The German Question

December, 1945

THE preceding final chapter, written in the spring of 1945, dealt with questions of the actual moment and the future, and was thus particularly exposed to the risk of being overtaken by the onrush of events. At that time it was only possible to attempt a cautious forecast of what would happen after Germany’s collapse and her occupation by the victors, and to offer urgent advice to avoid particular errors. That future has quickly become the present. It seemed best, however, to make no change in what had been written, and to leave it to the reader himself as far as possible to note any divergence of subsequent developments from this earlier forecast and the advice based on it.

It is betraying no secret to say that none of the victor Powers has yet been able to give a clear statement of any solution of the German problem, still less to put it into effect. All the Powers, with the exception of the Russians, seem at last to agree that the hastily drawn-up Potsdam decisions are by now in the utmost need of revision, although the plans which the Western Allies seek to put in their place are still vague and unsatisfying. Indeed, it is doubtful whether it is yet possible to speak of actual plans: we seem to be still in the stage of hesitant groping after a new solution. Is it desired to set up a German unitary State on the model of the Weimar Constitution, or a truly federal State; and how is it proposed to create either in face of the fact that the Russian Zone has been pushed so far west as the Werra? Is it proposed to allow Germany to continue as a mainly industrial country, or is it intended to go on weakening German industry by dismantling equipment or carrying it away?

There seemed to be reason to think that the Anglo-Saxon countries were in favour of a restoration of the centralized structure of the Reich, while the French advocated Germany’s conversion into a federal State. There are increasing signs, however, that it is no longer possible to identify either of these solutions with either of these two groups. From the Anglo-Saxon camp come voices urging the necessity for a federative Germany, while the French seem more and more determined on a purely separatist solution for the regions that primarily interest them—thus throwing away a unique opportunity, in their freedom from commitment to the Potsdam decisions and with their superior knowledge of the nature of the German problem, of pointing out the commonsense course to the other Allies and to the Germans.

The commonsense course is that which promises a real escape from the dilemma with which the problem faces us. On the one hand, Germany must be so transformed politically, economically, and mentally that she ceases to be a danger to Europe; on the other hand, this transformation must be so effected that it has the agreement of the majority of the Germans, or that at all events that agreement can be secured without difficulty. Faihng this, the poison of an aggressive German nationahsm will accumulate again. Is there an escape from this dilemma? I have long been firmly convinced that there is. Whichever of the Allied Powers ascertains and advocates this means of escape would easily bring conviction to the other Allies and to the Germans.

The solution of the problem of the political transformation of Germany is to be found neither in the maintenance of the past centralistic, Greater Prussian structure of the Reich, nor in the other extreme of the dismemberment of the German State through separatism or particularism, but in a third process—the constitution of a genuine German confederation. The first extreme—Greater Prussian centralism—would be an abandonment of the radical transformation of Germany which is essential in the interests alike of Germany and of the rest of the world, and today could not even count on the assent of considerable elements of the German people; it can only be worked for by those who, either as nationalists or as collectivist revolutionaries, want to retain Greater Prussia. As the whole of eastern Germany, which, with its capital and its traditions, would retain the leadership in such a unitary State, is now in the hands of a Power that would naturally favour a collectivist revolution, this extreme, as matters now stand, would almost automatically lead to an easternization of western Germany, which certainly neither the Western Allies nor the majority of the Germans want. The other extreme—now pushed into the foreground by the French Government—of a separatist or particularist dismemberment of the Reich, is just as impossible a way out of the dilemma, since it proposes to render Germany harmless through means which cannot expect the assent either of the Germans or of most other countries, if only because of its economic consequences.

That the intermediate solution between these two extremes lies in the constitution of a genuine German confederation, is so obvious that there is no need to demonstrate the fact at length here; what is surprising is that none of the Powers concerned has plainly stated this as the aim of its policy for Germany. It would have to be accomplished step by step, by giving each of the German territorial States an autonomous character, with a clear reference to its historic tradition and an appeal to regional patriotism; the Allies meanwhile jointly administering central affairs until they have definite knowledge that Germany’s political, economic, and mental transformation has been achieved.

