The Division of Germany and American Policy On Reparations

Abstract

MOST ACCOUNTS of U.S. diplomacy in the period immediately following World War II emphasize that the Americans lacked any coherently developed and ideologically refined policies. The United States, it is argued, responded to the consistent expansionist aims of the Soviet Union.? This approach, however, neglects to consider that since 1933 the Americans, led by Secretary of State Cordell Hull, had committed themselves with ever increasing assurance to a single set of ideas in formulating foreign policy. Throughout this decadeand-a-half the primary goal of diplomacy was the creation of a world multilateral trade system in which barriers to commerce and payments would be reduced to moderate levels and would be applied by each country without discrimination. Within the system the markets of all nations would be opened to U.S. goods, and American business interests would be free to establish themselves anywhere: underconsumption of U.S.-produced goods at home meant that stability was to be achieved by selling abroad. But these positive economic benefits for the United States were not viewed in isolation. The expansion of trade, at least theoretically, would raise living standards everywhere and bring prosperity to all countries; it would remove the specter of depression which haunted the Americans throughout the thirties and into the wartime period. The new world order would also eliminate those economic frictions which Americans universally believed were the fundamental causes of war. Economic autarchy and bilateral trade agreements would vanish, and with them would go the basic clashes that resulted in global violence. Lastly, international multilateralism would almost ensure the establishment of pacific political democracies, similar to that of the United States, all over the earth. Although these premises, to a great extent economic in orientation, have rarely been examined by historians, an understanding of them is indespensable to grasping the development of American diplomacy in the immediate postwar period. The conflict of the policies generated by this interrelated group of assumptions with the policies of the other allies, particularly the Russians, eventually led to the cold war. In this essay I shall attempt to show how these ideas provide a framework for comprehending the vital but little-understood question of American reparations policy toward Germany and also the Balkans. The reparations issue illuminates the importance of multilateralism to American decision-making and illustrates the dynamic character of the U.S. strategy which dominated the peace and created the basis for a divided Europe.