Nevertheless, Roosevelt played what cards he had with skill. "Most Poles," he told Stalin, "want to save face. ... It would make it easier for me at home if the Soviet government could give something to Poland." A government of national unity, Roosevelt declared, would facilitate public acceptance in the United States of full American participation in postwar arrangements. "Our people at home look with a critical eye on what they consider a disagreement between us. ... They, in effect, say that if we cannot get a meeting of minds now . . . how can we get an understanding on even more vital things in the future?" Although Stalin's immediate response was to declare that Poland was "not only a question of honor for Russia, but one of life and death," he finally agreed that some reorganization of the Lublin regime could take place to ensure broader representation of all Poles.
In the end, the Big Three papered over their differences at Yalta by agreeing to a Declaration on Liberated Europe that committed the Allies to help liberated peoples resolve their problems through democratic means and advocated the holding of free elections. Although Roosevelt's aide Admiral William Leahy told him that the report on Poland was "so elastic that the Russians can stretch it all the way from Yalta to Washington without ever technically breaking it," Roosevelt believed that he had done the best he could under the circumstances. From the beginning, Roosevelt had recognized, on a de facto basis at least, that Poland was part of Russia's sphere of influence and must remain so. He could only hope that Stalin would now show equal recognition of the U.S. need to have concessions that would give the appearance, at least, of implementing the Atlantic Charter.
The same basic dilemmas, of course, occurred with regard to the structure of postwar governments in all of Eastern Europe. As early as 1943, Roosevelt had made clear to Stalin at Tehran that he was willing to have the Baltic states controlled by the Soviets. His only request, the president told Stalin, was for some public commitment to future elections in order to satisfy his constituents at home for whom "the big issues . . . would be the question of referendum and the right of self-determination." The exchange with Stalin accurately reflected Roose-velt's position over time.
Significantly, Roosevelt even sanctioned Churchill's efforts to divide Europe into spheres of influence. With Roosevelt's approval, Churchill journeyed to Moscow in the fall of 1944. Sitting across the table from Stalin, Churchill proposed that Russia exercise 90 percent predominance in Romania, 75 percent in Bulgaria, and 50 percent control, together with Britain, in Yugoslavia and Hungary, while the United States and Great Britain would exercise 90 percent predominance in Greece. After extended discussion and some hard bargaining, the deal was made. (Poland was not even included in Churchill's percentages, suggesting that he was acknowledging Soviet control there.) At the time, Churchill suggested that the arrangements be expressed "in diplomatic terms [without use of] the phrase 'dividing into spheres,' because the Amer-icans might be shocked." But in fact, as Robert Daliek has shown in his superb study of Roosevelt's diplomacy, the American president accepted the arrangement. "I am most pleased to know," FDR wrote Churchill, "you are reaching a meeting of your two minds as to international policies." To Harriman he cabled: "My active interest at the present time in the Balkan area is that such steps as are practicable should be taken to insure against the Balkans getting us into a future international war." At no time did Roosevelt protest the British-Soviet agreement.
In the case of Eastern Europe generally, even more so than in Poland, it seemed clear that Roosevelt, on a de facto basis, was prepared to live with spheres-of-influence diplomacy. Nevertheless, he remained constantly sensitive to the political peril he faced at home on the issue. As Congressman John Dingell stated in a public warning in August 1943, "We Americans are not sacrificing, fighting, and dying to make permanent and more powerful the communistic government of Russia and to make Joseph Stalin a dictator over the liberated countries of Europe." Such sentiments were widespread. Indeed, it was concern over such opinions that led Roosevelt to urge the Russians to be sensitive to American political concerns. In Eastern Europe for the most part, as in Poland, the key question was whether the United States could somehow find a way to acknowledge spheres of influence, but within a context of universalist principles, so that the American people would not feel that the Atlantic Charter had been betrayed.
The future of Germany represented a third critical point of conflict. For emotional as well as political reasons, it was imperative that steps be taken to prevent Germany from ever again waging war. In FDR's words, "We have got to be tough with Germany, and I mean the German people not just the Nazis. We either have to castrate the German people or you have got to treat them in such a manner so they can't just go on reproducing people who want to continue the way they have in the past." Consistent with that position, Roosevelt had agreed with Stalin at Tehran on the need for destroying a strong Germany by dividing the country into several sectors, "as small and weak as possible."
Still operating on that premise, Roosevelt endorsed Secretary of the Treasury Henry Morgenthau's plan to eliminate all industry from Germany and convert the country into a pastoral landscape of small farms. Not only would such a plan destroy any future war-making power, it would also reassure the Soviet Union of its own security. "Russia feared we and the British were going to try to make a soft peace with Germany and build her up as a possible future counter-weight against Russia," Morgenthau said. His plan would avoid that, and simultaneously implement Roosevelt's insistence that "every person in Germany should realize that this time Germany is a defeated nation." Hence, in September 1944, Churchill and Roosevelt approved the broad outlines of the Morgenthau plan as their policy for Germany.
