Prologue Magazine

Fall 2002, Vol. 34, No. 3

The Black Market in Postwar Berlin
Colonel Miller and an Army Scandal, Part 2

By Kevin Conley Ruffner

 Brig. Gen. James B. Edmunds (left) and Lt. Gen. Lucius Clay (center) met with Senator Thomas Connally at Templehof airfield in Berlin on February 17, 1946. Connally and other senators conducted several fact-finding tours. (NARA, 111-SC-229672)

Bull in a China Shop

Meader completed his report on November 22, and even prior to his completion, it became the center of political debate.46 That same day, Senator Kilgore in West Virginia telegrammed Senator Mead in Washington urging the special committee to read the report carefully and guard against "leaks." Mead responded that "unfortunately Mr. Meader's confidential report has already been published in the press here and elsewhere."47

In fact, just days after Meader returned from his overseas trip, Owen Brewster, Republican senator from Maine and soon-to-be chairman of the special committee, had revealed the details of Colonel Miller's confidential Senate testimony in a Liberty Magazine article on November 9 entitled "Is a Scandal Brewing in Germany?"48

On November 13 Republican senators Brewster, Homer Ferguson, and William F. Knowland met with Senators Connally and Vandenburg in New York City. Both Connally and Vandenburg now expressed their firm opposition to an investigation of the military government. Connally stated outright that public hearings would create "a most unfavorable reaction and adverse publicity." Vandenburg, likewise, was reported as having urged his colleagues to drop the matter.49

While attending the meeting of the Council of Foreign Ministers in New York, Secretary of State Byrnes told the Republican senators what he felt about an investigation of the military government. The meeting went badly. Trying to sort out the costs of occupation over the next year and whether the State Department should assume responsibility from the army, Brewster acknowledged "in certain quarters, there is concern over the proposed investigation. We are not clear as to the source. But there is definitely a lack of enthusiasm in the State Department. The reason is not clear."50

Denying that Congress wanted to meddle in foreign areas, Senator Brewster explained that occupation costs would soon reach $350 million, including $125 million for Germany. The senator from Maine felt that the American taxpayers have a "right to know if that is to be a worthwhile investment, and whether it is to be economically expended." Brewster asserted that "we are not concerned with any long range foreign policy" but declared that it was critical to settle whether the State Department or the army would be responsible for the administration of Germany and the other occupied countries.51

Upon the senators' return to Washington, the special committee met on November 14 with Lt. General Clay, who was in the United States to discuss American and British plans for the economic unification of their zones in Germany.52 Four days later, Chief Counsel Meader addressed a memorandum to Senator Kilgore, summarizing the Truman administration's opposition to an investigation. This opposition, Meader remarked, centered on fears that an investigation would undermine negotiations by the United States. Noting that the special committee had withheld information about its investigations during the war when it feared that it would harm the war effort, Meader exclaimed, "now the war is over, the enemy is defeated. By no stretch of the imagination can secrecy be urged on grounds of military security." Meader conceded that the special committee would not, in this case, hold public hearings on military government. "The explanation of the disastrous consequences thought to ensue from making these facts available to the public," Meader told Kilgore, "must be made by those who urge it."53

In the meantime, the Democrats insisted that any investigation have the concurrence of the executive branch. The White House and the State and War Departments now all weighed in against congressional investigation. When asked at a press conference on December 3 whether he approved of such an investigation, President Truman answered simply, "I don't think it's necessary."54 The press reported that both Secretary of State Byrnes and Secretary of War Robert P. Patterson were opposed to the special committee's plans.

