Cost of Defeat

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U.S. and British intelligence officers had watched the plot develop for months. Under the direction of one-armed Arthur Axmann, once Reichsjugendführer, responsible only to Hitler, former Hitler Youth leaders were grouping themselves in innocent-looking business firms, preserving their organization, biding their time. Then, suddenly, the Allies struck. When a wild night of house raids and gun battles was over, 800 young Nazis were behind bars.

Next day ordinary Germans hardly mentioned the raids. They had greater troubles on their minds. Once they had thought Versailles' 34 billion reparations bill too tough. Now they knew that Potsdam's modest demand for five billions in capital removals would be far tougher. In Berlin the four-power council announced a plan that spelled out the Potsdam Agreement, industry by industry.

The Plan. German steel production was to be reduced from over 20,000,000 tons a year to 5,800,000. German heavy industry was to be cut to approximately one-half of its 1938 level. The manufacture of synthetic gasoline, rubber, ball bearings, radio transmitters, heavy machine tools and many another war-important product was banned altogether. But manufacturers of ceramics, glass and bicycles would be encouraged to surpass prewar records. Germany would not be starved, but it would be reduced to its 1932 standard of life.

Obstacles. The success of the plan, Allied officers admitted, depended on three obvious assumptions: 1) the population of the new Germany would not exceed 65,500,000 (many an expert believed it would go higher), 2) Germany would find foreign markets for its textiles (competition from Britain and the U.S. would be stiff), 3) Germany would remain one economic unit (the French are still opposed).

There was a fourth assumption, less obvious but more important: that the Allies would build up the industries of Germany's neighbors so they might replace the Reich in Europe's economy. Already the British, watching the weakening of their old German customer, were complaining. One day the Germans, now reduced to futile plots, might find more effective ways to complain.

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