Within weeks, however, the harsh policy of pastoralization came unglued. From a Soviet perspective, there was the problem of how Russia could exact the reparations she needed from a country with no industrial base. American policymakers, in turn, objected that a Germany without industrial capacity would prove unable to support herself, placing the entire burden for maintaining the populace on the Allies. Rumors spread that the Morgenthau plan was stiffening German resis-tance on the western front. American business interests, moreover, suggested the importance of retaining German industry as a key to postwar commerce and trade.
As a result, Allied policy toward Germany became a shambles. "No one wants to make Germany a wholly agricultural nation again," Roosevelt insisted. "No one wants 'complete eradication of German industrial production capacity in the Ruhr and the Saar.' " Confused about how to proceed, Roosevelt--in effect--adopted a policy of no policy. "I dislike making detailed plans for a country which we do not yet occupy," he said. When Churchill, Stalin, and Roosevelt met for the last time in Yalta, this failure to plan prevented a decisive course of action. The Russians insisted on German reparations of $20 billion, half of which would go to the Soviet Union. Although FDR accepted Stalin's figure as a basis for discussion, the British and Americans deferred any settlement of the issue, fearing that they would be left with the sole responsibility for feeding and housing the German people. The only agreement that could be reached was to refer the issue to a new tripartite commission. Thus, at just the moment when consensus on a policy to deal with their common enemy was most urgent, the Allies found themselves empty handed, allowing conflict and misunderstanding over another central question to join the already existing problems over Eastern Europe.
Directly related to each of these issues, particularly the German question, was the problem of postwar economic reconstruction. The issue seemed particularly important to those Americans concerned about the postwar economy in the United States. Almost every business and political leader feared resumption of mass unemployment once the war ended. Only the development of new markets, extensive trade, and worldwide economic cooperation could prevent such an eventuality. "The capitalistic system is essentially an international system," one official declared. "If it cannot function internationally, it will break down completely." The Atlantic Charter had taken such a viewpoint into account when it declared that all states should enjoy access, on equal terms, to "the raw materials of the world which are needed for their economic prosperity."
To promote these objectives, the United States took the initiative at Bretton Woods, New Hampshire, in 1944 by creating a World Bank with a capitalization of $7.6 billion and the International Monetary Fund with a capitalization of $7.3 billion. The two organizations would provide funds for rebuilding Europe, as well as for stabilizing world currency. Since the United States was the major contributor, it would exercise decisive control over how the money was spent. The premise underlying both organizations was that a stable world required healthy economies based on free trade.
Attitudes toward economic reconstruction had direct import for postwar policies toward Germany and Eastern Europe. It would be difficult to have a stable European economy without a significant industrial base in Germany. Pastoral countries of small farms rarely possessed the wherewithal to become customers of large capitalist enterprises. On the other hand, a prosperous German economy, coupled with access to markets in Eastern and Western Europe, offered the prospect of avoiding a recurrence of depression and guaranteed a significant American presence in European politics as well. Beyond this, of course, it was thought that if democracy was to survive, as it had not after 1918, countries needed a thriving economy.
Significantly, economic aid also offered the opportunity either to enhance or diminish America's ties to the Soviet Union. Averell Harriman, the American ambassador to Moscow after October 1943, had engaged in extensive business dealings with the Soviet Union during the 1920S and believed firmly in the policy of providing American assistance to rebuild the Soviet economy. Such aid, Harriman argued, "would be in the self-interest of the United States" because it would help keep Americans at work producing goods needed by the Russians. Just as important, it would provide "one of the most effective weapons to avoid the development of a sphere of influence of the Soviet Union over eastern Europe and the Balkans."
Proceeding on these assumptions, Harriman urged the Russians to apply for American aid. They did so, initially, in December 1943 with a request for a $1 billion loan at an interest rate of one-half of 1 percent, then again in January 1945 with a request for a $6 billion loan at an interest rate of 2.25 percent. Throughout this period, American officials appeared to encourage the Soviet initiative. Secretary of the Treasury Morgenthau had come up with his own plan for a $10 billion loan at 2 percent interest. When Chamber of Commerce head Eric Johnson visited Moscow, Stalin told him: "I like to do business with American businessmen. You fellows know what you want. Your word is good, and, best of all, you stay in office a long time--just like we do over here." So enthusiastic were some State Department officials about postwar economic arrangements that they predicted exports of as much as $1 billion a year to Russia. Molotov and Mikoyan encouraged such optimism, with the Soviets promising "a voluminous and stable market such as no other customer would ever [offer]."
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