The first thing needed for this purpose is that the Prussian provinces west of the Elbe (Hanover, Schleswig-Holstein, Westphalia, Hesse, and the Rhineland) should be given without delay the opportunity of seceding from Prussia and gaining the autonomous character of the States of southern Germany (Bavaria, Württemberg, Baden, and Hesse-Darmstadt). Since this primary and principal step falls within the sphere of responsibility of the Anglo-Saxon Powers, it should also be a means of winning over the French to a common policy for Germany among the Western Allies on the basis of going seriously to work to establish the German federal State, and of thus overcoming the deadlock in the present negotiations between these two groups.

Such a policy would require, it is true, that the Western Allies should either agree on a joint occupation or so dehmit their zones as no longer to cut across historic territorial boundaries. If the latter solution is decided on, it would be necessary for the various zones to be administered on uniform lines by the various Powers and for the unification of the zones to be assured in regard to economic affairs and to communications.

Such is the way out of the dilemma; moreover, by this means, all secure their due. The Anglo-Saxons obtain the degree of German unification which they want for economic and political reasons; the French obtain security, which would be offered far more truly, more permanently, and more harmoniously by this federative transformation of Germany, with the Allies holding all the trumps for an indefinite period, than by a separatist policy, which would threaten the French with growing isolation both from their allies and. from the Germans. And the Germans themselves will have the comforting feeling that it is intended to lead them towards a really constructive solution with which they themselves can only be in full agreement.

The true difficulty in this policy lies, as everyone will agree, not in the Russian occupation of the territories east of the Elbe, which was expected, but in the unexpected extension of the Russian Zone to the Werra, the Harz, and the Fichtel Mountains. Must we put up for the present with this east-west line of demarcation, accept the undeniable fact that it marks off two completely different systems of civilization, and so declare that any joint administration of the two halves of the Reich is a dangerous Utopia? Or shall we aim at that very thing, so as not to cut off every possibility of arriving after all at a modus vivendi with the Russians?

If it is agreed that a common administration of all Germany is possible in the long run only through the predominance of one or the other of the two systems of civilization—and who would deny it?—the question arises whether the West has the better prospect of “westernizing” the East, or the East of “easternizing” the West. Anyone who thinks the former is the likeher will be in favour of a joint administration by the Western Allies and the Russians, and will already have in mind the constitution of a confederation embracing all Germany. But anyone who holds the opposite view will logically come to the conclusion that for the present the only practicable policy is the constitution of a confederation confined to the autonomous West German territories. For the time being, in order to leave the way open for all future possibilities, this confederation should perhaps be given only a provisional, de facto character, dispensing with a formal proclamation; and it should simply provide for a co-ordination of the western territories by the Western Allies, leaving open the question of a later adhesion of the territories east of the demarcation line—Prussia (which might perhaps now be re-christened Brandenburg), Mecklenburg, Thuringia, the province of Saxony with Anhalt, and the territorial State of Saxony.

If, however, we come to this conclusion that as yet a federation is possible only in the regions occupied by the Western Allies, this means that at least in that part of Germany there must be carried out without delay the unification that will make it into a solid economic unit and will end the intolerable existing fragmentation, which is hindering any sort of reconstruction and is, indeed, menacing the very existence of the country. If for the time being the idea of the economic and transport unification of all Germany is abandoned, any further delay in the unification of the regions occupied by the Western Allies is so much the more unpardonable. As for relations with the regions occupied by the Russians, these will have to be confined to providing by means of barter agreements for such economic requirements as are essential, in order to mitigate the partitioning of Germany so far as is possible in face of political facts that are beyond changing. Since the eastern part of Germany is just as keenly interested in this as the western, it should be possible to assume that with a measure of good will there will be no obstacle in the way of such barter agreements.

