IN the war's fourth year the United Nations have at long last arrived at the point where they face major tasks of handling territory wrested from the enemy. Russia's winter offensive brought back to her control vast stretches of twice-scorched land. In French North Africa, Tripolitania, Libya, Madagascar, parts of New Guinea and various smaller islands in the South Pacific the problem of controlling and restoring economic life behind the fighting fronts has already been presented. Yet in comparison with what lies ahead for the American and British expeditionary forces these liberated colonial territories were merely fields for experiment. Despite the peculiar difficulties they have presented their economic weight in the world is relatively small.

In the United States and Britain the preparatory work of economic research, planning and training of executive personnel for the administration of foreign economies is rapidly assuming imposing proportions.[i] Doubtless a great deal of similar work is being done in Soviet Russia, though independently of what is going on in the United States, Great Britain and Canada; also, it probably is of a different nature, since presumably it deals essentially with the problems in repossessed Russian territories.

Since the research and planning connected with this intelligence work is under the direction of the office of the joint chiefs of staff, much of it is veiled in secrecy. To protect the war's greatest military secret -- the place and time of the successive invasions that lie ahead -- the assignment given those planning for the occupation of liberated and enemy territories covers the entire European Continent, all the lands overrun by Japan, and Japan proper.

Not even the Germans, masters in meticulous planning, could be better equipped for systematically preparing the concrete details of invasion and occupation than are the Americans. The writer's earlier familiarity with the organization, methods and work of the German economic general staff, and ten years of observation of economic planning and research in the United States, put him in a position to make a comparison and state the foregoing conclusion. But for a variety of different reasons, the occupation problems will be more complex for the United Nations than they have been for the enemy. The reasons are only in part technical. The central ones consist of the moral obligations assumed by the United Nations and the intangible values for which they fight.


When the military government of the United Nations takes control in the major areas concerned the totalitarian Powers will have ruled there for several years. The methods used by the Axis officials, both good and bad, and the degree of success they have achieved, deserve our keen attention. We must not think that because there was brave opposition in many countries the Axis rule was ineffective.

That rule was based first of all on thorough knowledge of economic conditions. For many years the Axis nations surveyed in detail the foreign territory which had been marked for conquest. This economic analysis did not even require espionage. It was done, with the friendly coöperation of the future victims, by a host of travellers, traders, engineers and members of the economic general staff. Along with this thorough planning went the training of personnel for specific assignments. Efficiency of operation was ensured by the complete coördination of activities under a single head and the delegation of a maximum of executive power down the line to the last occupation engineer and clerk. The United Nations can duplicate these fundamentals of success if they devote a similar amount of talent and energy to the job. But it is far more difficult for them to gather the preliminary information, of course, since their economic intelligence must rely on prewar data, air reconnaissance and estimates and conjectures, with some help from exiled nationals.

The enemy has one great administrative advantage. The Nazis and the Japanese know exactly what they want to do: each wants to create and hold a huge economic empire, big enough for complete autarchy and conceived as an independent sphere of power. They rule by force and recognize only one principle, success. Both régimes stripped themselves of all psychological impediments, such as respect for the desires or the lives of conquered peoples, of moral or humanitarian obligations, of respect for any existing political or economic structure. They function with the discipline of an army. Their economic realms are completely centralized. Berlin and Tokyo give orders. Orders are obeyed.

The most fanatical exponent of a perfectly planned economy could not ask for a more ideal administrative set-up than that under which the fortress economies operate. Capital, industrial plants and raw materials are subject to orders that may move them in any direction, employ them any rate, or lay them idle. Manpower, skilled or unskilled, male or female, can be drafted and deported to wherever it may be wanted. Prices for any item can be fixed or juggled at will, openly or by ingenious methods of concealment. Costs within the ordinary margin of business calculation can be disregarded. The profit and income motive is still utilized as the most powerful incentive, but it is sharpened by coercion. The Japanese administrators, or the members of the Wirtschafts-Stäbe of the Nazis, can deny food ration cards to their slaves or their slaves' families. They can separate, deport or imprison them or have them tortured or shot. They can promote or bribe those who obey and collaborate.[ii]

We do not want or intend to organize so fiendish a system. We fight to destroy it. But we should study it carefully for the diverse lessons which it teaches.

