and Slavs) had little to offer. The "culture-destroying" races included "Gypsies, Negroes, and Jews" and were considered subhuman.4 Each race struggled to survive and expand, and the Nazis believed Germany's biologically defined destiny was to expand to the east, taking living space (Lebensraum) from "inferior" races such as the Poles or Russians.5 Roma and Sinti (then known as Gypsies) and Germans who were mentally and physically disabled were early targets of Nazi persecution on "racial" grounds. Political opponents, members of religious sects that declined to pledge unconditional allegiance to the regime (Christian Scientists, Jehovah's Witnesses), as well as Freemasons and homosexuals, were victims of Nazi persecution.6

In this ideology, the master race was in a battle for world domination with its chief enemy, the Jews, who, aware of their "inferiority," used every foul means to subdue the Aryan race. Nazi ideology associated democracy, socialism, capitalism, liberalism, modernism in art, and prostitution with the Jews and postulated that Jews, if not segregated and eventually removed from Germany, would further infect German culture, increase control over Germany's finances, and pollute German blood through miscegenation. The end result of the Jewish infiltration would be a Bolshevik dictatorship that would extinguish the German race.7

Once Hitler became chancellor, Nazis and their sympathizers subjected Jews to commercial boycotts as well as scattered acts of violence. Because violent actions often destroyed property and prompted criticism from abroad, they hurt the German economy. Nevertheless, the Nazi regime was determined to profit from dispossessing its enemies, and it prepared a comprehensive strategy of plunder.8


Discrimination and Plunder Become Law

The first part of that strategy was the removal of opponents from public life. As early as March 1933, Nazi officials established a concentration camp at Dachau to intern communists, social democrats, and members of trade unions. Jews with similar political beliefs were among the first wave of prisoners. In later years the Nazis built hundreds of concentration camps and interned Jews (from Germany and elsewhere) regardless of their politics, as well as Sinti and Roma, homosexuals, Jehovah's Witnesses, prisoners of war, Poles, and others. One month after the Nazis inaugurated the Dachau camp, the racism of this once fringe group gained its first foothold in the German legal system with the enactment of the Law for the Restoration of the Professional Civil Service of April 7, 1933. The law dismissed Jewish civil servants from state employment, with few exceptions. Corollary laws disbarred Jewish judges and dismissed Jewish tax advisors. Hitler and his party were taking the first steps toward their goal of a Germany free from Jewish influence.9

From 1933 on, the Nazi regime supplemented unofficial acts of repression with official discriminatory decrees. Other policies followed to expropriate Jewish assets, to deprive Jews of their livelihoods, and to force them out of Germany. The process was gradual but inexorable, provoking the emigration of between 100,000 and 170,000 German Jews between 1933 and 1938, half of whom might have had significant assets. As Jews emigrated, the Nazis also attempted--by whatever means--to transfer their assets into non-Jewish hands.10 One mechanism was the Transfer (Ha'avara) Agreement of August 28, 1933, originally negotiated between Germany and some of the Zionist leaders. Under the controversial agreement--criticized by many Jews who urged a boycott of Germany instead--20,000 Jews emigrated to Palestine between 1933 and 1941 after depositing funds in a German-based account. Once there they were to be reimbursed from the proceeds of the sale of German goods in Palestine.11

In 1934, the Nazis increased the tax on Germans applying for emigration, and two years later they restricted the export of securities. Other devices to wrest assets from Jews fleeing Germany included blocking accounts, manipulating exchange rates, confiscating insurance monies, forcing Jews to pay "atonement" fines, taxing them on their "right" to sell their property, and making them pay into a fund to support the emigration of poor Jews.12

The onslaught on German Jews was relentless and systematic. The Nazi Party used citizenship "experts" in the Reich Interior Ministry to write the Law for the Protection of German Blood and Honor and the Reich Citizenship Law. Following Hitler's orders, in 1935 the Nazi-controlled Reichstag (parliament) adopted these laws, known as the Nuremberg Laws. They identified the Jews, as those against whom official discrimination could and would be directed, to segregate them from German society and state citizenship.13 Accompanying regulations also included an elaborate scheme to officially define "Jew." By adding up Jewish ancestors, the laws assessed a person's "degree" of Jewishness. For instance, individuals with two Jewish grandparents were Jews if they professed the Jewish religion or if they were married to a Jew; if neither condition was met they were considered of "mixed Jewish blood."14 Among other things, the legislation banned marriage and extramarital relations between Germans and Jews and forbade Jews to hoist the German flag and to display the colors of the Reich.15

The Nuremberg Laws served as the prototype for the racial persecution of Sinti, Roma, and others defined as "non-Aryans." By 1939, the Nazis targeted social and political groups through more than 400 discriminatory laws, decrees, regulations, and amendments.16 Promulgated by executive decisions, these measures tended to be couched in vaguely worded measures of crime prevention or public health. Invariably they were punitive, restrictive, or confiscatory in nature and unmistakably designed to segregate "asocial" elements from the ethnic German community.17 Once the Nazi regime had defined its enemies, they could be easily identified and their assets targeted for confiscation.

Jewish business proprietors were vulnerable to Nazi extortions and Jewish-owned businesses were subjected to "Aryanization"--that is the process of transferring ownership to non-Jewish hands. After 1933, many pressures drove Jewish owners to sell their businesses--German boycotts, refusals by Germans to pay business debts to Jews, official harassment, the denial of credit by banks, threats issued to business owners when taken into what the police called "protective custody" and imprisoned, and the business owners' desire to raise the necessary cash to emigrate.18 By 1935, as many as a quarter of Jewish businesses, particularly in rural areas and small towns, might already have closed or been sold.19 While details of many of these transactions are no longer available, it is clear that Aryanization first struck at Jewish shopkeepers, while the larger Jewish enterprises--textile firms, department stores, banks heavily involved in export financing--were among the last to be sold or transformed into limited partnerships or other forms of enterprise.20 Of an estimated 100,000 Jewish enterprises of all kinds in 1933, only about 40,000 remained by November 1938 when the Nazi government prohibited Jewish ownership of retail businesses.21

The Nazi regime promptly and efficiently exported its racial policies and its institutional framework to each territory it absorbed into the Reich. On March 12, 1938, Nazi Germany celebrated its first large acquisition as its army marched into Austria and attached it to the Reich. The Anschluss (annexation) absorbed Austria's nearly 200,000 Jews, whose wealth totaled an estimated 2.5 billion Reichsmarks.22 Up to the outbreak of the war the following year, the Nazis offered exit visas to Austrian Jews but only in exchange for everything they owned. Officials in Austria wasted no time in targeting Jewish wealth for confiscation. Austrian Nazis surpassed the Germans in looting property from Jewish shops and homes, including household goods, libraries, and valuable paintings, and "revealed a degree of vicious anti-Semitism which surprised even the Germans."23

On April 26, the official Nazi newspaper Völkischer Beobachter declared: "The Jew must go--and his cash stays here!"24 The newspaper referred to the decree promulgated that day requiring all Jews in the Reich to register all their domestic and foreign property worth more than 5,000 Reichsmarks.25 Although ostensibly the decree was to ensure the utilization of assets for the Reich, its ultimate purpose was to exclude Jews from the economy.26 In November 1938, the Nazis assessed the value of all Jewish assets in the Reich, now including Austria, at 8.5 billion Reichsmarks, of which RM 1.4 billion were debts and other liabilities. The assets included business capital, real estate, and financial assets--including pensions, salaries, insurance, bank notes, securities, and other "vulnerable assets
...readily seizable."27

The situation for Jews in Nazi Germany grew worse in the autumn of 1938. On November 7, Herschel Grynszpan, a young Jew distressed by the mistreatment of his parents by the Nazis, assassinated Ernst vom Rath, the Councilor of the Legation at the German Embassy in Paris. To retaliate, Nazi leaders urged their supporters throughout the Reich to take to the streets on November 9 and burn synagogues, break into Jewish apartments, and wreck Jewish-owned shops.28 During the three days of the pogrom, ninety-one Jews perished, including many suicides.29 The Nazis also imprisoned over 35,000 Jews in concentration camps.30 The depredations of Kristallnacht, the "Night of Broken Glass" (so-named for the smashed window panes on the streets), marked a new era of official violence against Jews. Jews were ordered to clean up and make repairs and were barred from collecting insurance for the damages.

Although still maintaining the pretensions of Rechtsstaat, the vaunted Germanic concept of "a state ruled by law," the ostensibly legal transfer of property and enterprises into non-Jewish hands differed little from expropriation and theft, for example, the "Atonement Tax" imposed in the wake of Kristallnacht was the largest single tax or fine on Jews and raised more than 1.1 billion Reichsmarks from the Jewish community in Germany by confiscating payments from insurers that were intended to compensate property owners for their damages.

The Nazi momentum seemed unstoppable. In October 1938, the Reich expanded again, following the agreement at Munich (between Germany, France, Great Britain, and Italy) that forced Czechoslovakia to surrender control of the Sudetenland to Germany. In March 1939, Czechoslovakia ceased to exist when Germany occupied Bohemia and Moravia and established the puppet state of Slovakia. That September Germany attacked Poland, which led to declarations of war by France and Great Britain. In 1940, the Nazi armies went on to invade and defeat Denmark, Norway, Luxembourg, the Netherlands, Belgium, and France; the following year they turned south into Greece and Yugoslavia, creating the puppet state of Croatia in the process. Germany now controlled most of western and central Europe, with its allies--Italy, Bulgaria, Hungary, and Romania--holding much of the rest.

By the summer of 1941, the Reich acquired additional resources and laborers but also more "undesirables." With varying degrees of success, Nazi Germany bullied its allies, the puppet states, and the governing agencies in occupied countries to impose laws to exclude Jews from economic and public life and, eventually, to assist Germany in the deportation of the Jewish population and the seizure of its wealth. Two countries resisted: Denmark, German-occupied but with its prewar government in place, and Finland, a future German ally against the Soviet Union. The others, including allies, wavered between compliance with and resistance to German pressure to deal harshly with their Jewish populations. Although Bulgaria, Hungary, Romania, and Slovakia were "avid expropriators" of Jewish assets, they often fell short of "the German standard" in dealing with Jews.31

As soon as they occupied an area, Nazi officials began identifying and confiscating assets, creating what has been called a "plundering bureaucracy" for art and cultural property to supplement the organizations and laws concerned with expropriating financial holdings.32 For instance, in Poland Nazis stripped the Catholic Church of most of its regalia and treasure. In France, German embassy staff collected Jewish artwork. The occupation authorities in the Netherlands required Jews to turn over their jewels, precious metals, and other valuables.