In the economic field the German dilemma takes the specific form of the need for so weakening the German industrial potential that it will cease to be a danger to the world, while at the same time this must be done in such a way that it will be compatible with the sense of justice of the victors and of the Germans and shall leave Germany viable. As Mr. James W. Riddleberger, Chief of the Division of Central European Affairs, stated on November 25th, 1945, in an address at the University of Kansas, which counts among the clearest and best considered statements of this sort, “The Allied purpose is not to dislocate or to injure European economy, but to strike an even balance between the necessity for making Germany powerless for war while compensating the victims of German aggression, and such restoration of German economy as will assure the satisfaction of legitimate needs by German exports. Germany must neither be a menace nor a burden to her neighbours.” But how can Germany be made “neither a menace nor a burden to her neighbours?”

When the question is put in that way it becomes clear at once that one of the possibilities considered, and unfortunately given prominence up to now, must be dismissed as entirely out of the question—the economic disarmament of Germany by means of purely mechanical—we were tempted to say unintelhgent—destruction of industries. This cannot but provoke German resentment, and if it were really to achieve its end for a period it would have to be carried to the length of literally converting Germany into a hopelessly overpeopled agricultural country; for the borderline between industries of importance for war and other industries is today more undiscoverable than ever. It is obvious that in doing this the interests of the whole Continent would be most seriously injured.

In comparison with this pseudo-solution of the problem, the French proposal to detach the Rhenish-Westphahan industrial region from Germany offers certain advantages, since it would permit the German industries to be left intact, while the economic disarmament of Germany would be secured by bringing the remainder of Germany’s economic system into entire dependence on international trade. Before, however, it could become possible to make this plan seem worth discussing, a guarantee would be needed against this industrial region remaining, in spite of its formal detachment from Germany, an integral part of the German economic system. It is difficult to visuahze such a guarantee, and still more difficult to interpret explanations hitherto offered as providing it. The plan appears to be entirely in acceptable if we recall the considerations here advanced concerning the political conditions on which the solution of the German problem depends. Separatism has to be rejected for political reasons; and there are equally strong reasons for advising against it on economic grounds.

It is, indeed, impossible to separate the political from the economic side of the German problem. A child cannot be deprived for all time of knives and scissors because it may do damage with them; the time has to come when it must be trained in adult habits. Once Germany has been restored by a radical political and intellectual conversion to the state of a normal nation, there will be no need to deprive her permanently of knives and scissors simply because these peaceful instruments are capable of being used as weapons. What is needed is an indirect economic disarmament that will lead farther than the direct process; but this requires all the more radical political and intellectual conversion. Until this has been achieved, under our plan the Allies must hold all the threads in their hands, and during this period they will also be able to take all further measures of security needed for protection against any possible surprise.

But that, quite rightly, will not be considered enough; and in fact there is a very simple method, and a specifically economic one, of achieving the economic disarmament of Germany. We have just seen a tempting aspect of the French plan in the idea that it would drive Germany in the direction of peacefulness by increasing her international economic dependence. This does indeed seem the right path. But why produce that dependence in so mechanical and political a way, one burdened with all the problems of politics? Is there not an organic, specifically economic, and eminently peaceful way of arriving at the same goal, and one, therefore, on which the Anglo-Saxon governments should be able to agree at once with the French?

This way may be found by the application of a principle that in the world of today surpasses every other in boldness and novelty, a principle more revolutionary than all socializations, all economic controls, and all Beveridge Plans put together—the principle of absolute and even, if necessary, one-sided Free Trade. We should urgently recommend in all seriousness—in agreement, incidentally, with Professor F. A. Hayek (The Saturday Review of Literature, June 23rd, 1945)—to impose on Germany virtually nothing more than a single measure of economic compulsion, namely entire freedom of economic intercourse with foreign countries, and to bring this German Free Trade into effect the moment the settlement of the most urgent currency and financial issues permits. It need scarcely be added that for the present this German free trade area could not, for obvious reasons, include the territory occupied by the Russians.