We must not discount the enemy's geographical advantage. The Germans, particularly, have made the most of their strategic location in the center of the European Continent. They spread over the surrounding countries like soup bubbling over the rim of a pot; but they spread through the medium of a unified continental railway and trucking system operated from highly efficient strongholds. When the United Nations invade the Continent, the value of that central position will become clear. Unless gigantic air raids make the center untenable, the Germans will gradually abandon one outlying bastion after another, slowly retreating into the inner fortress, bequeathing to the United Nations more scorched earth, ruined cities, depleted railways, and millions of destitute people. As the air attack on their vital centers becomes more harassing, they will strengthen their flak and fighter protection.

To pretend that the Germans do little more than pilfer and strip other nations clean is a dangerous delusion. If they had not done more, they would now be at their wits' end. The reality is, of course, that agriculturally and industrially, in transportation and in trade, they have reorganized and utilized the productive resources of the Continent.


The invasion of Europe and the invasion of Japanese-held territory are both shipping propositions. The vital centers of the economic power of the United Nations lie in the British Isles, in Central Russia and above all in North America. And Russia has been so weakened that she herself requires continuous aid by sea. The shipping situation will become tighter when the battle for the Continent starts, even with the Mediterranean passage swept clean and even if the U-boats can gradually be mastered. If the invasion armies must continue to rely exclusively on transatlantic shipping after they have won the bridgeheads, then the war in Europe might go on for several years.

In other words, the United Nations need the products of the farms and factories of the Continent as badly as the Nazis did when they launched their campaign. The United Nations are not short of raw materials. But their geographical position requires an extreme effort in shipbuilding which competes directly with their production of food and arms. They therefore must seize and utilize resources inside the Continent as soon as possible.

Instead of considering European productive resources in connection with "relief campaigns" we should covet them as an aid to early victory. Even if we were able to ship every ton of food, fuel and ammunition required by the expeditionary armies we should still need the products of Europe's farms and factories to make our occupation a success. Our invading forces will liberate millions of people who are our allies in thought, prayer and hopes. The United Nations have no desire to weld an empire by conquest; but they have already assumed responsibility for the life, health and rehabilitation of these victims of tyranny. The combined resources of the United Nations are hopelessly inadequate to feed and clothe them all. Aside from our obligations under the Hague Convention of 1907 and apart from our plain humanitarian duty, we must rehabilitate the economy of occupied areas for the sake of our own fighting forces. The alternative is widespread unemployment and industrial anarchy behind our lines. An army with chaos at its rear soon becomes demoralized.

If we can prove that we can help the unfortunate people of Europe resurrect their economy we shall win all of them over to our side. The emphasis placed here on this point may surprise those Americans who are convinced that everybody in Europe is frantic to see the United Nations win. It is not safe to take it for granted that because all the people in Europe want to get rid of the Nazi tyranny they will join our side immediately and unconditionally. One heritage of the years of torment in Europe will be a bitter skepticism of every man's motives. Some will ask whether the United States, Great Britain and Russia, with their large-scale economies, do not offer just another type of forced salvation. We must remember that the centripetal forces of Europe are still incredibly powerful.

It is vital that nothing be done by blackjack methods, even if they promise temporary success. The United Nations will defeat their own ends if they do not mobilize the forces of voluntary coöperation in all nations which come temporarily under their rule. This requires political tact. Our administrators must be men of first-rate caliber. "C'est le ton qui fait la musique." What the wrong tone may do to the relations even between states of the same federal union is suggested by the strength of the feeling which still exists in the South against Northerners after almost three generations. Most of it derives not from the actual fighting but from the way military occupation and reconstruction were handled.


Our military commanders should have the problems of reconstruction in mind while they are planning the assault and while the battle itself is being waged. We must not leave it entirely to the enemy to determine what must be rebuilt.

From a professional soldier's point of view it may sound absurd to suggest that on top of the colossal work of fighting the battles of the machine age, officers and men should be asked to anticipate the economic results of their strategy and tactics. Yet we must ask them to do just that. Military needs must of course be satisfied first. Obviously one of our major military objectives is the destruction of the enemy's staying power. Not only armaments factories, blast furnaces and chemical plants, but transportation systems, power plants, water works, warehouses and a myriad of plants of different types are proper targets for bombs and shells. In total war, all industry feeds the fighting front. Yet we must immediately rebuild at least a part of what we have destroyed. We can be sure that the enemy will do his best to demolish what could be of use to us. But he will do that only when he has time for it. His retreat went so fast in the intensively cultivated parts of southern Tunisia that they were left almost intact.