A host of agencies, some under the leadership of high-level Nazi party members such as Hermann Goering and Joachim von Ribbentrop, arose specifically to confiscate assets. Hitler himself created an organization to collect artwork for his pet project, a grand museum in Linz. The quasi-commercial Dienststelle Mühlmann served as a clearinghouse for confiscated artwork. A key instrument of plunder was the special party agency Einsatzstab Reichsleiter Rosenberg (ERR). These organizations competed with one another to loot archives, libraries, artwork, and cultural objects from the "enemies" of National Socialism. In their rush to plunder, the Nazis did not limit themselves to cultural items. For instance, between January 1942 and August 1944, the ERR raided 71,619 Jewish dwellings in the western occupied territories, packed up household property worth RM 1.5 billion, and transported it--in 29,436 railroad cars full of containers sometimes marked "Jewish goods"--to the Reich. The special operation also netted RM 11.7 million in currency and securities from Jewish residences.33

Devices of Extermination

After September 1939, the brutal persecution of Jews and other "enemies" paralleled Nazi Germany's widening war of aggression against most of the rest of Europe. Although in 1939 the Nazis still encouraged Jewish emigration from Germany, by 1940 they were instead forcibly deporting victims to occupied Poland. Germans took over the property left behind, including the contents of tens of thousands of apartments as well as the dwellings themselves.34 To maximize the amount of property abandoned in the confusion and available for confiscation, secret Nazi plans called for abruptly transferring Jews into ghettos.

By the end of 1941, the Nazis had established major Jewish ghettos in Warsaw, Cracow, Lodz, Lublin, and Lvov; they would establish hundreds more throughout Eastern Europe.35 In October 1941, the German Security Police sent 20,000 Jews from Germany, Austria, and Luxembourg and 5,000 Roma and Sinti to Lodz.36 The process of liquidating the ghettos began in the spring of 1942.

The German invasion of the Soviet Union on June 22, 1941, marked yet another phase of the victimization policy. Agencies such as the Sonderkommando Ribbentrop followed the German troops and plundered art, cultural objects, and books.37 More sinister were mobile units--Einsatzgruppen--that also accompanied German troops and killed Jews and Communists on the eastern front.38 According to a directive of June 3, 1941, from German Army Headquarters entitled "Guidelines for the Conduct of Troops in Russia," the struggle demanded "ruthless and energetic measures against Bolshevik agitators, guerrillas, saboteurs, [and] Jews."39 In practice, "ruthless" measures resulted in the death of large numbers of Soviet prisoners of war and civilians. From 1941 to 1943, the Order Police (Ordnungspolizei) together with the Security Police (Sicherheitspolizei) deported Poles from annexed territories and shot hundreds of thousands of Jews and partisans in the Soviet Union and Poland. Some police units stripped Polish Jews of their valuables before deporting them from Polish ghettos to newly established camps at Treblinka and Majdanek.40

On January 20, 1942, Nazi leaders met in a villa in the Berlin suburb of Wannsee to coordinate a "Final Solution of the Jewish Question." During discussions they expressed pride in the ongoing expulsion of Jews from German life and decided on more deportations to the east. But they also planned to force able-bodied Jews to build roads, "in the course of which doubtless many will be eliminated by natural causes." Those that survived, who would "undoubtedly consist of the most resistant portion," would have to be "treated accordingly" since they "would, if released, act as a seed of a new Jewish revival."41

"Treated accordingly" meant execution by firing squad or death by gassing, the latter a technique adapted from the Nazi's so-called euthanasia program. In November 1941, the Nazi regime began building the first extermination centers at Chelmno and Belzec. Belzec opened in March 1942, soon to be followed by Sobibor, Treblinka, Majdanek, and Auschwitz.42 By this time, emigration was no longer possible for Jews in German-occupied Europe or Jews in Germany, and deportations to the "east"--a euphemism for the killing centers--intensified.43 Before the death camps ceased operations, an estimated 2.7 to 2.9 million people died at these six locations.44

The deportees carried with them a strictly limited number of possessions, usually in one small suitcase per person. The Nazi officers in charge of the concentration and death camps--members of the SS (Schutzstaffel), Heinrich Himmler's elite police and guard organization--carefully collected every small item. Between April 1942 and December 1943, for example, the Reich collected assets with a total value of 178.7 million Reichsmarks from victims of the camps in the Lublin area. The majority of the valuables consisted of German, Polish, and foreign currency and coins; the loot also included precious metals, jewelry, household items, and fabric. At Auschwitz confiscated valuables included the gold fillings that the Nazis had extracted from the mouths of their victims.46

Between August 26, 1942, and January 27, 1945, the SS made 78 deliveries to the Reichsbank in Berlin of property it had confiscated from victims of Auschwitz and Lublin, with a total value estimated between 36 million and 50 million Reichsmarks. The bank acted as trustee for some of the loot and disposed of the rest, depositing the proceeds in an account in the name of the Ministry of Finance, to help fund Germany's war effort. The Reichsbank purchased outright the foreign bank notes, gold, and securities; it enlisted the services of the Prussian State Mint and the firm of Degussa to smelt jewelry, broken gold, and dental gold; and it sold jewelry and other items to the Berlin Pawnbroker Office. The Reichsbank disposed of 43 shipments of SS loot for an estimated 24 million Reichsmarks. After the Allies bombed the bank building in February 1945, bank officials stashed the contents of the vaults in mineshafts near Merkers in western Thuringia.47

Having confiscated items from prisoners, camp officials promised those strong enough to work a "reprieve" from death. An April 30, 1942 directive instructed camp officials to exploit their prisoners as slave labor for the Reich without regard to health and life, essentially a process of "extermination through work."48 In other words, those who were spared from gassing were to be worked to death.


United States Engagement

Overcoming Isolationism

The horrors perpetrated by Nazi Germany during the 1930s drew little attention or calls for action in the United States. Domestic problems--in particular unemployment and the sagging economy of the Great Depression--loomed far larger in the early 1930s than international concerns. Many felt that it was risky and unnecessary to become embroiled abroad when the nation's strength was so sapped. In 1932, when unemployment stood at 13.7 million in the United States, the isolationist Senator William E. Borah wrote that Americans should "look after our own interests and devote ourselves to our own people."49 This political isolationism grew out of a strong sense of nativistic nationalism, an attitude of "America for Americans." The attitude overlapped with and only thinly disguised anti-immigrant and anti-Semitic sentiments prevalent in broad strains of American society, including some members of Congress and the State Department who could tie up any political initiatives to aid Jewish refugees before and during the war.50 Between 1938 and 1941, one-third to one-half of Americans questioned in public opinion polls believed that Jews had "too much power in the United States," especially in "business and commerce" and in "finance."51 Furthermore, popular distrust of banks, big business, and munitions manufacturers, all of which were perceived as profiting from continuing foreign trade (if not actively promoting war), supported inward-looking attitudes.52

President Franklin D. Roosevelt reflected national sentiment in August 1936, when he declared that, "we shun political commitments which might entangle us in foreign wars."53 Until 1938, Roosevelt's efforts focused on ways to undermine aggressor nations by encouraging disarmament and by restricting trade, as well as by suggesting blockades or other ways of controlling the seas. His efforts were stymied by the Congressional passage of the Neutrality Acts (1935 - 37) that mandated arms embargoes and prohibited loans to all belligerents, making it impossible to favor those considered allies. It remained possible to supply food, raw materials, and manufactured goods as long as a country paid for them in cash and carried them away on foreign ships. While the United States remained officially neutral until 1941, this allowance permitted a transatlantic trade with Great Britain to flourish.54

In 1936, President Roosevelt said, "I can at least make certain that no act of the United States helps to produce or to promote war," implying that provocative acts by other nations were a different matter.55 During his reelection bid in 1940, still under pressure from the political isolationists, Roosevelt declared that American "boys are not going to be sent into any foreign war." On other occasions, however, he added a key qualifier, "except in case of attack."56

Even before the election, he and his advisors began planning to extend aid to Great Britain. With Nazi Germany in control of the entire continental coastline from southern France to the north of Norway and threatening Great Britain, Roosevelt considered such support in America's self interest. "If my neighbor's house catches fire," Roosevelt said, "and I know the fire will spread to my house...and I don't pass my garden hose over the fence to my neighbor, I am a fool." With that analogy, Roosevelt gained public approval of his Lend-Lease policy.57

The passage of the Lend-Lease bill in March 1941 was a turning point in the country's greater involvement, permitting the United States to lend or lease to Great Britain--the only Western European power left to oppose Nazi domination--the weapons, munitions, food, or other supplies needed to fight Hitler without requiring payment in return. The measure, Roosevelt said, was "key to the security of the Western Hemisphere" and to the security of the United States.58 The Japanese attack on Pearl Harbor on December 7, 1941, finally ended American political and military isolation. Three days after declaring war on Japan, the United States also found itself at war with Japan's allies, Germany and Italy, known collectively as the Axis Powers.59 The United States' entry into the European conflict after Hitler's declaration of war on the United States on December 11 resulted in the formal alliance with Great Britain and the Soviet Union that eventually crushed Nazi Germany.


The Grand Alliance

Roosevelt chose to give the war in Europe strategic primacy, but he still had to weigh that priority against the demands of the war in the Pacific, in which the Soviet Union was reluctant to get involved. During World War II the western powers--the United States and Great Britain--and the Soviet Union worried that their Grand Alliance to defeat Nazi Germany might split, that Hitler might succeed in reaching a separate agreement with one or the other. In such a scenario, the Germans could have marshaled their forces on one front and possibly reversed the tide of the war. The success of the Big Three in maintaining the coalition--in doubt until the last months of the war--ensured the joint victory that gave U.S. forces and agencies the opportunity to recover and later dispose of victims' assets in the territories that they occupied.

Beginning in 1942, the Soviets pressed the western Allies for a second front against the Germans in Europe. The Soviet Union's leaders dismissed Allied operations in the Mediterranean Theater as providing little relief in the east. In June 1944, the western Allies invaded Normandy, and officials both in the United States and in Great Britain began considering how the map of postwar Europe (and the world, for that matter) might look, and several had substantial concerns about Soviet designs in the east. In 1944 the State Department's leading expert on the Soviet Union, George Kennan, believed it time for a "full-fledged and realistic political showdown with the Soviet leaders" to discuss their territorial intentions.60 In May 1945, the European war came to an end, with Germany invaded from the east by the Soviet Red Army and from the west by the combined forces of the United States and Great Britain, aided by Free French Forces.