There are a number of other details which ought to be carefully considered. One of these would be the necessity of protecting this free trade Germany against discriminatory import restrictions of a prohibitive nature. To this end we suggest that all countries should grant to Germany unconditional most-favoured-nation treatment, and that a special body of the United Nations should act as an international authority exercising supervision and arbitrating in the event of conflicts of opinion arising.

We are probably safe in assuming that today the majority of people the world over will tremble at the daring of such an idea, since they have been brought up to believe in the economic blessings of Protection and see in Free Trade the road to a country’s inescapable ruin. To these people we need only say that here they have a unique opportunity of testing the truth of their dogma by actual experiment on a nation that has already been the victim of worse experiments and would not dream for a moment of exchanging this organic method of economic disarmament, with its appeal to their energy and their inventive faculties, for the destructive method of industrial dismantling or the political smashing of economic ties. Should the protectionists, however, be right, and should Free Trade severely impair Germany’s economic system, there will be those who find comfort in that consequence because it is just what they want, while other people will have to remind themselves that the result could not have been any worse if the other methods of economic disarmament had been continued.

The minority, however, who do not adhere to the present-day world religion of economic nationalism, will have other expectations. Undoubtedly a territory’s transition to Free Trade in the present-day world of triumphant protectionism will compel the Germans to bring into play exceptional resourcefulness, adaptability, and abstinence; but in comparison with what they have to go through today that will be easy to bear. People who pass their lives in cellars or wander aimlessly along the highroads will be the last to be frightened by the prospect of having to change their occupation or place of work, of having to work with tireless energy, of having to seek the most careful adaptation to the requirements of foreign markets, and of living for a time on short commons, in order to pave the way to economic recovery that is promised by Free Trade and the integration in international commerce which it implies. Once the fetters are removed at home and abroad, they will not make a great song over sacrifices of which they see the sense.

Undoubtedly there will also be some opposition abroad to an experiment in a direction so uncongenial to protectionists, and the objection might grow with the success of the experiment. But there might be a corresponding growth in its attractiveness. And should not such an experiment be particularly attractive to the United States, whose Government is advocating the restoration of freedom of trade in the world market?

This policy of Free Trade will inflict a mortal blow in Germany on the very principle that had always underlain the aggressive German monopoly capitalism, with its overgrown heavy industries, from the time of Bismarck’s tariff of 1879—the principle of protectionism. The heavy industries, with which, of course, economic disarmament has first to concern itself, would automatically, from rational economic considerations, and therefore for the good of Germany and of the world, be reduced to the dimensions which today are being aimed at through pure destruction. West Germany would be brought into entire dependence on international trade, and, in contrast to the impossible Potsdam decisions, would be converted not into a poverty-stricken self-supplying agricultural country but into a region uniting an intensive, highly developed agriculture, dependent on imports of feeding-stuffs, with a highly specialized industry depending on exports. It would become a sort of enlarged Belgium, and with its extreme dependence on foreign trade it would have to abandon any idea of building up an “autarkic” war industry.

This would be the constructive solution of the problem of economic disarmament, instead of the destructive one—a solution by means not of the isolation and impoverishment of Germany but of a prosperity that stands or falls with the interweaving of German industry with international trade. The productivity of West Germany—without which neither the Germans, who without it must starve or depend on international charity, nor the rest of Europe can dispense—would be preserved from further senseless destruction. It would be interesting to observe the results which this revolutionary experiment in Liberalism would have on the collectivist world of the East, and, indeed, on the collectivists of the whole world. It is clear, finally, to everyone farmiliar with the circumstances that the problem of the German cartels, to which the Americans especially attach full importance, would of itself be solved, since cartels presuppose a protectionist system.

Once more let us say that this plan should be able to count on the special sympathy of the Americans, who would secure under it the opportunity of regaining much of the moral terrain which they seem to have lost in the parts of Germany they occupy. But should we not be concerned above all with the consideration that it would be particularly appropriate for a nation that had become so deeply involved in the sin of nationalism to make, with Free Trade, this beginning in the stemming of nationalism? That Germany should thus be given the opportunity of expiating her guilt by setting an example in the uttermost renunciation of nationalism?

END