Our command should know the major economic installations in the enemy's area and be aware of their value for our occupation economy. It should spare the most valuable ones from destruction, in so far as alternatives in tactics offer themselves. And it should distract the enemy as much as possible from their demolition. Even during the First World War the German economic staff guided the action at the front, particularly in the East, in order to bring into German hands valuable stores of raw materials as well as other important objectives. In this war the German tactics have been designed with the greatest skill toward the capture rather than the destruction of key resources. It is possible that incessant bombing of German industry may so weaken German resistance that the industrial areas of neighboring states may be spared from being turned to rubble in slow warfare between ground forces. The chiefs of staff probably are weighing economic as well as military considerations in deciding which parts of the Nazi empire are to be broken off first. Mechanized mobile warfare will offer opportunities for avoiding the demolition of the most productive areas of Europe outside of Germany.


If by good management and good luck many of the industrial plants and most of the farms of Europe come into our hands undamaged, the real task will be to get them producing quickly. Obviously Europeans must do the work. We can't even staff the factories with managers in the time available. And it must be emphasized again that speed in reorganizing them is essential: we need their products and we must stave off the corrupt political manoeuvring which a disorganized economy invariably brings.

A first task of the occupation command will be to establish the legal and administrative framework within which a system of economic reorganization can operate. The commanding general should seize complete economic control as soon as the first bridgehead is gained and delegate this power to his staff of military governors. They must at once seize the "commanding heights." These are the central controls of the productive and distributive functioning of the national economy: (1) money and banking; (2) transportation; (3) communications -- radio, telegraph, mails; (4) public services -- light, gas, water, sewage, sanitation; (5) fuel and power; (6) agriculture; (7) industries and handicrafts; (8) manpower; (9) distribution of goods, prices, rationing, policing of the market; (10) medical services and public health.

Whether some of these departments are combined or further subdivided is merely a matter of expediency. The important thing is that a staff of specialists for each of these fields be at hand on the day the second front is opened. It is immaterial whether they wear uniforms or civilian clothes. It matters tremendously that they are prepared to tackle the job instantly.

The job for these experts is to frame the emergency regulations which will become the law of the land upon decree of the military governor or high commissioner of occupation. The work must be done on the spot, not with blueprints drafted 9,000 miles away. The more astute the psychology which inspires this temporary legislation the better are the chances that things will go smoothly.

But the wisest decrees will fail to get the economy going unless capable native managers and administrators help. The North African prelude should have taught us that politics plays even more of a rôle than economics in this connection. It may happen that some who are professionally qualified to help may belong to the "wrong" party. The cross-currents of resentment and ambition will run fast and strong. We must avoid a search for perfection in picking native administrators, for if we do that we shall end up by trying to staff the administration from top to bottom with nationals of the occupying forces. That would not only put an unbearable drain on our own qualified manpower but would immediately drive the people of the occupied country into wholesale opposition.

We must seize the "commanding heights" before we even look for native co-administrators and before we attempt to negotiate with representatives of the occupied nation. In this way we shall avoid perhaps reaching a period during which the controls have to be gradually tightened, with consequent disadvantageous repercussions. If we take over the controls completely from the outset, the natural course is gradual relaxation. As trustworthy representatives of the friendly or conquered enemy nation are found, power can be delegated to them temporarily. But they must remain on probation as long as the occupation lasts.


The years of adversity have given Great Britain and the United States time to gather valuable experience with the problems of military government.

In the spring of 1941, shortly before the fall of Greece, the British established their Middle Eastern Supply Center in Cairo. In the two years of its existence it has become a joint British-American center for all economic activities in the Eastern Mediterranean territories, closely tied in with the different Combined Boards in London and Washington and with the shipping authorities. Founded originally for Egypt and Palestine alone, the MESC today has 15 additional member territories -- Iran, 'Iraq, Saudi Arabia, Transjordan, Cyprus, Syria, Lebanon, Aden Protectorate, British and French Somaliland, Sudan, Ethiopia, Eritrea, Libya and Tripolitania. These territories have a population of 62 million people.