The final movement of western forces through Germany and into Austria and Czechoslovakia brought American soldiers into positions to discover and impound caches of enormous wealth that the Nazis had looted from victims all over Europe. The endurance of the Grand Alliance (or "Strange Alliance," as it has also been dubbed),61 which linked the Soviet Union with the western powers, created the conditions that placed many of these treasures, including assets originally owned by victims of the Holocaust, in American hands. In the months following Germany's defeat, the alliance collapsed, dissolving into a Cold War that further complicated European reconstruction and the restitution of Nazi loot to the original owners or their heirs.

The case of Hungary demonstrates these complications. In the first flush of victory, the U.S. government declared as "war booty" goods that the Hungarian or the German government transported to the Reich to evade capture by Soviet forces. In the list were items such as the gold reserves of the Hungarian National Bank, rolling stock, medical supplies of the retreating Hungarian army, and several hundred pedigreed horses. Noting the collapsed economy and the fragility of an emerging democracy, U.S. diplomats and military officers assigned to Hungary began recommending soon after their arrival that Washington comply with requests for restitution.

Little by little and item by item, the American government relented on the subject of war booty. On June 15, 1946, the Departments of State and War decided that "restitution improves the political stability of the U.S. relations" with the countries so favored.62 As the Cold War replaced the Grand Alliance, American policymakers reacted to communist propaganda that claimed that U.S. occupation forces in Germany were holding back Hungarian goods in order to harm Hungary. A little more than a year after the war ended, the U.S. government position shifted to favor of wholesale restitution in the hope that it would contribute to Hungary's economic reconstruction and political stability.

The United States went out of its way to dramatize its change of mind. On August 6, 1946, U.S. Minister Arthur Schoenfeld welcomed the train carrying the bullion of the Hungarian National Bank, worth $32 million, and expressed the hope that it would help stabilize the economy and "rebuild Hungary on democratic lines." Schoenfeld stressed that the gold, shipped to Germany during the last phase of the war, was captured by the U.S. Army as war booty and as such, the American government was entitled to possession, yet decided to return it to Hungary. Upon receipt of the Hungarian National Bank gold, Finance Minister Gordon delivered an address "which was very complimentary to the United States."63

On December 22, 1946, General George Weems, U.S. representative on the ACC for Hungary, was present at Budapest's Eastern Railway Station to welcome the return from Austria of "a heated train of carefully crated fine art," originally from Hungarian museums.64 Additional assets restituted a few weeks earlier included barges, passenger ships, and the pedigreed horses.


Occupation and Stabilization

Civil Life in Chaos

World War II caused unprecedented destruction and an estimated 60 million deaths worldwide, military and civilian, including approximately six million murdered because they were Jews.65 The fighting displaced millions of people, and the postwar settlements displaced millions more.66 With the infrastructure that sustained civilian life paralyzed or destroyed in much of Europe, the U.S. Army faced occupation duties that called for skills dramatically different from those it had applied to winning the war.

In the final months of the war, retreating Germans devastated northern France and Belgium: broken dikes in the Netherlands caused widespread flooding. Milan and Turin--Italy's traditional centers of economic strength--lay prostrate. In central Europe, bomb craters, denuded countryside, and heaps of rubble and debris replaced urban, residential, and agricultural centers.67

In May 1945, U.S. troop strength in the European theater stood at just over three million. By July 1945, the general population under direct U.S. Army control had grown to a staggering 22 million--19 million in Germany and nearly three million in Austria. Within its zones in Germany and Austria, the U.S. Army housed and fed five million people--displaced persons in camps, prisoners of war, and U.S. troops.68 The war had destroyed nearly 20 percent of the housing in Germany; many of the standing structures were uninhabitable. Pressures to locate civilian housing only increased with the arrival of refugees--92,000 in Frankfurt alone between May and August 1945. Over the following year Frankfurt saw an additional one thousand former soldiers and air raid evacuees return each week.69

The threat of famine haunted postwar Europe. The war had eroded the farm economy: machinery, fertilizers, and seed were destroyed and breeding livestock killed. Grain production in France was less than half of its prewar levels. Limited food supplies necessitated mandatory rationing. The commander of the U.S. Military Government in Germany from 1945 to 1949, General Lucius D. Clay, later recalled that "for three years the problem of food was to color every administrative action" taken in Germany.70 Yet food was not the only necessity in short supply: clothing and shoes were scarce; tools, coal, and domestic amenities were largely unavailable. German civilians burned any flammable substance they could find to survive the harsh winters of 1945 - 46 and 1946 - 47.

Most shops remained empty, making it nearly impossible to purchase legitimately such commodities as fabric, soap, light bulbs, or window glass. Nearly one-third of the goods still being produced in Germany at war's end found their way onto the black market. Although trading on the black market was a court-martial offense, soldiers actively bartered or sold army-issue cigarettes, which quickly became the preferred currency on the black market. A first lieutenant selling his entire cigarette allowance stood to pocket six times his annual salary in four months.71 At times, using the black market became the only means of carrying out military assignments.72

Well aware of the dominating influence of food concerns, General Clay realized that the United States "could not hope to develop democracy on a starvation diet."73 To improve the material situation of the population of the U.S. Zone, military commanders began to distribute seed and fertilizer as early as the summer of 1945. The 12th Army Group released 400,000 German prisoners of war for employment in farm labor. In June 1945 Supreme Headquarters Allied Expeditionary Force (SHAEF) ordered 650,000 tons of wheat for import into the American Zone.74

Having won the war, the U.S. Army in Germany changed its objectives drastically in May 1945 to focus on bettering the lives of civilians under its care. It had to marshal personnel and equipment to revitalize national civilian infrastructures in both liberated and occupied countries. Accordingly, army units shifted their mission from combat to control and governance. Troops maintained law and order, disarmed and demilitarized a population they feared might be belligerent, and organized the U.S. military government in Germany and Austria. These concerns all competed with the task of securing and organizing looted assets in preparation for their restitution. The continuing war in the Pacific theater also led the Army to extract troops from Europe to deploy in the war against Japan--still intense in May 1945--or return them to the United States for demobilization.75

The task of redeployment demanded a prodigious effort in the first months after the war ended in Europe. It required the reduction of troop strength in Europe by hundreds of thousands, shipping men and material to the Pacific, and "readjusting" the total combat force to allow the soldiers with the longest service in combat and with dependent children to return to the United States. The original War Department plan had called for reducing troops in the European theater from 3.1 million in May 1945 to about 400,000 in 18 months, meaning that more men would be shipped out each month than the maximum number arriving in any one month during the war. The redeployment effort had to be coordinated and accomplished even though the most experienced personnel were simultaneously leaving Europe. By comparison, the replacements arriving in Europe tended to be unskilled and less well-trained.76

Redeployment hindered the effort to collect, control, and distribute victims' assets and other valuables. More immediate problems for the military took precedence, the most important of which was the provision of basic necessities--food, lodging, and clothing--to the population under its authority. Material conditions improved only slowly.


U.S. Command Structure


In 1943, the U.S. Army created a command element known as the Civil Affairs and Military Government Division (G-5). Attached to SHAEF, the G-5 Division was to organize military government in occupied territory, which included establishing property and financial controls and caring for and repatriating uprooted and dispossessed persons. In time G-5 duties included securing, safeguarding, and registering looted assets.77

G-5 detachments accompanied the troops liberating Europe and were responsible for setting up rudimentary military governments.78 Never in one place for long, the G-5 detachments were often the first units to come into contact with Nazi plunder and assume responsibility for victims' assets.

Chaos on the ground had its parallel in the military structure. The United States Group Control Council (Germany) (USGCC) was established as a U.S. organization on August 9, 1944, with a mission almost identical to that of the G-5 Division. The USGCC was subordinate to SHAEF until the combined command terminated in July 1945.79 Originally, the USGCC included only three divisions responsible for German disarmament and demilitarization, the repatriation of Allied prisoners of war, intelligence collection, as well as economic and political matters. In November 1944, USGCC was reorganized into twelve divisions including a Reparations, Deliveries, and Restitution division. A Monuments, Fine Arts, and Archives Subcommission (MFA&A), formerly a part of SHAEF, became a branch of this new division under USGCC.80 The mission of MFA&A was to prevent damage to monuments, buildings, statues, and artworks while warfare raged; to identify, inventory, and safeguard cultural artifacts and property coming under U.S. Army control; and to restitute such items in the immediate postwar era. No comparable unit existed for gold or other financial assets.

On July 1, 1945, an independent American command, U.S. Forces, European Theater (USFET), was established and SHAEF was dissolved.81 Eisenhower headed USFET until November 11, 1945, when General Joseph T. McNarney took command. Lieutenant General Lucius D. Clay, who later assumed a critical role in the restitution process, became SHAEF Deputy Military Governor in March 1945 and continued in that position under USFET. In 1947, Clay became Commanding General of the European Command (EUCOM, the successor to USFET), a position that he held well into 1949. From October 1945 to late 1949, Clay commanded the Office of Military Government for Germany, United States (OMGUS).

The USFET commanding general served as the U.S. representative to the Allied Control Council (ACC). The ACC served as a quadripartite commission, comprised of the commanders-in-chief of the Allied armed forces and a French representative. The commanders of the four occupying armies exercised complete authority within their zone. The ACC had a dual mission to administer Germany as a single economic unit and to establish a subsistence level for industrial production. As serious disagreements over economic policy and the reparations issue arose, however, the ACC became more a negotiating than a governing body.82 Although it enacted legislation, the ACC was unable to enforce its decisions.

Presidents Roosevelt and Truman agreed that civilian authorities were better suited to governing and should relieve military forces of their political control of conquered territories.83 War Department officials and commanding generals also disliked the idea of turning soldiers into governors.84 Secretary of War Henry Stimson and Assistant Secretary John J. McCloy both envisioned a "short military occupation with minimal political responsibilities."85 In 1943, Army Chief of Staff General George C. Marshall instructed the commander of the Civil Affairs Division--the agency within the War Department charged with coordinating policy for liberated and occupied territories--to focus on getting out of planning for the occupation, emphasizing that "we have never regarded it as part of the proper duty of the military to govern."86

On September 29, 1945, the Army redesignated USGCC as OMGUS. At the same time G-5, still part of the USFET general staff, became Office of Military Government for Germany, U.S. Zone (OMGUSZ). MFA&A became a section of the OMGUS Economics Division, Restitution Branch.87 This restructuring removed the dual system of military government, replaced it with an increasingly centralized operation, and allowed Clay progressively to remove most of the military personnel from the military government.88 The overlapping military alignments complicated the conduct of military government, including the management of assets seized from the Nazis.

