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The first American soldiers, members of the 5th Army, reached the centre of Rome late last night after encountering dogged resistance from German forces on the outskirts of the city.
Early this morning it was announced the German troops had been ordered to withdraw.
Rome is the first of the three Axis powers' capitals to be taken and its recapture will be seen as a significant victory for the Allies and the American commanding officer who led the final offensive, Lieutenant General Mark Clark.
In a broadcast in the United States this evening, President Franklin D Roosevelt welcomed the fall of Rome with the words, "One up, two to go." But he gave a warning that Germany had not yet suffered enough losses to cause her to collapse.
In Rome itself, the people have been celebrating. Shops have closed and huge crowds have taken to the streets, cheering, waving and hurling bunches of flowers at the passing army vehicles.
First reports from the city say it has been left largely undamaged by the occupying German forces.
The city's water supply is still intact and there is even electricity - recent blackouts are reported to have been caused by engineers reluctant to restore power for the occupiers.
Most Romans remained in the city during the occupation and many refugees also fled here. Food supplies are now extremely short with bread rationed to 100g per person per day.
A report from Hitler's headquarters said he had ordered the withdrawal of the German troops to the north-west of Rome in order to prevent its destruction.
The statement said: "The struggle in Italy will be continued with unshakable determination with the aim of breaking the enemy attacks and to forge final victory for Germany and her allies."
The Pope appeared on the balcony of St Peter's this evening and addressed the thousands of Italians who had gathered in the square.
He said: "In recent days we trembled for the fate of the city. Today we rejoiced because, thanks to the joint goodwill of both sides, Rome has been saved from the horrors of war."
The American military authorities in London have broadcast a tribute to the British General Sir Harold Alexander, who has been in overall command of Allied forces in Italy.
It described the campaign as "daring, unconventional and brilliant" and said his methods had compelled the enemy to evacuate Rome without destructive fighting within the city itself.
The American commander of the 5th Army, Lieutenant General Mark Clark, chose to strike for Rome from the Anzio beachhead, after the fall of Monte Cassino, rather than chase after the retreating German forces as he had been ordered by the British officer in overall charge, General Sir Harold Alexander.
This decision has since been described by eminent American military historian Carlo D'Este as "as militarily stupid as it was insubordinate". Although Rome was liberated, the Germans were not decisively defeated.
After the fall of Rome German forces fell back to the so-called Gothic Line of defence, running across Italy just north of Florence.
The Allies did not breach this line until September 1944. The Allied front then stalled again until a breakthrough in April 1945 when their final assault broke German resistance and led to capitulation on 2 May.
The Italian campaign had tied down more than 20 German divisions - while the Allies concentrated on the battle on the western front. Although some have argued it was the Germans tying down the Allies.
But the Italian campaign was not in itself decisive and in the end victory in Europe was won only through direct attacks on Germany itself.
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