In 1942 when a swarm of locusts and the Sunn pest swept through Asia Minor and threatened a large part of the area with famine the German press gloated over the coming disaster. However, the MESC succeeded in shipping in 600,000 tons of wheat via the Cape of Good Hope. It organized a tractor board for Syria, persuaded Egypt to divert one-third of her normal cotton acreage to food crops, established an anti-locust organization, and obtained the coöperation of Russian, Persian, British and Indian agricultural experts in pest-prevention efforts. Beyond that, the Center built a plant for oilseed crushing in 'Iraq, built canning plants in Egypt, and opened superphosphate factories in Palestine and Egypt. When General Montgomery chased Rommel westward and entered Tripolitania, Brigadier General M. S. Lush, appointed military governor of the province under the army commander, was at his side. With him came 80 officers of the Occupied Enemy Territory Administration, fully trained in the geography and history of the area, the system of government, its agricultural and mining resources and all other facts relevant to military government. The governor solved the currency problems by fixing the rate of exchange of the pound of military authority money against the lira at 1:480.

As far back as March 1942 the MESC became a British-American joint enterprise, and in October 1942 Mr. Frederick Winant, brother of the American Ambassador in London, was made chairman of the executive committee. Mr. Ben H. Thibodeaux of the United States Department of Agriculture was dispatched to the Center to make a survey of the needs of agricultural machinery for the whole area. Many other United States agricultural experts are working on other matters which are handled through the Combined Boards. Should southeastern Europe be invaded, the MESC would be perfectly equipped to handle all the supply problems.

The United States has been acquiring in North Africa, in cooperation with the French administration of General Giraud, its first large-scale experience for the coming ventures in Europe. The American economic mission, at first under the chief civilian affairs officer on General Eisenhower's staff, Mr. Murphy, passed through a long vale of surprises, embarrassments and unforeseen difficulties, partly political and partly economic in nature. However, by April 1943 the worst had been overcome. Before Tunis and Bizerte fell, the Office of Foreign Relief and Rehabilitation succeeded in moving relief shipments to Tunisia and had on the spot its agricultural field observer, Mr. Henry W. Parisius, ready to make a general survey of the requirements for the agricultural reconstruction of all of French North Africa. All this work will have an important bearing on the way relief and reconstruction is organized on the Continent. With economic centers in the British Isles, North Africa and the Middle East prepared to tackle that great task, the broad foundations for future success have been laid.


The United States Government has incorporated the Office of Foreign Relief and Rehabilitation Operations into the Department of State in order to keep its transactions in harmony with the higher decisions of foreign policy. As a subordinate branch of the State Department it will be subject to more restraint than it would have been as one of the customary separate war agencies. But if it is granted freedom of action within the limits of a determined general policy then the synchronization of its activities with the delicate course of foreign policy will bear valuable fruit. At present the OFR is working in Tunisia on its initial assignment. It provides food, clothing, shelter, medical supplies and sanitation for the civilian population, and it is surveying the requirements of agricultural reconstruction.

The fundamental job of a relief organization is the protection of its clients from hunger and disease. As a corollary to this task it must give them the opportunity to regain a way of life in which they will be able to take care of themselves. Even modestly conceived, the relief job that lies ahead on the Continent is far more intricate than the American public seems to realize. To cope with it successfully, the OFR must religiously abstain from the temptation to mix into its legitimate work as a good doctor any grandiose ideas about reforming national diets, however popular such ideas may be at home. Food relief should not, of course, be based on outmoded concepts of nutrition; it should try to provide balanced rations. But if a program of relief is not to defeat itself the businesslike principle of thrift must be observed. It is all very well to keep optimum nutritional and medical requirements in view, and ideals of social betterment, but a tendency to stress them too much might drive the whole program on the rocks. To attempt to offer a perfect diet, perfect clothing, and perfect medical care can only lead to the early discovery that the requirements hopelessly exceed available supplies.[iii]

The United Nations should be continually on the watch to see whether their shipping, personnel and financial resources are sufficient to meet the giant need. Some healthy doubts will make more plain the importance of immediate efforts to increase local agricultural production and start up certain industries as soon as possible. To supply seed, gasoline and spare parts for tractors might in time pay large dividends and save great shipments of food. Under certain conditions -- those in North Africa, for example, and probably in the Balkans -- imports of some key consumers' goods might facilitate the disgorging of food hoards by farmers. The opening of a window-pane factory in bombed cities might save more people from death by pneumonia than a dozen hospitals. In short, relief must be adapted on the spot to conditions which intelligent men of action perceive on the spot.


Reconstruction is a matter of vital military importance, as we have already noted. And it will inevitably absorb the larger part of the relief effort. The defect common to all reconstruction plans is that they necessarily are projects conceived more or less in a vacuum. Most of them jump from the situation as it is now to a conjectural situation after the complete surrender of the enemy; and, being abstractions, they are usually slanted toward the ideal. Military government, however, will face concrete problems. It will have neither the absolute power nor the unlimited resources that somehow are silent assumptions in most of the more popular plans for reconstruction.