OMGUS served as a de facto government in the U.S. Zone, largely replicating the structure of prewar German administration. Clay made explicit his intention to hold elections in the U.S. Zone by 1946. As early as August 1945, Clay encouraged the Germans to form parties, hold elections, and operate courts. Although OMGUS retained ultimate authority to intervene, for the most part it played a supervisory role and progressively withdrew from the day-to-day operations of government. American civilians replaced military personnel in the administration of German affairs before turning their tasks over to German officials.89 From 1946, OMGUS existed to advise and observe the new German civil government.90

On September 21, 1949, the Office of the U.S. High Commission for Germany (HICOG) replaced OMGUS, signaling the final shift of responsibility from a military to a civilian agency.91 The first High Commissioner, John J. McCloy, played an important role in the restitution of assets confiscated by the Nazis, encouraging the German government to provide restitution of its own accord (Wiedergutmachung) and to assist its Jewish community and the Jewish Restitution Successor Organization (JRSO).92 In McCloy's opinion, these actions were necessary to bring about the political and "moral integration" of Germany into postwar Europe.93


As had been done in Germany, Austria was occupied by Allied troops and divided into four zones of control governed by the United States, France, the Soviet Union, and the United Kingdom, respectively. Unlike Germany, political and economic authority in Austria quickly returned to the Austrians--a consequence of the 1943 Moscow Declaration. The Allies agreed that Austria, as the first victim of Nazi aggression, should be occupied, but not treated as a defeated enemy.94 The four powers retained a military presence in Vienna and in their four zones, and, in June 1946, recognized an autonomous Austrian national government. The peace treaty officially ending the occupation was signed in May 1955.

In July 1945, U.S. Forces Austria (USFA) was established and placed under the command of General Mark W. Clark. USFA operated under the authority of the Joint Chiefs of Staff in Washington, as did its USFET counterpart in Germany.95 USFA established headquarters in Salzburg on August 10, 1945, and although an equivalent to USFET as a command, it depended upon USFET headquarters in Frankfurt for supply and administration. The United States Allied Council for Austria (USACA)--comprised of the commanding officers from each occupied zone--mirrored the United States Group Control Council (USGCC) in Germany.

The U.S. Army and the Discovery of Assets

As Germany's eventual defeat appeared imminent, German officials sought to protect assets from destruction or seizure by enemy armies. Allied ground and air attacks increased steadily, and those in charge of national treasures--including plunder--began hurried attempts to move valuables and hoards of loot to safety, shipping most of them to isolated areas in southern Germany and western Austria. Because American armies advanced into precisely these areas in early 1945, American soldiers uncovered many of these caches of valuables.

Initially, the task of safeguarding, cataloging, and restituting looted assets fell to specialized units of the U.S. Army. G-5 personnel and more specialized detachments assumed responsibility to protect these assets from combat damage and the elements, and also to prevent theft and destruction by American soldiers, DPs, and German civilians.96 In April 1945, military authorities established the Foreign Exchange Depository (FED) in Frankfurt as a site for holding gold and financial assets. Throughout the spring of 1945, SHAEF established collecting points in Germany and Austria within the U.S. Zones to serve as depots for other assets.

G-5 detachments shouldered awesome military, civil, and humanitarian responsibilities with little time in which to carry them out. Safeguarding assets constituted only one of the many responsibilities facing G-5 personnel, who were also charged with establishing civic order and government. Despite the fact that many Germans with administrative experience had served as civilian officials under Hitler or had been members of the Nazi Party, G-5 personnel had to rely on them to implement the policies of the Military Government. Frequently combat had destroyed the offices that housed local civilian government, and G-5 detachments confiscated or requisitioned public and private buildings to take their place. They also restored utilities and basic services. G-5 detachments repaired or arranged for the repair of damaged roads and railroad tracks to allow for shipments of military equipment, medical supplies, food, and coal to the armies. They prevented the outbreak of deadly diseases, fed and provided shelter for displaced persons of various backgrounds, dismissed and appointed civilian officials according to strict denazification guidelines, organized German police to help keep order, and removed all obstacles in the way of the war effort. Highly mobile and severely understaffed, G-5 had to meet immediate needs in a chaotic environment.97


Managing Refugees and Displaced Persons

SHAEF used the term "refugee" to designate civilians temporarily homeless within their national borders and "displaced persons" (DPs) civilians outside their native countries. Then, as now, the word "uprooted" incorporated both categories.98 U.S. occupation authorities looked upon the masses of the uprooted in Germany and Austria as almost as much of a potential threat to postwar stability as resurgent Nazis. The number of refugees at war's end presented the U.S. Army with one of its most significant challenges.

The uprooted people not only included those who had been imprisoned in camps and worked as forced laborers for the Reich and German industries, but also liberated prisoners of war (POWs), evacuees, members of the Nazi Party, and many others.99 Ethnic Germans expelled from Eastern Europe and the Baltic region, and those fleeing from the Soviet area of occupation into the western zones, soon added to this mix of victims, non-victims, and perpetrators.

According to General Clay, Allied forces advancing into Germany encountered almost 6.5 million uprooted persons, the vast majority brought into Germany for forced labor.100 Employing a kind of "hurry-up humanitarianism,"101 the U.S. military government repatriated more than four million of these DPs and refugees by the end of July 1945, including at least one million Russians and more than 500,000 French.102 Despite these efforts, nearly 40 percent of the population in Germany in May 1945 qualified as DPs or refugees; by August approximately 25,000 to 30,000 people fleeing Eastern Europe were arriving daily in Berlin, and by the end of the year, nearly one-third of the residents of Bavaria, Lower Saxony, and Schleswig-Holstein were uprooted persons.103 British estimates placed more than seven million refugees and DPs or the three western zones (16 percent of the population) by October 1946. In the 1950 census, the newly created Federal Republic of Germany counted 9.6 million people (around 20 percent) who had arrived during or after the war, many of them political refugees from the east.104

In December 1944, SHAEF had directed military commanders to locate, register, care for, and control non-enemy displaced persons, to move the DPs away from combat areas, to segregate them from enemy or ex-enemy persons, and to provide adequate humanitarian and medical assistance. SHAEF also expected the commanders to cooperate with repatriation officials for the speedy return of DPs to their country of origin.105 During the last months of the war and the first months of peace, allied military forces assumed primary responsibility for the uprooted.

Despite the chaos surrounding them, Allied forces quickly implemented this policy. Thousands of civilians, speaking a variety of languages, required urgent care in bombed-out villages and cities. They were housed in former army posts, suburban dwellings, castles, and even former Nazi concentration camps where soldiers supplied food and clothing, repaired buildings, restored water and electricity, constructed latrines, and provided medical services.106

Although Allied military forces exercised primary responsibility for the DP camps, the United Nations Relief and Rehabilitation Administration (UNRRA) , a civilian entity, aided efforts from 1943 to 1947. Forty-four nations, including the United States, Great Britain, and the Soviet Union, founded UNRRA in 1943 to care for "victims of war in any area under the control of any of the United Nations [the Allies] through the provision of food, fuel, clothing, shelter and other basic necessities, medical and other essential services."107 By the end of June 1945, 322 UNRRA teams helped Allied forces administer the DP camps.108 The United Nations Organization established the International Refugee Organization (IRO, preceded by an initial preparatory commission, the PCIRO) to replace UNRRA. In July 1947, the IRO assumed all UNRRA personnel and equipment, and inherited total responsibility for over 700,000 persons displaced by the war and its aftermath.109 The IRO also superseded the Inter-Governmental Committee on Refugees (IGCR)--a nonmilitary agency that had existed since 1938--in assisting the resettlement of stateless persons and DPs.110 During its five-year existence, the IRO worked to repatriate and resettle approximately one million displaced persons and refugees.111 Although by the early 1950s, Europe's DP camps still contained several hundred thousand people, the IRO disbanded in 1952.112

The American Jewish Joint Distribution Committee (AJDC)--an organization founded in 1914 to embody "whatever American Jewry was willing to do for its fellow Jews overseas"--held immense significance for many Jewish DPs. Between 1946 and 1950 the AJDC spent $280 million to help DPs. Initially, the AJDC provided medical services and helped locate relatives, but eventually the organization supplied food, clothing, and other goods. The AJDC also borrowed over 21,000 Jewish books from military authorities to be distributed by the UNRRA in DP camps. Beyond the material assistance that the AJDC provided, it established a Branch for the Restitution of Jewish Property in March 1947 to cooperate with OMGUS on the implementation of policies regarding the disposition of victims' assets in Germany.113 These several organizations--UNRRA, IGCR, IRO, and AJDC--all dealt with victims and, in some instances, with victims' assets.

The U.S. Army identified DPs by nationality,114 grouping Jews and other victims with their fellow nationals. German Jewish refugees and others displaced from countries allied with Germany during the war--Austria, Bulgaria, Hungary, Italy, and Romania--fell under the designation of "enemy nationals." Jews were often denied the status of United Nations displaced persons, which entailed greater privileges. Allied policy further disadvantaged Jews by not recognizing religion as a factor in determining the level of care needed by the uprooted.115 As a result, Jewish DPs, including former camp inmates, were often placed in difficult situations, forced to live in camps with refugees from the Baltic states, Poland and elsewhere. Many of the other DPs had espoused anti-Semitic views and, in some cases, had even collaborated with the Nazis.116

Between May and November 1945, the U.S. Army repatriated more than 2.3 million displaced persons from the areas that it controlled, leaving about 475,000 still in its zone.117 In January 1946, the U.S. Zone officially contained 36,000 Jewish DPs; by October the number had climbed to 141,000, the increas attributed to an influx of refugees called "infiltrees" from Soviet-occupied Europe.118 As late as May 1948, more than 124,000 Jews sought refuge in the U.S. Zone.119

The U.S. Military Government's initial failure to acknowledge the unique situation of Jewish survivors meant that military personnel responsible for caring for the displaced population were often unapprised of their special needs and problems. Anti-Semitism in the armed forces sometimes manifested itself in hostility toward and mistreatment of Jewish DPs.120 Reports of deplorable conditions for Jews and other concentration camp survivors in the DP camps motivated President Harry Truman to ask Earl G. Harrison, Dean of the University of Pennsylvania Law School and former Commissioner on Immigration and Naturalization under President Roosevelt, to visit DP centers and to file a report. After an intensive inspection of several camps during the summer of 1945, Harrison informed the President in early August that, indeed, surviving Nazi persecutees suffered under U.S. supervision, and remained confined to areas surrounded by barbed wire and armed guards, often in former concentration camps. In summary, Harrison reported, "As matters now stand, we appear to be treating the Jews as the Nazis treated them except that we do not exterminate them."121 As a consequence of the Harrison report, the U.S. military provided separate DP camps and increased rations for Jews, and the War Department appointed an advisor to the military governor on Jewish affairs, a position that endured to the end of 1949.122

Jewish repatriates also confronted anti-Semitic attitudes and policies in their native lands. In August and September 1945, the New York Times reported that initial efforts undertaken by Jews to recover looted possessions from local government officials in Slovakia and Austria, and also in Germany, remained fruitless.123 Worse yet, Jews sometimes became the targets of overt discrimination and physical assaults. On December 10, 1945, the New York Times described how in Poland "Jews are receiving threatening letters warning them to get out."124 In July 1946, 42 Jews were killed in Kielce, spurring Jewish migration from Poland shortly afterwards.125 Even with the end of the Nazi regime, Jewish refugees, DPs, and repatriates continued to suffer from discrimination and violence.