The deputy military governor, Lt. General Clay, however, may have been even more opposed to an investigation. When he first learned of the special committee's plans in September, Clay was reportedly irritated and issued a "no comment" to press inquiries.55 In his meeting with the senators in mid-November, Clay said "the Soviet press and the German press in the Soviet zone utilize every opportunity to criticize and discredit not only the American but also the British military government." A congressional investigation would undermine Clay's ability to work with the Soviets, although he said that he would welcome a congressional "inspection" as opposed to an "investigation." "Whether we want it or not," Clay warned the senators, "we must recognize that we are in a direct political and ideological competition in Germany."56 In early December the New York Times reported that Clay threatened to resign if the Senate pursued its plans to investigate the military government in Germany.57

The Republicans, however, were not intimidated because they felt that the special committee did not require the "permission of any department to an investigation of its operation."58 After meeting with General Clay, Senator Brewster announced plans to launch a full investigation to "focus on the costs of occupation, black market activities, and 'sensational sex stories that have come from the occupied areas.'"59 Pressure mounted in Washington for a full-scale investigation of the military government.60 Drew Pearson, in his column "Washington Merry-Go-Round," commented on November 23 that "for some strange reason, Secretary of State Byrnes has become awfully jittery about having a Senate committee probe of what's going on in Germany." Pearson quoted Sen. William F. Knowland, a California Republican member of the special committee, as saying:

I was not particularly interested in the reported sexual aberrations of American troops in Germany or of black-market porch-climbing until I found out you [Secretary Byrnes] were so anxious to keep us out. But since there have been several carefully conducted tours of newspaperman through Germany, I see no reason why United States Senators should not have the same privilege.61

Chief Counsel Meader noted that "considerable opposition has developed to the Committee's investigation. In my opinion," Meader stated in his report, "the facts obtained in the preliminary investigation indicate clearly the need of a thorough study by the Committee. Efforts which have been made recently to block this inquiry fortify that conclusion by raising the suspicion that there is something to hide which the Committee might uncover if it did conduct the investigation."62

Among the leading opponents of a Senate investigation, the Washington Post weighed in on November 25 with its editorial "Bull in a China Shop." "For the first time in our memory," the paper's editors wrote, "we feel called upon to criticize the special investigating committee that was first presided over by Mr. Truman when he sat in the Senate." Criticizing the special committee's reliance on the testimony of "dissatisfied employees in Germany," the Post blamed the special committee, which "raked over isolated cases of misbehavior, mainly, it would seem, connected with what Senator Vandenburg calls porch climbing." The Post also feared that a full investigation "would be the equivalent to opening our confidential files in Berlin and Frankfurt to the world. It would damage our prestige in Germany and prejudice our negotiations about Germany." The standing committees in the Senate, not the special committee, which, in the paper's view, operated like a "witch hunt," would be better able to tackle the nation's sensitive issues regarding occupation.63

The same day that the Washington Post's editorial appeared, the special committee met in executive session for a knockdown fight over Meader's report. With only a handful of members present, the senators quickly became embroiled in partisan wrangling. The Democrats bitterly opposed any Senate efforts to launch a full-scale investigation of the army's regime in Germany. At the end of the meeting, Senator Kilgore called for a vote whether to proceed with an investigation by the special committee.64 After polling absent members, the vote split along party lines (six to four) and defeated Republican Senator Joseph H. Ball's motion to establish a subcommittee to travel to Europe to study military government expenditures and administration.65

Meader Blamed for Report

Meader faced a barrage of criticism as 1946 came to a close. His report became the target for attacks from several fronts. After the special committee's meeting with Secretary of State Byrnes in New York City on November 13, the New York Herald-Tribune and the Washington Post claimed that Secretary Byrnes had made disparaging remarks about both Soviet Foreign Minister Vyacheslav Molotov and Gen. Douglas MacArthur. According to press reports, Byrnes reportedly called MacArthur a "prima donna." Meader was forced to defend himself against these leaks to Secretary Byrnes as well as to Senators Brewster and Mead.66