Reconstruction will actually begin amidst the most unusual and complex difficulties. Men of common sense will demand that all non-essentials in aims or methods, no matter how great their individual merits, be thrown overboard or stored safely to await calmer days. Among such non-essentials are many plans for the reform of the economic systems of the occupied countries. Europe certainly does not lack opportunities for economic and social reform. Alas, what continent does not! Some countries there need agrarian reforms, most of them need industrial reforms, many of them need social and political reforms. Yet so long as the Japanese phase of the war is unfinished, even the enormous economic power of the United States and Great Britain will not be adequate to effect large-scale reforms in Europe. The writer is convinced that the same severe limitations on transportation facilities, matériel, manpower and finances which will restrict the scope of relief will render immediate economic reforms impossible. The military governors will be forced to confine themselves to the emergency job of maintaining in operation, or selectively bringing back to production, whatever industrial and agricultural resources exist. They will uproot totalitarianism. But they will leave decisions as to long-term economic changes to those who alone have a legitimate right to make them -- the people of the nations concerned.

The task of reconstruction demands thrift, efficiency and speed. Should the actual work be done by private corporations or government agencies? Germany rebuilt railways, bridges, tunnels and power plants with amazing speed during the First World War, chiefly by means of contracts awarded to private corporations. In this war it has entrusted such work mainly to the Todt Corporation. The war effort of the United States has been endlessly delayed by the American system of checks and balances and by a combination of evils in the administrative structure and processes. In contrast, the accomplishments of American free enterprise in industry and agriculture are most impressive. It would seem that contracts for reconstruction jobs in occupied territory ought to be awarded to private corporations on condition that they utilize to the maximum the existing local resources and manpower. Such a policy would also prepare American industry for its part in postwar foreign trade.

Germany and Japan now supply their conquered territories with various industrial goods. When their armies are expelled these goods will have to be obtained from other sources. This fact was overlooked, at first, in the territories under the jurisdiction of the MESC as well as in French North Africa, and the stoppage of the supplies in question impeded reconstruction. Private companies are the logical source of replacements -- another reason for planning to use private business in the reconstruction job as a whole.

The reconstruction task compels the United Nations to the closest coöperation. It brings them to grips with the great issues of the future, such as the question of equal access to trade and raw materials and the problem of currency arrangements. It should teach them the lesson of mutual aid in the pursuit of that fixed but distant goal: freedom from want.

We shall not know the final form which the reconstruction problem will take until through the smoke of battle comes the answer to that most important and obscure question of all: Will Germany quit suddenly or will she fight to the end? If she should fight for every inch of European soil, prolong her own agony and multiply the devastation everywhere about her, the United Nations will have more time to study the reconstruction and to mobilize the resources needed for tackling it effectively. If, on the other hand, Germany should collapse in an early stage of the battle of the Continent, the devastation would be much smaller and the task of reconstruction easier. That is why the undermining of German resistance psychologically, so far a sadly neglected field of work, has such great economic importance. But whether the German collapse comes swiftly or by prolonged stages, the establishment of military government by the United Nations will be the first step towards peace. It must be accomplished wisely, for some of its operations probably will be the model for many lasting forms of useful international economic coöperation, or the reverse.

[i]Cf. Colonel Herman Beukema, "School for Statesmen," Fortune, January 1943, and editorial, "Prepare to Occupy," Fortune, February 1943.

[ii] Dutch farmers who are willing to go into the Ukraine or other parts of occupied Russia become managers of collective farms, or obtain large tracts of land as gifts. French, Belgian, Dutch or Danish engineers can find good jobs in many parts of Europe for the asking.

[iii]Cf. M. K. Bennett, "Food for Europe, Seven Questions," Free World, May 1943, p. 440-446.

You are reading a free article.

Subscribe to Foreign Affairs to get unlimited access.

  • Paywall-free reading of new articles and a century of archives
  • Unlock access to iOS/Android apps to save editions for offline reading
  • Six issues a year in print, online, and audio editions
Subscribe Now
  • KARL BRANDT, Economist and Professor of Agricultural Economics at the Food Research Institute, Stanford University, California; formerly Professor of Agricultural Economics, University of Berlin
  • More By Karl Brandt