Policy Versus Implementation

The measures U.S. occupying forces took to establish and maintain control of Germany in 1945 stemmed from a wide array of individual and institutional perspectives. President Roosevelt, President Truman, the State Department, War Department, and Treasury Department all held conflicting views on how best to administer defeated Germany, leading one scholar to interpret the actions of those years as "improvising stability and change."126

In the summer of 1944, the White House had yet to formulate specific policy guidelines on postwar Germany. In their absence, SHAEF developed its own set of directives as American troops prepared to invade and occupy Germany. The resulting "Handbook for MG [Military Government] in Germany" provided orders for denazification and demilitarization, but failed to satisfy those American officials who sought thorough punishment of Germany.127 Chief among those criticizing the "Handbook" was Treasury Secretary Henry Morgenthau who advocated a much harsher proposal that envisioned the deindustrialization and "pastoralization" of Germany. The "Morgenthau Plan," as the proposal came to be known, briefly won Roosevelt's approval in autumn 1944. "We have to be tough with Germany," Roosevelt said, but other Cabinet officials, such as Secretary of War Henry Stimson and Secretary of State Cordell Hull, found the Morgenthau Plan vindictive and brutal, and Stimson argued to Roosevelt that it was a "crime against civilization itself."128 Roosevelt moved away from the Morgenthau Plan, but the spirit of being "tough with Germany" nevertheless influenced a later short-term directive concerning occupation issued in 1945 by the Joint Chiefs of Staff (JCS).

JCS 1067, as the directive was known, instructed occupiers to control the German economy "only to the extent necessary to meet the needs of the occupation forces or to produce the goods which would prevent disease and unrest, which might endanger the occupying forces."129 Occupation officials were to demilitarize Germany, dissolve the Nazi Party, monitor the press and the educational system, decentralize the German government, assist with reparations, and try war criminals. In the retrospective opinion of General Clay, Commander of the Military Government in Germany (OMGUS) between 1945 and 1949, JCS 1067 "specifically prohibited us from taking any steps to rehabilitate or maintain the German economy except to maximize agricultural production."130 However, SHAEF could not officially implement JCS 1067 without British agreement, and that was not immediately forthcoming.131 Moreover, eight different versions of this directive appeared between the early draft in September 1944 and April 1945 when it was issued to Eisenhower.132 At the Potsdam Conference in the early summer of 1945, the Allies modified the stringent economic conditions set forth in it. The Americans, and General Clay in particular, began to worry about how much material they would need to furnish, at the expense of the American taxpayer, to prevent widespread starvation and the total collapse of the German economy.

At both the Yalta and Potsdam conferences the three Allies--the United States, Great Britain, and the Soviet Union--agreed that Germany should retain enough of its productive capacity to rebuild a viable peacetime economy and to pay reparations. To address the latter, the Allies began an inventory of industrial plants with an eye not only to their closure if they had produced war material, but also to their use as partial reparations payments once the plants had been dismantled and moved out of Germany. Initially the United States and Great Britain considered expropriating 1,500 to 2,000 industrial plants, but by the end of 1947, only 682 plants (mostly in the British Zone) were still under consideration as "surplus and available for reparations." Only 40 factories had been dismantled and removed by that time from either the American or British zones. France pursued its own policy. Cold War tensions with the Soviets were rising as well, partly because Soviet leaders were unwilling to treat Germany as a single economic unit despite the Allied agreement at Potsdam to do so, and partly over the the Soviet actions regarding reparations. The State Department realized that by 1948 the Soviets had removed and shipped to the east an unknown amount of capital equipment from their zone, lowering Germany's productive capacity.134

As early as 1946, it became evident that the postwar British and American goal of rebuilding the German economy was at odds with shutting down and removing industrial facilities and at odds with Soviet and French policies regarding the economic treatment of Germany. General Clay's cessation of dismantling industrial plants as part of reparations' transfers to other zones illustrates this clearly.135 U.S. Secretary of State James Byrnes emphasized the position of the United States at a July 1946 meeting of the Council of Foreign Ministers. Either the four powers had to treat Germany as an economic whole or the United States would have to merge its zone with that of any other power to accomplish rationalization and economies of operation. Only the British accepted, and on January 1, 1947, the British and American zones merged to form the new administrative unit known as Bizonia.

The creation of Bizonia underscored crystallization of a new approach by the United States toward Germany. Secretary Byrnes outlined the new thinking in a speech in Stuttgart in September 1946, in which he asserted that the policy of distrust and nonfraternization of the early months of the occupation had now given way to an attitude of friendship. He urged that levels of German production be raised immediately if the four powers intended to continue to take reparations from current German production. Finally, he suggested that the governing powers in Germany had to introduce an all-German currency reform as an essential step to the restructuring of the German economy.136 A year later, in August 1947, the State and War Departments issued a joint communiqué re-emphasizing the policy: "The old plan provided for very sharp cuts in production capacities...from which the bulk of reparations were to be obtained. It is impossible to provide a self-sustaining economy in the bizonal [U.S. and British] area without materially increasing the levels in these industries."137

About the same time, the British and Americans began discussions with French representatives for the creation of a trizonal government.138 By the spring of 1948, these discussions had merged with discussions leading to currency reform for Germany in June 1948 and to the re-establishment of an autonomous German government, albeit with certain powers still reserved for the three occupying powers.139

The increasing political difficulties of cooperating with the Soviets in the various four-power decision-making bodies governing Germany concealed a fundamental dilemma between the desire to limit Germany's capacity to produce industrial goods--production capacity that might be converted to wartime uses--and the desire to rebuild the German economy within Europe, a goal that grew out of memories of the tangled politics, economics, and psychology that surrounded the failed economic reconstruction of Europe after World War I. By 1948, the western powers had resolved the dilemma in favor of rebuilding Germany. Ultimately, the countercurrents that characterized American policy towards Germany between 1944 and 1947 accorded U.S. military leaders great flexibility to interpret, improvise, and implement according to their own perceptions of the day-to-day situation that they faced.


Control of Victims' Assets In The United States

The invasion and occupation of Germany and Austria did not represent the first American opportunity to take control of Nazi assets. Even before the United States entered the war in Europe, it had sought to deny certain assets potentially available to support the Axis war effort.


The United States Treasury Department and Frozen Assets

Beginning on April 10, 1940, the United States took steps to protect assets in the United States belonging to friendly aliens and to prevent their use by the Axis powers. The blocking or "freezing" of property meant that its title remained with the private owner, but U.S. authorities controlled transfers and other dealings affecting the property. By June 1941, the U.S. government had "frozen" the assets of twelve invaded European countries and their citizens. On March 11, 1942, President Roosevelt established the Office of Alien Property Custodian, which was empowered to "direct, manage, supervise, control or vest alien property." When a property was "vested" the United States assumed its title. The Custodian also had authority to seize and profit from business enterprises, patents, trademarks, and copyrights.140


The Bureau of Customs, Import Prohibitions, and the Post Office

The U.S. Bureau of Customs and the Post Office also acted as mechanisms to detect foreign and enemy assets nationwide. In cooperation with the Treasury Department they monitored the import and export of securities, currency, and foreign exchange and delivered seized securities and currency to the Federal Reserve Bank.141 The Customs Bureau also cooperated with Foreign Funds Control (FFC) and the State Department to oversee the importation of gold, diamonds, postage stamps, and artwork.142 The FBI also played a role. In one case in September 1945, the State Department asked the FBI to determine whether artworks that Customs had recently seized in New York City had been looted.143

In compliance with the Tariff Act of 1930, the U.S. Bureau of Customs regulated the importation of all works of art into the United States. Although artwork could be brought in duty free, the importer had to declare the objects and their true value at the time of entry or risk their forfeiture. During the war Customs tightened its controls. A Treasury Department decision on July 8, 1944, gave
Customs the power to detain any artworks entering the United States and required importers to obtain an import license and file a report on the nature of the work and the circumstances of its acquisition.

Customs regulations authorized the U.S. Post Office to investigate all foreign mail parcels. U.S. personnel stationed abroad could send (with a required declaration) gift parcels valued at no more than $50. The Post Office could inspect any parcel lacking a proper declaration or appearing to surpass the value limit.144 The Bureau of Customs and the Post Office had mechanisms in place to intercept illegal transfers, including those parcels sent by U.S. personnel overseas.


The Cold War and The Jewish State

The beginnings of the Cold War and the formation of a Jewish state in Palestine affected how the United States handled victims' assets. Between 1945 and 1948, the Grand Alliance between the United States and the Soviet Union fell apart. On March 5, 1946, former British Prime Minister Winston Churchill spoke of an "iron curtain" descending across Europe from the Baltic to the Adriatic. The American journalist Walter Lippmann later characterized this developing struggle between the United States and the Soviet Union as a "Cold War."

The United States only gradually assumed a leadership role in this evolving conflict. Even though the American public hoped for a prompt demobilization of its armed forces and a return to a normal, peacetime existence, the U.S. government remained engaged in European and regional affairs. In March 1947, to counter Soviet threats and communist insurrections in Europe, President Truman sent a message to Congress pledging U.S. support "for free peoples who are resisting attempted subjugation by armed minorities or outside pressures."145 Truman expressed his willingness to extend assistance to similarly threatened nations marking a change of course from the earlier isolationist stance taken by the United States.

The European Recovery Program (ERP), outlined by Secretary of State George C. Marshall in 1947, marked another step in the American path to world leadership. The "Marshall Plan" offered American economic aid to all European countries willing to cooperate in the economic reconstruction of Europe as a whole. The proposal represented an invitation to Western European nations to create a new alignment based on shared economic principles.

In 1947 and 1948, Communist parties, with Soviet support, seized government control in Poland, Hungary, and Czechoslovakia. In March 1948, President Truman urged Congress to reinstate peacetime conscription for military service, affirming American participation with Western European states in a common military defense. These steps confirmed a new direction in American foreign policy--resistance to and "containment" of Soviet power in Europe and around the globe.

