Here is the sequence of events:
The German statement:
"The fortune of war is changing. This time the U.S.A. forces in and near Bastogne have been encircled by strong German armored units. More German armored units have crossed the river Our near Ortheuville, have taken Marche and reached St. Hubert by passing through Hompre-Sibret-Tillet. Libramont is in German hands.
There is only one possibility to save the encircled U.S.A. troops from total annihilation: that is the honorable surrender of the encircled town. In order to think it over a term of two hours will be granted beginning with the presentation of this note.
If this proposal should be rejected one German Artillery Corps and six heavy A. A. Battalions are ready to annihilate the U.S.A. troops in and near Bastogne. The order for firing will be given immediately after this two hours’ term.
All the serious civilian losses caused by this artillery fire would not correspond with the well known American humanity.
The German Commander."
–---------------------------------------------------------------------------------------
But then McAuliffe realized that some sort of reply was in order. He pondered for a few minutes and then told the staff, “Well I don’t know what to tell them.” He then asked the staff what they thought, and I spoke up, saying, “That first remark of yours would be hard to beat.” McAuliffe said, “What do you mean?” I answered, “Sir, you said ‘Nuts’.” All members of the staff enthusiastically agreed, and McAuliffe decided to send that one word, “Nuts!” back to the Germans. McAuliffe then wrote down: “To the German Commander, “Nuts!” The American Commander.”
McAuliffe then asked Col. Harper to deliver the message to the Germans. Harper took the typed message back to the company command post where the two German officers were detained. Harper then told the Germans that he had the American commanders reply. The German captain then asked, “Is it written or verbal?” Harper responded that it was written and added, “I will place it in your hand.”
General Anthony McAuliffe
taken on December 27th, 1944
The German major then asked, “Is the reply negative or affirmative? If it is the latter I will negotiate further.”
At this time the Germans were acting in an arrogant and patronizing manner and Harper, who was starting to lose his temper, responded, “The reply is decidedly not affirmative.” He then added that, “If you continue your foolish attack your losses will be tremendous.”
Harper then put the German officers in a jeep and took them back to where the German enlisted men were detained. He then said to the German captain, “If you don’t know what ‘Nuts’ means, in plain English it is the same as ‘Go to Hell’. And I’ll tell you something else, if you continue to attack we will kill every goddam German that tries to break into this city.”
The German major and captain saluted very stiffly. The captain said, “We will kill many Americans. This is war.” Harper then responded, “On your way Bud,” he then said, “and good luck to you.” Harper later told me he always regretted wishing them good luck.