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In February 1946, the U.S. Strategic Services Unit (SSU) released the report “Rumors in Russian Zone” that described the opinion Berliners held about American occupation troops. It was a year full of intelligence and US government reports on American activities in Germany, and much of it wasn’t flattering. Not even a year after the war, the GIs earned a reputation as “men who drink to excess; have no respect for the uniform they wear; are prone to rowdyism and to beat civilians with no regard for human rights; and benefit themselves through the black market.”

Truth or exaggeration? Was a GI in the early postwar years little better than a “Russian with his trousers pressed?” (The Russians were notorious for violence and corruption, especially in the months directly after the war). How much American corruption existed on the ground in Berlin?

An intelligence officer’s testimony before a Senate Special Committee in 1946 started an avalanche of investigations and bad press for US occupation forces. Col. Francis P. Miller, ex-executive officer with the Office of the Director of Intelligence at the US government headquarters (OMGUS) in Berlin, complained about illegal activities that reached the highest offices. They were, he said, swept under the rug by none other than Lt. General Lucius Clay, deputy military governor and director of OMGUS in Berlin. CIA historian Kevin Conley Ruffner describes the affair in his excellent article The Black Market in Postwar Berlin; Colonel Miller and an Army Scandal (Prologue Magazine Vol. 34, No. 3, Fall 2002).

Miller’s accusations focused on the “moral disintegration” of American officers and enlisted men. Sexual excess and the venereal disease that came with it was just one side of the coin. The other was money. Miller pointed out that troops sent home a lot more money than was being paid out to them. In July 1945 the army’s finance office in Berlin paid troops one million dollars, “yet soldiers sent some three million dollars to addresses in America,” Ruffner says.

For Americans, Germany and Berlin in particular, was a get-rich-quick opportunity. A soldier could buy 10 packs of cigarettes for 50 cents at the PX and sell them for $100. Russians paid exorbitant amounts for watches, a status symbol. Even after the army cracked down on some of this activity, the damage to its reputation was done. Ruffner quotes the official army historian in Germany, who said the gigantic fraud “gave many Germans the impression that Americans are fundamentally dishonest and weak.”

Back in the States, Miller’s accusations were picked up by Republicans looking to damage the Truman administration ahead of the next elections. The Senate special committee appointed counsel George Meader to launch a preliminary investigation. After interviewing dozens of witnesses in the US and Germany, he recommended an even deeper investigation into the goings-on in the US occupation areas.

Even before Meader’s report was made public, the stuff hit the fan. Branches of the US government bickered over who should investigate what, and to what extent. The Truman administration opposed an investigation. It didn’t want scandal to disrupt talks with the British on economically uniting their German zones. General Clay opposed an investigation because of the propaganda capital the Soviet press would get from it.  The major US press reported on allegations of fraud, failure and incompetence in the military government. The Senate special committee’s chair Senator Kilgore (D- West Virginia) criticized Meader — his committee’s counsel — for succumbing to “hearsay, rumors and gossip.”

At one time, four army and government investigations were under way at the same time. But by 1948, the issue had blown over. The Soviet threat and the Berlin Airlift were more important than raking up accusations about corruption.

I highly recommend Ruffner’s article, as well as a close read of his excellent footnotes. The scandal may be forgotten in the general postwar/Cold War narrative, but it gives a fascinating glimpse into the early US occupation of Germany.