These newly formed ties between the United States and Western Europe were tested in June 1948 in Berlin. Although the city remained an island in the Soviet occupation zone, each of the four powers occupied a sector of the city and
established military government there. As postwar tensions increased among the occupying powers over Germany's future the Soviet Union seized the opportunity to test western resolve by blocking land access to Berlin from the three western zones of Germany. Short of confronting the Red Army, the West could only gain access to Berlin through established air "corridors." Nonstop flights to Berlin from western occupation zones delivered foodstuffs and other necessities, keeping the people of Berlin alive. The "Berlin Airlift" of 1948 showed the Western determination to prevail, and led the Soviets to eventually rescind their land blockade.

In devising pragmatic solutions to address immediate problems, U.S. officials remained committed to revitalizing Europe and avoiding an armed conflict with the Soviet Union. A deepening mistrust of communism and the Soviet Union enveloped leadership circles in American society, government, and business and prompted policymakers to deny the Soviets any advantage. The Cold War shaped attitudes in the United States, and, at times, interfered with the restoration of looted assets to individuals whose property--if returned to the country of origin--might once again be subject to expropriation.

Before World War II, underdeveloped and strife-torn Palestine was not a magnet for the majority of European Jews fleeing Hitler's Germany. Though British opposition to a Jewish influx further discouraged potential immigrants, Jewish leaders decided by early 1944 that any mass postwar migration would have to be to Palestine, with or without British approval.146 The war did not change British visa policies, but restrictions on emigration from DP camps to the United States (and to a lesser degree to Canada, Australia, and Brazil) persuaded many uprooted Jews to decide in favor of Palestine.147

After the creation of the State of Israel in 1948, U.S. policy to turn over heirless assets to Jewish organizations played a role in building the new state. It facilitated the rapid resettlement of hundreds of thousands of refugees. Between 1947 and 1953, the American Jewish Joint Distribution Committee (AJDC) and the Jewish Agency for Palestine (JA) received over $10 million to resettle 120,000 DPs in Israel.148 Had these funds not been available, the activities by the AJDC, JA, and other organizations supporting the resettlement of DPs would have been made considerably more difficult, if not impossible.



As soon as it gained power in 1933, the Nazi Party began to turn into laws and policies the racial ideology Adolf Hitler proposed in Mein Kampf. Implementing "the natural law" based on the "supremacy" of the Aryan master race and the "inferiority" of other races that must be wiped out, the Reich's policies on Jews escalated from forced emigration to "Aryanization" of business enterprises to the "Final Solution" of genocide. But whether uprooting or exterminating entire categories of people, Nazi officials also took great care in first stripping them of whatever they owned.

By 1945, few Americans questioned why the United States had been at war with Nazi Germany. The extent of the Nazis' unimaginable atrocities became known when soldiers and civilians touring the camps reported back home. In the 1930s, however, Americans had been preoccupied with domestic issues, most notably the economic hardships of the Great Depression. Throughout the 1930s Americans resisted political involvement in European affairs. Isolationist policies prevailed until a concurrence of foreign events and the perseverance of an astute American president moved the government to assist European nations as they fell prey to German military might. Despite its awareness of the Nazi campaign of terror on the European continent, it was a surprise attack by Japan that moved the United States from neutrality to war.

In the aftermath of the war, U.S. officials took steps to bring order to a devastated European society and economy. In Germany and Austria, occupying forces repaired roads, railways, waterways, housing, and other infrastructure while providing care for the millions of refugees and victims of Nazism. The United States came into possession of victims' assets in a variety of ways, partly through Treasury Department action to freeze foreign assets, in part through discovery and seizure by invading troops. The question of how to return valuables to their rightful owners had to vie for the attention of occupation officials and policy planners in Washington with the problems of providing food, shelter, medicine, and other necessities to Nazi victims and other displaced persons in the former Reich.

During the war, officials in Washington addressed the subject of property looted by the Nazis as one among the many problems spawned by the conflict. After achieving victory in Europe, they confronted the complicated and challenging tasks of occupation and restitution. The President and the Departments of War, State, and Treasury struggled to formulate the policies guiding military and civilian government of Germany--including a policy for the restitution of victims' assets--without the advantage of either precedents in international law or even clear understanding of the situation of victims.

Lacking clear guidelines from Washington, the U.S. Army issued its own directives to manage the occupation in Germany and Austria. The Army took the lead to create order out of chaos, to care for those persecuted by the Nazis, and to return stolen property. Only later did other governmental and international agencies follow the Army's lead as custodians of victims' assets in Europe.

The Nazi campaign against Jews and other "non-Aryans" began with discriminatory legislation in 1933 and ended with the regime's collapse in 1945. The extensive material damage and enormous human suffering caused by the war made the occupation, the reconstruction of civil society, and the re-creation of a viable international order, a seemingly impossible program for the victors.


Endnotes for Chapter 2

1 Robert H. Abzug, Inside the Vicious Heart: Americans and the Liberation of Nazi Concentration Camps (New York: Oxford Univ. Press, 1985), 27, 30; Gerhard L. Weinberg, A World At Arms: A Global History of World War II (New York: Cambridge Univ. Press, 1994), 834.

2 Michael Berenbaum, ed., Witness to the Holocaust (New York: Harper Collins, 1997), 308-10.

3 Dwight D. Eisenhower, Crusade in Europe (Garden City, NY: Doubleday, 1948), 408 - 9.

4 Leon Baradet, Political Ideologies, 5th ed. (Englewood Cliffs, NJ: Prentice Hall, 1994), 246.

5 Lucy S. Dawidowicz, The War Against the Jews, 1933 - 1945 (New York: Holt, Rinehart & Winston, 1975), 90 - 91; Alan Bullock, Hitler: A Study in Tyranny (New York: Harper, 1964), 399.

6 See Michael Berenbaum, ed., A Mosaic of Victims: Non-Jews Persecuted and Murdered by the Nazis (New York: New York Univ. Press, 1990); Guenter Lewy, The Nazi Persecution of the Gypsies (New York: Oxford Univ. Press, 2000).

7 Bullock, Hitler, 365, 407.

8 Avraham Barkai, From Boycott to Annihilation: The Economic Struggle of German Jews, 1933 - 1943, trans. William Templer (Hanover, N.H.: Univ. Press of New England, 1989), 56 - 57; Richard Breitman, Official Secrets: What the Nazis Planned, What the British and Americans Knew (New York: Hill & Wang, 1998), 20 - 21.

9 Uwe Adam, Judenpolitik im Dritten Reich (Düsseldorf: Droste Verlag, 1972), 310; Raul Hilberg, The Destruction of the European Jews (New York: Holmes & Meier, 1985), 27 - 28; Raul Hilberg, Perpetrators, Victims, Bystanders: The Jewish Catastrophe 1933 - 1945 (New York: Harper Collins, 1992), 12 - 13.

10 Helen Junz, "How the Economics of the Holocaust Add" (Appendix S), in Report of the Independent Committee of Eminent Persons (Volcker Commission, 1999), A-171. See Hilberg, Destruction of the European Jews, Ch. 2 & Ch. 3.

11 Edwin Black, The Transfer Agreement: The Untold Story of the Secret Agreement Between the Third Reich and Jewish Palestine (New York: Macmillan Publishing Co., 1984), 231 - 32, 249, 256 - 59, 268, 379. Another 40,000 Jews emigrated through indirect aspects of the transfer agreement.

12 Christopher Kopper, Zwischen Marktwirtschaft und Dirigismus. Bankenpolitik im "Dritten Reich" 1933 - 1939 (Bonn: Bouvier Verlag, 1995), 266 - 67; Junz, "Economics of the Holocaust," A-201; Barkai, From Boycott to Annihilation, 100.

13 Andreas Rethmeier, "Nürnberger Rassegesetze" und Entrechtung der Juden im Zivilrecht (Frankfurt am Main: Peter Lang Verlag, 1995), 88 - 100.

14 For a description of Nazi racial decrees and attempts to define who was Jewish, see Hilberg, Destruction of the European Jews, 27 - 37.

15 Reichsbürgergesetz vom 15. September 1935; Gesetz zum Schutze des deutschen Blutes und der deutschen Ehre vom 15. September 1935; Gesetz zum Schutze der Erbgesundheit des deutschen Volkes vom 18. Oktober 1935 (Munich: C. H. Beck'sche Verlagsbuchhandlung, 1936), 31 - 37; Dawidowicz, War Against the Jews, 67.

16 Arnold Paucker et al., Die Juden im nationalsozialistischen Deutschland (Tübingen: J. C. B. Mohr, 1986), 105.

17 Michael Burleigh & Wolfgang Wippermann, The Racial State: Germany, 1933 - 1945 (New York: Cambridge Univ. Press, 1991), 49; Guenter Lewy, "The Travail of the Gypsies" The National Interest (Fall 1999): 82.

18 Karl Schleunes, The Twisted Road to Auschwitz. Nazi Policy Toward German Jews 1933 - 1939 (Urbana: Univ. of Illinois Press, 1990), 143.

19 Barkai, From Boycott to Annihilation, 70.

20 Ibid., 72 - 77.

21 Paucker et al., Die Juden im nationalsozialistischen Deutschland, 156; Barkai, From Boycott to Annihilation, 111.

22 George Weis, "Report on Jewish Heirless Assets in Austria," Dec. 4, 1952, 9 - 11, NACP, RG 59, Recs. of the Officer in Charge of Italian & Austrian Affairs, Lot File 58D223, Entry 1284, Box 8, File 586 [319306-317; 319342 - 343]. In 1939 the agency established to record Jewish wealth in Austria reported a total of RM 2.04 billion. The Weis report adjusts this figure to RM 2.5 billion for several reasons, including probable undervaluation of assets reported by Jews and the Austrian agency's use of only about 48,000 of an estimated 62,000 reports eventually filed. The Reichsmark figure equates to either $750 million, converted from marks to Austrian schillings to dollars, or just over $1 billion, converted from marks to dollars ($8.8 billion or $11.8 billion in 1999 values).

23 Lynn Nicholas, The Rape of Europa. The Fate of Europe's Treasures in the Third Reich and the Second World War (New York: Alfred A. Knopf, 1994), 38 - 44.

24 Cited in Robert Wistrich, Austrians and Jews in the 20th Century (New York: St. Martin's Press, 1992), 208.

25 George Weis, "Report on Jewish Heirless Assets in Austria," Dec. 4, 1952, 4, 9 - 10, NACP, RG 59, Recs. of the Officer in Charge of Italian & Austrian Affairs, Lot File 58D223, Entry 1284, Box 8, File 586 [319310-316 of 319306-317].

