I start with the international political setting after VE-day and the disagreements, also over reparations, that the four Allied Powers ran into after the Potsdam Agreement of August 1945. This stipulated that Germany should be treated as a single economic unit by the Allied Control Council. The Council of Foreign Ministers was established to prepare a peace treaty with Germany. It failed despite its several conferences 1945 to December 1947. For US Military Governor in Berlin, General Lucius D. Clay, Gerhard Colm and Raymond Goldsmith, Jewish economists who had emigrated from Germany 1933/34 to the US, had produced a currency-reform plan already in May 1946. Clay tabled it in the Allied Control Council in September 1946, where it got stuck. These developments progressively increased the danger of a partition of Germany. A separate currency reform would automatically entail political partition. I pinpoint the day the dice were cast in Washington DC 1. on giving up on a currency reform with the Soviets: 11 March 1948, and 2. on printing Deutschmarks in the USA: 13 October 1947. I then deal with Tenenbaum’s leading roles among all Western currency experts and in the top-secret meeting with eleven West German financial experts at Rothwesten. Lastly, I analyze the reform of 20 June 1948, C-day, itself, its consequences, and assessments.

Chapter 1 traces the development of Allied internment policy from 1943 to 1946. It examines the discussions and statements of the UK, USA, and USSR, including at their European Advisory Committee and in the Potsdam Agreement of 1945. It analyses arrest directives issued in 1944–5 by western military authorities and the Soviet NKVD and discusses the Allied Control Authority’s attempt to develop a detailed quadripartite policy in late 1945/early 1946. It shows that the British were more enthusiastic and that the ‘Morgenthau Plan’ was less significant for US policy than is generally believed. The chapter argues that security, punishment, political change, and reparatory labour all featured in Allied thinking and that internment was consistently conceived as an extrajudicial measure against targets defined largely by their positions in Nazi organizations, rather than by individual acts. The chapter identifies differences over the precise targets, with Soviet directives being more expansive than their western equivalents and calling for members of the SA, SS and other paramilitary organizations to be deported as POWs rather than interned in Germany. Comparisons with Austria reveal basic similarities for the western powers but a different Soviet approach of leaving denazification and internment to Austria’s provisional government.