The press, in the meantime, paid considerable attention to allegations of misconduct by army personnel in Germany. Reports in both Collier's Magazine and Liberty Magazine illuminated the problems in Germany and were quickly followed by the New York Times and other major papers.67 The press seized upon allegations that the army had failed to impose order on the large numbers of displaced persons or its own Negro troops in Germany. The New York Times, for example, stated that the Meader Report claimed that "the denazification program is a glaring failure; the break-up of the cartel system (one of the root causes of the war) has gotten nowhere; that widespread fraternization with German women is undermining the effectiveness of military government; that the demands for luxurious accommodations by United States personnel have created a desperate housing situation; and that a number of high-ranking army officers are involved in gross black-marketing operations."68

Critics of the report, including the executive director of the Hebrew Sheltering and Immigrant Aid Society and the executive secretary of the NAACP, denounced the special committee's investigation as "unfair, biased and apparently based on hearsay or distorted facts."69 Meader, in turn, wrote the New York Times to explain that the "only expression of opinion that I made [on the topic of displaced persons] was that this problem should be thoroughly studied by Congress so that the people and the Congress, to the extent that they have responsibilities in connection with this problem, could make their decisions on the basis of knowledge rather than ignorance."70

Reporting by the Washington Post and the New York Herald-Tribune caused Meader the most grief. In an article on November 27, Meader was surprised to learn that Senator Kilgore had sent a private letter to the members of the special committee two days earlier. The Herald-Tribune obtained a copy of Kilgore's letter and reported that the senator had denounced the Meader Report as "hearsay, rumors, and gossip." Furthermore, Kilgore blasted his chief counsel because "this report goes far beyond the limits of the proper activities of our committee. The report deals with questions of foreign policy. In fact, this report constitutes advice, instruction and criticism in the field of foreign affairs, directed at the President, Secretary Byrnes, Senator Connally, Senator Vandenburg, and former Senator Austin and our other delegates to the United Nations." Referring to displaced persons and black soldiers, Meader's two most controversial subjects, Kilgore told his colleagues, "it is difficult to discuss those portions of the report which attack our own soldiers, and helpless victims of Nazism, without the strongest disagreement and condemnation."71

Meader Report Released

As the year drew to a close, Republican and Democratic members of the special committee continued to wrestle over the role of the American military government overseas. Republicans vowed to renew their efforts to launch an investigation when the new Congress convened under Republican control in early 1947. In the meantime, the Republican senators on the special committee took matters into their own hands and released the Meader Report on their own authority on December 4, 1946. The Republicans felt "compelled to take this action because excerpts of an earlier draft of the report by Mr. Meader and portions of the testimony given in these executive hearings, giving distorted and inaccurate impressions, have already appeared in the press and the only way to correct such inaccuracies is to release the full texts."72

The day before, Senator Kilgore, learning that the Republicans planned to release Meader's report, released the War Department inspector general's summary of its investigation into Colonel Miller's allegations. Hoping to defuse the impact of the Meader Report, Kilgore expressed "my own personal opposition to giving currency to the unverified charges which constitute so large a portion of the counsel's report and my opinion that its release by our Committee would be contrary to fair procedure."73

The release of the full Meader Report in December 1946 did not dampen the controversies raised by earlier leaks about black marketing by U.S. military personnel, disciplinary problems among black troops, or the army's management of displaced persons.74 While Senator Brewster was widely regarded as the source of the special committee's leaks, George Meader later fingered Herbert Schimmel, a member of Senator Kilgore's staff, as responsible for releasing portions of the draft report dealing with black soldiers and refugees in Germany.75 Schimmel, who later worked at the United Nations, was dismissed in 1952 by the secretary general for refusing to testify to the Senate Subcommittee on Internal Security about Communist activities at the UN headquarters in New York.76

Following on the heels of the Meader Report, the House Military Affairs Committee also issued its own report in December 1946 criticizing the army's operations in Germany. In particular, the House report cited the army's laxness with denazification, the lack of a foreign policy objectives, and black market activities by the "vast majority" of American soldiers. The House advocated stringent checks on income taxes as a means to gain control on black market profits brought into the United States.77