26 Barkai, From Boycott to Annihilation, 118.

27 Junz, "Economics of the Holocaust," A-166; Barkai, From Boycott to Annihilation, 113.

28 Anthony Read & David Fisher, Kristallnacht: The Nazi Night of Terror (New York: Random House, 1989).

29 Encylopaedia Judaica, vol. 12 (Jerusalem: Keter Publishing House, 1972), 1279.

30 Martin Gilbert, Atlas of the Holocaust (New York: William Morrow & Co., Inc., 1993), 28.

31 Adam, Judenpolitik im Dritten Reich, 310; Hilberg, Destruction of the European Jews, 168 - 69. See especially Hilberg, Perpetrators, 75 - 86; the quoted phrases are on pages 76 - 78.

32 Jonathan Petropoulos, Art and Politics in the Third Reich (Chapel Hill: Univ. of North Carolina Press, 1996), 129, 141.

33 Ibid., 126 - 50; Nicholas, Rape of Europa, 44 - 49, 64, 98, 137 - 140. The Dienststelle (agency) Mühlmann was named after Kajetan Mühlmann, a party functionary and assistant to the Reichskommissar for the Netherlands, Arthur Seyss-Inquart; and the ERR after Alfred Rosenberg, the party's ideologue. See Tuviah Friedmann, Das Vermögen der ermordeten Juden Europas (Haifa: Institute of Documentation, 1997); Wolfgang Dressen, Betrifft: "Aktion 3"--Deutsche verwerten jüdische Nachbarn (Berlin: Aufbau-Verlag, 1998), 45 - 61. This particular aspect of the ERR's activities was known as the Möbel-Aktion, literally "furniture operation."

34 Hilberg, Destruction of the European Jews, 160 - 162; Hilberg, Perpetrators, 15, 196 - 97.

35 Barkai, From Boycott to Annihilation, 175; Hilberg, Destruction of the European Jews, 74 - 84.

36 Breitman, Official Secrets, 72; Hannah Arendt, Eichmann in Jerusalem (New York: Penguin, 1982), 93 - 95.

37 Petropoulos, Art and Politics, 145 - 150. The Sonderkommando (special command), as it was informally known, was named after its leader, Foreign Minister Joachim von Ribbentrop.

38 Hilberg, Destruction of the European Jews, 99 - 103, 125.

39 Falk Pingel, Häftlinge unter SS-Herrschaft (Hamburg: Hoffman und Campe, 1978), 119 - 22; Dawidowicz, War Against the Jews, 123 - 25; Richard Breitman, The Architect of Genocide: Himmler and the Final Solution (Hanover, N.H.: Univ. Press of New England, 1991), 149 - 50.

40 Christopher R. Browning, Ordinary Men: Reserve Police Battalion 101 and the Final Solution in Poland (New York: HarperCollins, 1992), 9 - 25, 109, 134.

41 The quotations from the protocol appear in Dawidowicz, War Against the Jews, 106. For the Wannsee Conference see Christopher Browning, Nazi Policy, Jewish Workers, German Killers (Cambridge: Cambridge Univ. Press, 2000), 26 - 57, and Hilberg, Destruction of the European Jews, 165 - 68.

42 Hilberg, Destruction of the European Jews, 228 - 30; Gudrun Schwartz, Die nationalsozialistischen Lager (Frankfurt am Main: Campus, 1990), 210 - 16.

43 Adam, Judenpolitik im Dritten Reich, 310.

44 Hilberg, Destruction of the European Jews, 225 - 228, 239 - 240; Schwartz, Die nationalsozialistischen Lager, 212 - 16.

45 Friedmann, Das Vermögen der ermordeten Juden Europas, 9 - 13.

46 Hilberg, Destruction of the European Jews, 249.

47 Col. Bernard Bernstein, "SS Loot and the Reichsbank," Oct. 30, 1945, Part B-I 1 - 2, Part B-II 1 - 4, NACP, RG 260, Office of the Adj. Gen., Gen. Corresp. & Other Recs. "Decimal File," Box 8, File 004.2 [216036-046]; Monthly Rpt., Part III "Further Evidence on Disposition of SS Loot by Reichsbank," May 1945, NACP, RG 260, FED, Central Files 1945 - 50, Box 423, File 940.304 [220381-386]. U.S. officials in 1945 equated the 23.9 million "gold RM" accruing from the 44 shipments to $9.56 million. See also Memo from Keating, OMGUS, to AGWAR for WDSCA, no date [ca. July 1947], NACP, RG 260, Recs. of the Office of Finance Adv., FED, Box 160, Currencies Rest. [329606-608].

48 Bernd Klewitz, Die Arbeitssklaven der Dynamit Nobel (Schalksmühle: Verlag Engelbrecht, 1986), 432 - 34.

49 Thomas Guinsburg, The Pursuit of Isolationism in the United States Senate from Versailles to Pearl Harbor (New York: Garland Publishing, 1982), 135.

50 On nativistic nationalism and its relationship to anti-Semitism see David S. Wyman, Paper Walls: America and the Refugee Crisis, 1938 - 1941 (New York: Pantheon Books, 1968, 1985), 10 - 14, 82 - 92.

51 David S. Wyman, The Abandonment of the Jews: America and the Holocaust, 1941 - 1945 (New York: Pantheon Books, 1984), x, 14 - 15. See also Deborah E. Lipstadt, Beyond Belief: The American Press and the Coming of the Holocaust, 1933 - 1945 (New York: The Free Press, 1986).

52 Manfred Jonas, Isolationism in America 1935 - 1941 (Ithaca: Cornell Univ. Press, 1966), 26.

53 New York Times, Aug. 15, 1936, reprinted in Paul Holbo, Isolation and Interventionism, 1932 - 1941 (Chicago: Rank McNally & Co., 1967), 17. See also H. Schuyler Foster, Activism Replaces Isolationism: U.S. Public Attitudes 1940 - 1975 (Washington, D.C.: Foxhall Press, 1983).

54 Ronald Powaski, Toward an Entangling Alliance. American Isolationism, Internationalism and Europe, 1901 - 1950 (New York: Greenwood Press, 1991), 58 - 88.

55 New York Times, Aug. 15, 1936, reprinted in Holbo, Isolation and Interventionism, 17.

56 Holbo, Isolation and Interventionism, 51.

57 Warren F. Kimball, The Most Unsordid Act: Lend-Lease 1939 - 1941 (Baltimore: Johns Hopkins Univ. Press, 1969), 77.

58 Powaski, Toward an Entangling Alliance, 95.

59 Ibid., 110.

60 Stephen E. Ambrose, Rise to Globalism. American Foreign Policy Since 1938, 8th rev. ed. (New York: Penguin Books, 1997), 27 - 31.

61 Ibid., 15.

62 Cable from Depts. of State, War and Navy to USFET, Frankfurt, OMGUS Berlin, ACC Vienna, and ACC Budapest, Hungary, June 15, 1946, NACP, RG 338, Entry 11017, Box 53 [124725-726].

63 Cable from OMGUS, Econ Sec., MTOUSA signed Weems to OMGUS Berlin, Econ. Div., no date, NACP, RG 338, Entry 11017, Box 55 [124727-729].

64 Rpt. U.S. Naval Member, ACC, Budapest Hungary, "Danube Shipping, Restitution of Hungarian Vessels," Dec. 20, 1946, NACP, RG 338, Entry 11017, Box 39 [124730-734].

65 Weinberg, World at Arms, 894 - 95. Peter Calvocoressi and Guy Wint, Total War. Causes and Courses of the Second World War (New York: Penguin Books, 1979), 551 - 53, estimate the global death toll at 50 million.

66 Weinberg, World at Arms, 894 - 95. Calvocoressi & Wint, Total War, 551 - 53.

67 For this and subsequent paragraphs describing Europe in 1945 see Walter Laqueur, Europe since Hitler: The Rebirth of Europe (New York: Penguin Books, 1982), 15 - 20. See also Alfred Grosser, Germany in Our Time: A Political History of the Postwar Years (New York: Praeger Publishers, 1971), 35ff.

68 Population figures for Germany come from Oliver J. Frederiksen, The American Military Occupation of Germany 1945 - 1953 (Darmstadt, Ger.: Historical Div., HQ, U.S. Army, Europe, 1953), 12, 50, 119; for Austria from "A History of the United States Allied Commission, Austria," no date [ca. July 1945], para. 100, NACP, RG 260, USACA, Files of the Dir., Entry A/B/C, Box 45 [212935 of 212856-957].

69 Rebecca Boehling, A Question of Priorities: Democratic Reform and Economic Recovery in Postwar Germany (Providence: Berghahn Books, 1996), 80 - 81, 90, 106.

70 Lucius D. Clay, Decision in Germany (Garden City, NY: Doubleday & Co., Inc., 1950), 263.

71 A. J. Ryder, Twentieth-Century Germany: From Bismarck to Brandt (New York: Columbia Univ. Press, 1973), 467.

72 Response of Maj. Gen. Robert J. Fleming to letter from Karl C. Dod, Oct. 18, 1973, Office of Hist., HQ, U.S. Army Corps of Engineers, Research Collections, Mil. Files, XI, Box 3, File 3 [122866-875].

73 Clay, Decision in Germany, 266.

74 Earl F. Ziemke, The U.S. Army in the Occupation of Germany, 1944 - 1946 (Washington, D.C., Center of Mil. History, 1975), 274 - 75.

75 For an extensive discussion of the army's shift from combat to demobilization and redeployment, see Robert P. Grathwol & Donita M. Moorhus, "Building For Peace: U.S. Army Engineers in Europe, 1945 - 1991," (Office of Hist., HQ, U.S. Army Corps of Engineers, 1999), 16 - 33.

76 Ibid., 17; Ziemke, The U.S. Army in the Occupation of Germany, 320, 328 - 29, 334 - 36, 422 - 24.

77 Ziemke, The U.S. Army in the Occupation of Germany, 164.

78 Klaus-Dietmar Henke, Die amerikanische Besetzung Deutschlands (Munich: Oldenbourg, 1996), 240. Frederiksen, The American Military Occupation of Germany, 9.

79 Christoph Weisz, OMGUS-Handbuch. Die amerikanische Militärregierung in Deutschland, 1945 - 1949 (Munich: Oldenbourg, 1994), 11.

80 Ziemke, The U.S. Army in the Occupation of Germany, 56. Although the entity responsible for monuments, fine arts, and archives changed names, organization, and reporting responsibility several times during and after the war, for consistency this report often uses "MFA&A" to refer to any of the iterations of this organization.

81 Frederiksen, The American Military Occupation of Germany 1945 - 1953, 23.

82 Ziemke, The U.S. Army in the Occupation of Germany, 1944 - 1946, 344.

83 Ibid., 13; Earl F. Ziemke, "Improvising Stability and Change in Postwar Germany," in Wolfe, Americans as Proconsuls: United States Military Government in Germany and Japan, 1944 - 1952, (Carbondale: Southern Illinois Univ. Press, 1984), 59.

