The British-German Fight over Dismantling The Removal of Industrial Plants as Reparations and its Political Repercussions Trond Ove Tøllefsen Thesis submitted for assessment with a view to obtaining the degree of Doctor of History and Civilization of the European University Institute Florence, 9 June 2016 European University Institute Department of History and Civilization The British-German Fight over Dismantling The Removal of Industrial Plants as Reparations and its Political Repercussions Trond Ove Tøllefsen Thesis submitted for assessment with a view to obtaining the degree of Doctor of History and Civilization of the European University Institute Examining Board Professor Youssef Cassis, EUI (Supervisor) Professor Anne Deighton, Oxford University (External Supervisor) Professor Federico Romero, EUI Professor Gabriele Clemens, Hamburg University © Trond Ove Tøllefsen, 2016 No part of this thesis may be copied, reproduced or transmitted without prior permission of the author. Researcher declaration to accompany the submission of written work Department of History and Civilization - Doctoral Programme I Trond Ove Tøllefsen certify that I am the author of the work The British-German Fight over Dismantling - The Removal of Industrial Plants as Reparations and its Political Repercussions. I have presented for examination for the Ph.D. at the European University Institute. I also certify that this is solely my own original work, other than where I have clearly indicated, in this declaration and in the thesis, that it is the work of others. I warrant that I have obtained all the permissions required for using any material from other copyrighted publications. I certify that this work complies with the Code of Ethics in Academic Research issued by the European University Institute (IUE 332/2/10 (CA 297). The copyright of this work rests with its author. Quotation from it is permitted, provided that full acknowledgement is made. This work may not be reproduced without my prior written consent. This authorisation does not, to the best of my knowledge, infringe the rights of any third party. I declare that this work consists of 155429 words. Statement of language correction: This thesis has been corrected for linguistic and stylistic errors. I certify that I have checked and approved all language corrections, and that these have not affected the content of this work. Signature and date: 13/5/16 i The British-German Fight over Dismantling - The Removal of Industrial Plants as Reparations after the Second World War and Its Political Repercussions Trond Ove Tøllefsen Abstract The programme of dismantling German factories for reparations caused the biggest crisis in the relationship between British and the Germans during the post-Second World War occupation years. By 1949, the peak year for dismantling in the British Zone, the Germans were convinced that the British, alone among the Allies, were pushing for continued dismantling, and that they were doing so for purely commercial reasons. The dismantling campaign has been almost exclusively by economic historian, with the consensus being that its effect was limited. This raises the question of why it turned into such a bitter political conflict. My thesis explores the dismantling programme from this angle. I show that the renewed dismantling programme from 1947 onwards caused rifts inwards in the British occupation apparatus, as the punitive aspects of the dismantling campaign and the strong German reaction against it started threatening what the British saw as their positive mission in Germany, re-educating the Germans. It caused a rift between the Allies, as the US Congress started a massive campaign to end dismantling in connection with the Marshall Aid, and with the French vacillating between ending and continuing dismantling. In Germany itself, the dismantling programme became an issue where the political parties, industry groups and labour unions sought to exploit the groundswell of popular discontent against dismantling for their own, wider political goals, often with a troublesome nationalistic rhetoric. Dismantling as a major political issue ended with the Petersberg agreement in November 1949. By this time the conflict over dismantling had festered for so long that it was relatively easy for the Adenauer government to side-line the British and focus their attentions on rapprochement with France and European economic integration. The most original part of the research focuses on how British debates on whether to proceed or end dismantling, and how British dismantling policies were shaped by other occupation goals focused on a particular British conception of power. The British increasingly saw dismantling as influencing British prestige, meant to compensate for lagging relative power. I define what the British meant by their prestige in this question, its imperial origins and how it failed. i ii Table of Contents ABSTRACT ......................................................................................................................................................... I TABLE OF CONTENTS ....................................................................................................................................... III ACKNOWLEDGEMENTS .................................................................................................................................... V INTRODUCTION ................................................................................................................................................ 1 AIMS AND GOALS .................................................................................................................................................... 3 SCOPE ................................................................................................................................................................... 5 HISTORIOGRAPHY .................................................................................................................................................... 6 CONCEPTUAL FRAMEWORK ...................................................................................................................................... 13 SOURCES ............................................................................................................................................................. 29 STRUCTURE .......................................................................................................................................................... 30 CHAPTER 1: BRITISH WARTIME PLANNING ..................................................................................................... 33 CHANGING VIEWS ON THE GERMAN OTHER ................................................................................................................ 35 THE WARTIME ON THE NATURE OF GERMANY .............................................................................................................. 37 THE LEFT-WING DEBATE ON GERMAN GUILT ................................................................................................................ 41 THE LABOUR PARTY SPLIT ON GERMANY .................................................................................................................... 43 PEOPLE VERSUS ELITES – THE GERMANS AS A MIRROR OF THE BRITISH SELF ....................................................................... 45 EARLY PLANNING ................................................................................................................................................... 47 DALTON AND ECONOMIC SECURITY ............................................................................................................................ 52 THE MALKIN COMMITTEE ....................................................................................................................................... 53 THE TEHRAN CONFERENCE AND A GERMANY DIVIDED ................................................................................................... 62 THE EIPS REPORT .................................................................................................................................................. 70 THE MORGENTHAU PLAN ........................................................................................................................................ 73 CONCLUSION ........................................................................................................................................................ 80 CHAPTER 2: DISMANTLING AND ALLIED DISAGREEMENT, 1944-1947 ............................................................. 83 YALTA AND THE SOVIET DEMAND FOR $20 BILLION ....................................................................................................... 84 FIRST CHARGE PRINCIPLE ........................................................................................................................................ 86 CHURCHILL AND THE DÖNITZ GAMBLE ....................................................................................................................... 88 SHADOWS OF MORGENTHAU ................................................................................................................................... 91 POTSDAM CONFERENCE .......................................................................................................................................... 94 THE FIRST LEVEL OF INDUSTRY PLAN .........................................................................................................................