As Christmas approached, United States News observed, "whether it [the situation in Germany] is misleading, as is charged by the Army, or an indication of gross misconduct by US forces abroad, as is suspected by some Republican Congressmen, it is almost certain to result in full-scale investigation of the occupation of Germany by Congress next year."78

The Army's Counter-Attack

The army's response to Colonel Miller's August testimony before the special committee was swift. Upon learning of the soon-to-be discharged officer's unauthorized testimony, Under Secretary of War Kenneth C. Royall, ordered the army's inspector general (IG) to conduct a full investigation into Miller's allegations. On September 28, 1946, Brig. Gen. Elliot D. Cooke, the deputy inspector general, launched his investigation by calling Miller as a witness to go over his congressional testimony. Cooke then proceeded to interview fifteen other witnesses in the United States, including Brig. Gen. Edwin L. Sibert, former USFET G-2, and Dr. Thomas Parran, surgeon general of the United States.

Concluding that the witnesses then in the United States could not support Colonel Miller's allegations, the Cooke Inquiry Group proceeded to Germany. Meeting with General McNarney on October 6, 1946, Cooke learned that several investigations were already under way in USFET. As early as June 19, 1946, McNarney had ordered a confidential investigation in Berlin to determine if American civilian or military personnel were involved in the black market. Conducted by Col. Charles G. Dodge, the investigation was completed on August 2. While black marketing had been "prevalent" among Americans prior to November 1945, Dodge found "insufficient evidence" to "support charges of looting or large scale Black Market activity against American personnel now on duty in Berlin." He noted that it still existed in the German capital, but that "most cases involve only petty amounts of cash." Dodge simply recommended the continuation of several cases already under way and that any large investigation of the black market be turned over to officials in Washington for further action.79

When Lt. General Clay learned about the secret investigation of personnel under his command, he felt that it was insufficient. He ended the Dodge investigation and ordered a new investigation by the theater inspector general. USFET headquarters assigned Col. Perry L. Baldwin to begin a fresh examination that had just started when Cooke arrived from Washington.80 Thus, by mid-October, OMGUS in Berlin had four different sets of investigators— the Senate special committee (Meader), the House military affairs committee (Benson), the USFET IG (Baldwin), and the War Department IG (Cooke)— looking into matters there. The four groups reached an agreement for a division of labor, although the special committee reserved the right to review the various army IG investigations.81

After a few weeks, General Cooke wrapped up his work in Germany and returned to Washington to write his final report. The War Department Inquiry Group interviewed nearly fifty military officers and civilians, including a German woman, to ascertain the facts in Colonel Miller's charges.82 The inspector general faced a dilemma as to how to characterize the allegations and the officer who leveled them before a Senate hearing. "The conduct of Colonel Miller in this affair," General Cooke noted, "is most difficult to comprehend." In trying to present a picture of Miller's personality, Cooke stated:

His honesty, high ideals and impeccable character were testified to again and again by responsible witnesses. It has also been evidenced that certain general conditions existed in the early occupation of Berlin which aroused the moral indignation of Colonel Miller. Also, it was proved that Colonel Miller made several attempts while in Berlin to have these general conditions investigated and rectified, but higher authority refused to take cognizance of his complaints, because he had no actual proofs of the conditions he alleged existed in Berlin.83

Once Colonel Miller took up this crusade against the army, he "indulged in a frenzy of over-all vituperations which, by implication at least, impugned the character and integrity of persons about whom Colonel Miller had not the slightest knowledge." In particular, the IG was especially concerned about Col. Miller's "fixation" against former Brig. Gen. James B. Edmunds and, in turn, Lt. General Clay, the deputy military governor. "Colonel Miller," Cooke noted, "seemed desirous of placing blame for nearly everything wrong in the German occupation upon either Colonel Edmunds or General Clay who, according to Colonel Miller, protected Colonel Edmunds."84