84 See Harry L. Coles & Albert K. Weinberg, Civil Affairs: Soldiers Become Governors (Washington, D.C.: Office of the Chief of Mil. Hist., Dept. of the Army, 1964).

85 Boehling, Question of Priorities, 18.

86 Cited in Edward N. Peterson, The American Occupation of Germany: Retreat to Victory (Detroit: Wayne State Univ. Press, 1977), 33.

87 Report of the American Commission For the Protection and Salvage of Artistic and Historic Monuments in War Areas, (Washington, DC: Government Printing Office, 1946), 123 - 24.

88 Ziemke, U.S. Army in the Occupation of Germany, 401 - 02, 432. OMGUSZ and OMGUS merged on April 1, 1946.

89 John Gimbel, "Governing the American Zone of Germany," in Wolfe, ed., Americans as Proconsuls, 94.

90 Peterson, The American Occupation of Germany: Retreat to Victory, 93.

91 Frederiksen, The American Military Occupation of Germany, 149, 198; Boehling, Question of Priorities, 46.

92 Thomas Alan Schwartz, America's Germany: John J. McCloy and the Federal Republic of Germany (Cambridge: Harvard Univ. Press, 1991), 177 - 180.

93 Ibid.,176.

94 Kurt Tweraser, "Von der Militärdiktatur 1945 zur milden Bevormundung des 'Bargaining-Systems' der fünfziger Jahre" in Alfred Ableitinger, Siegfried Beer, Eduard Staudinger, eds., Österreich unter alliierter Besatzung 1945 - 1955 (Vienna: Böhlau Verlag, 1998), 302; also see U.S. State Dept. and Senate Committee on Foreign Relations, A Decade of American Foreign Policy: Basic Documents, 1941 - 1949 (Washington, D.C.: Government Printing Office, 1950).

95 The First Year of the Occupation, Occupation Forces in Europe Series, 1945 - 1946, Vol. 1 (Frankfurt: Office of the Chief Hist. EUCOM, 1947), 87 [122880].

96 Ziemke, The U.S. Army in the Occupation of Germany, 199, 250 - 251.

97 Ibid., 402.

98 "A View of the Jewish Problem from the Pentagon and State Department," transcription of memoirs taped by Herbert A. Fierst, 87 - 98. Also interviews with Herbert A. Fierst.

99 Malcolm J. Proudfoot, European Refugees: 1939 - 52 (Evanston: Northwestern Univ. Press, 1956), 115.

100 Clay, Decision in Germany, 231.

101 Carl Friedrich et al., American Experiences in Military Government in World War II (New York: Rinehart & Co., 1948), 180.

102 Harold Zink, American Military Government in Germany (New York: Macmillan, 1947), 107.

103 Horst Pötzsch, Deutsche Geschichte nach 1945 im Spiegel der Karikatur (Munich: Olzog, 1997), 22.

104 Robert Moeller, ed., West Germany under Construction (Ann Arbor: Univ. of Michigan, 1997), 54.

105 Proudfoot, European Refugees, 147 - 48.

106 Ibid., 171.

107 From Article I of the UNRRA constitution, cited in George Woodbridge, UNRRA: The History of the United Nations Relief and Rehabilitation Agency (New York: Columbia Univ. Press, 1950), 4. The term "United Nations" used repeatedly in this report and in wartime documents refers to the 26 nations (including the United States, Great Britain, the Soviet Union, China, and most Latin American countries) that pledged in the "Declaration of the United Nations," published on Jan. 1, 1942, to fight "to defend life, liberty, independence, and religious freedom and to preserve human rights and justice in their own lands as well as in other lands, and that they are now engaged in a common struggle against savage and brutal forces seeking to subjugate the world." These "United Nations" are to be distinguished from the United Nations Organization founded in San Francisco in 1945. See Carroll Quigley, The World Since 1939: A History (New York: Macmillan Co., 1968), 95 - 96.

108 The military set up camps and brought in supplies, while the UNRRA provided administrators with various specialties. See Mark Wyman, DPs: Europe's Displaced Persons, 1945 - 1951 (Ithaca: Cornell Univ. Press, 1989), 46.

109 Proudfoot, European Refugees, 407.

110 Frederiksen, The American Military Occupation of Germany, 78-79.

111 Memo to America: Final Report of the United States Displaced Persons Commission (Washington, DC: Government Printing Office, 1952); Rene Ristelhueber, "The International Refugee Organization," International Conciliation 470 (April 1951): 222. Resettlement meant relocation of DPs in areas other than their native land.

112 Ristelhueber, "International Refugee Organization," 436.

113 Yehuda Bauer, Out of the Ashes (Oxford: Pergamon Press, 1989), 120 - 24, 203, 213 - 14, 256, 273; Memo from Lester K. Born to Col. J. H. Allen, "Loan of Jewish Books from Offenbach Archival Depot," Feb. 27, 1947, NACP, RG 260, Prop. Div., Box 722 [120262-268].

114 Leonard Dinnerstein, "The U.S. Army and the Jews: Policies Toward The Displaced Persons After World War II," in Michael R. Marrus, ed., The End of the Holocaust, vol. 9 of The Nazi Holocaust: Historical Articles on the Destruction of European Jews (London: Meckler, 1989), 513 - 515.

115 Dinnerstein, "U.S. Army and the Jews," 513 - 515; Abzug, Inside the Vicious Heart, 151.

116 Abzug, Inside the Vicious Heart, 151.

117 Frederiksen, The American Military Occupation of Germany, 75.

118 Angelika Königseder & Juliane Wetzel, Lebensmut im Wartesaal. Die jüdischen DPs (Displaced Persons) im Nachkriegsdeutschland (Frankfurt am Main: Fischer, 1994), 47, and Frederiksen, The American Military Occupation of Germany, 77.

119 Frederiksen, The American Military Occupation of Germany, 80.

120 Wyman, Abandonment of the Jews, 13 - 14.

121 Report of Earl G. Harrison to President Harry Truman, Aug. 1945, reprinted in Leonard Dinnerstein, America and the Survivors of the Holocaust (New York: Columbia Univ. Press, 1982), 300 - 301; Bertram Hulen, "President Orders Eisenhower to End New Abuse of Jews," New York Times, Sept. 30, 1945, reprinted in Robert Hilliard, Surviving the Americans: The Continued Struggle of the Jews After Liberation (New York: Seven Stories Press, 1997), 214 - 216.

122 Ziemke, U.S. Army in the Occupation of Germany, 417; Frederiksen, The American Military Occupation of Germany, 195, 198.

123 "Anti-Semitism Rife in Central Europe," New York Times, Sept. 9, 1945; "Jews in U.S. Zone of Reich Find Conditions Improving," New York Times, Aug. 26, 1945.

124 "Poles are Accused of Anti-Semitism," New York Times, Dec. 10, 1945.

125 See Michael C. Steinlauf, Bondage to the Dead: Poland and the Memory of the Holocaust (Syracuse: Syracuse Univ. Press, 1997).

126 Ziemke, "Improvising Stability and Change in Postwar Germany," 52 - 66.

127 Boehling, Question of Priorities, 27.

128 Cited in Peterson, American Occupation of Germany, 38 - 39.

129 Clay, Decision in Germany, 17.

130 Cited in Clay, Decision in Germany, 18; Ziemke, The U.S. Army in the Occupation of Germany, 104.

131 Ziemke, The U.S. Army in the Occupation of Germany, 58 - 60, 106. See also Boehling, Question of Priorities, 28.

132 Peterson, American Occupation of Germany, 42.

133 U.S. State Department, Germany 1947 - 1949: The Story in Documents (Washington: Government Printing Office, 1950), 413 - 14; Wolfgang Benz, Die Geschichte der Bundesrepublik Deutschland (Frankfurt au Main: Fischer Verlag, 1989), 73 - 74; Conrad Latour & Thilo Vogelsang, Okkupation und Wiederaufbau. Die Tätigkeit der Militärregierung in der amerikanischen Besatzungszone Deutschlands 1944 - 1947 (Stuttgart: Deutsche Verlags-Anstalt, 1973), 159 - 61.

134 U.S. State Department, Germany, 422.

135 Gimbel, The American Occupation of Germany: Politics and Military, 1945 - 1949, (Stanford: Stanford Univ. Press, 1968), 25 - 28 - 56 - 58, and passim.

136 Ibid., 85 - 90.

137 See "Revised Plan for Level of Industry in the Combined U.S.-U.K. Zones of Germany" in U.S. State Department, Germany, 358.

138 Gimbel, The American Occupation of Germany, 195 - 98.

139 Gimbel, The American Occupation of Germany, 198 - 225; Clay, Decision in Germany, 205 - 207.

140 Isadore Alk & Irving Moskovitz, "Removal of United States Controls Over Foreign-Owned Property," Federal Bar Journal 10, no. 1 (Oct. 1948): 4; Frederick Eisner, "Administrative Machinery and Steps for the Lawyer," Law and Contemporary Problems 11, no. 1 (1945): 66; Greg Bradsher, Holocaust-Era Assets: A Finding Aid to Records at the National Archives at College Park, Maryland (Washington, D.C.: NARA, 1999), 1056.

141 "General Information on the Administration, Structure and Functions of Foreign Funds Control, 1940 - 1948," no date [ca. 1948], Ch. 5, 13 - 14, NACP, RG 56, Entry 66A816, Box 47 [331487-488]; U.S. Treas. Dept., Documents Pertaining to Foreign Funds Control (Washington: U.S. Treas. Dept., 1940), 14.

142 Harry M. Durning & Gregory W. O'Keefe, "Directory of War Time Activities within Collection District No. 10, Port of New York," Nov. 1942, 33, Historian's Office, U.S. Customs Svc. [330859].

143 Rpt. of James F. Gardner, FBI, Sept. 12, 1945, FBI Files [349172]. The FBI investigated these paintings and concluded that there was no evidence that they had been in Germany in recent years. Nor was there any evidence of Nazi ownership.

144 Treasury Decision #49755, Art. 371 (C), in Treasury Decisions Under Customs and Other Laws, July 1938 - June 1939 (Washington, DC: Government Printing Office, 1940), 283 - 84.

145 This principle became known as the "Truman Doctrine."

146 Abraham J. Edelheit, "The Holocaust and the Rise of the State of Israel: A Reassessment Reassessed," Jewish Political Studies Review, vol. 12, 97 - 112.

147 Peter Duignan & L.H. Gann, The Rebirth of the West. The Americanization of the Democratic World, 1945 - 1958 (Cambridge: Blackledge, 1992), 314 - 15.

148 "IRO Financial Transactions with Voluntary Agencies," Jan. 13, 1953, American Jewish Joint Distribution Committee Archives AR45/64, File 3840 [124711-720].

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