The IG found no evidence to substantiate Miller's main allegations. "Aside from certain instances pertaining to personal conduct of individuals, the Inquiry Group could find no evidence to substantiate the general and over-all allegations made by Colonel Miller." Consequently, Cooke observed, "it is believed that the dark and gloomy picture painted orally by Colonel Miller before the Mead Committee was a figment of his own imagination, and not a true reflection of conditions as actually extant." Cooke, however, was critical of the USFET chain of command because "much of the embarrassment brought about by this entire incident could have been avoided if General McNarney and General Clay had utilized their inspectors general in the manner contemplated by War Department policies." Instead, USFET and OMGUS inspector general lacked sufficient command emphasis and, consequently, problems at the lowest levels within the military government were left to fester.85

The inspector general's final report of November 21 arrived at ten conclusions that absolved the military government in Germany. The IG made four recommendations for follow-up action, and it then turned to Colonel Miller, the man who ignited this firestorm. The Cooke Report closed by stating for the record that "a prominent notation be made in the AGO 201 file of Colonel Francis P. Miller, 0-524591, to the effect that these papers should be examined and considered in the event of any future evaluation of this officer's services."86

Gone and Forgotten

In Washington, political necessity dictated that Senate Republicans forget about the black market in Germany. With the new Congress in Republican hands, the Meader Report and a Senate investigation marked the first order of business in January 1947. Senate Republicans proposed to extend the life of the special committee for another two years and its new chairman, Senator Brewster, met with President Truman and George C. Marshall, the new secretary of state, to discuss a possible overseas inquiry.87

The Senate debated the issue of an investigation in Germany in the first floor fight of the Eightieth Congress on January 14, 1947. After a bitter debate that pitted both parties and threatened to divide the Republicans themselves, Senator Brewster offered to restrict the special committee's purview and limit its ability to conduct overseas investigations. In return, the Senate gave the Special Committee to Investigate the National Defense Program an additional year— to January 31, 1948— despite Democratic wishes to transfer investigative responsibilities related to national defense to the standing Committee on Expenditures in the Executive Departments. The special committee also had its authority clipped because it could investigate only things that had happened in the United States (including American territories) before June 1946. The threat of a full investigation by the Senate into the army's military government program receded as the special committee took up new investigations related to domestic defense programs.88

The Government Printing Office published Colonel Miller's testimony and the Meader Report in 1948, but emotions were spent. By this time, the Truman administration faced more pressing issues in Germany, including the growing Soviet threat in Europe and the Berlin airlift. Beyond the published report and a large body of documentary evidence, the special committee's actions in the fall of 1946 left little telltale signs. General Clay, for example, makes no mention of the Senate's actions or the War Department's investigations in his memoirs, personal papers, or official papers at the National Archives. Nor does Jean Edward Smith, Clay's biographer, mention either the Senate or War Department investigations in his landmark books.89 The extensive literature on President Truman likewise reveals no concern on his part as to the Senate's inquiries into military government. Coming at a time when Truman faced numerous domestic political and economic problems (including the Republican sweep in both houses of Congress and a nationwide strike by the United Mine Workers in late 1946), investigations of the army's military government program in Germany proved to be minor irritants.90

In the end, the scandals over the army's role in the black market in Germany faded away. Colonel Miller, seething over the army's treatment of his charges, decided to let the matter rest and returned to his active career in Virginia. He felt vindicated that he had brought the matter to a head and exposed the rot that had taken hold in the OMGUS headquarters in Berlin.91 His allegations and the ensuing investigations became footnotes in the larger sphere of the US Army's role in postwar Germany.

Berlin Black Market, Part 1
Berlin Black Market, Part 3


Kevin Conley Ruffner is a historian with the History Staff of the Central Intelligence Agency, specializing in World War II and early Cold War intelligence. His two-volume book of documents, Forging an Intelligence Partnership: CIA and the Origins of the BND, 1945 - 49, was recently declassified. Dr. Ruffner is currently writing a book on the black market and the U.S. Army in Berlin.
Articles published in Prologue do not necessarily represent the views of NARA or of any other agency of the United States Government.
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