SWNCC 267 File: Telegram
The Joint Chiefs of Staff to the Commanding
General, United States Forces, European Theater (McNarney), and the Director of the Office of Military
Government of the United States for Germany (Clay)
secret
Washington, 3 July 1946.
Warx 93543. Book message to McNarney and Clay from Joint Chiefs of
Staff. The following, received from the State, War, and Navy
Departments, is furnished for your information and guidance in reply
to your CC–23313 dated 18 February 1946 and CC–4481 dated 4 May
1946:32
- “1. Pending fundamental changes in German economic and
financial developments such as adoption of financial and
economic reforms which would stabilize the German
economy rate of 10 reichsmarks per dollar must be
applied to categories of transactions enumerated in
paragraph 2 below and to similar transactions. You are
authorized and directed to introduce in Allied Control
Authority proposal to establish this rate for such
transactions. This rate should not be employed in
pricing merchandise exports.
- “2. It is agreed that commercial exchange rate should
be established for following purposes:
- a.
- To permit purchases of reichsmarks by American
and foreign business firms and individuals,
government missions, et cetera, operating in
Germany, in order to defray their net reichsmark
expenditures incurred outside U.S. Army
facilities.
- b.
- To facilitate pricing of services sold to
foreigners against foreign exchange, including
rail transit charges.
- c.
- To permit benevolent and support remittances
to Germany, when and if remittance facilities are
established and licenses granted.
- “3. Prices of export products should continue to be
quoted in foreign exchange and based on world market
prices or prices in importing countries. Where such
prices are impossible to establish, as in cases of
specialty products, suggest as one possibility the
pre-war export prices be employed as basis for
calculation with whatever adjustment you deem
appropriate to take account of changes in prices of
similar or related commodities in importing
country.
- “4. Your points in opposition to use of 10–to–1 rate
and in favor of 3–to–1 rater:
- A.
- Agree that internal purchasing power of
reichsmark in terms official prices in general
exceeds 10 cents. Expect bulk of foreign
expenditures to consist of commodities and
services purchased at official prices. But any
resulting gain to foreigners will be comparatively
small since volume transactions will presumably
not be large.
- B.
- No conclusive evidence presented that
establishment reichsmark exchange rate at 10 cents
would substantially diminish foreign exchange
accruing to German economy as compared with higher
rate such as 3 marks to dollar. Believe dollar
value benevolent and support remittances would not
vary appreciably with rate since remitters
probably determine dollar value of remittances
with little reference to reichsmark equivalent.
There might be some reduction in foreign exchange
proceeds in few cases where demand for reichsmarks
relatively insensitive to their cost in foreign
exchange such as purchased by foreign missions and
businessmen in Germany of German goods and
services for consumption in Germany and to lesser
extent purchase of transit services in Germany.
Believe however that in such cases volume foreign
exchange accruing to German economy not
significantly affected particularly if account
taken of probability serious collection
difficulties in collections might be encountered
if transit services priced at 3–to–1 rate rather
than 10–to–1 rate.
- C.
- Fail to see how use of 10–to–1 rate can impair
stability present German price structure so long
as rate not reflected in prices of imported or
exported commodities. Additional purchasing power
resulting from higher reichsmark proceeds to
recipients of remittances will have negligible
effect on German economy.
- D.
- Comparison prices in Germany and in United
States of foods available on ration in Germany not
considered sufficiently broad basis for comparison
purchasing power of reichsmark and dollar.
Although there is no entirely satisfactory basis
for calculation purchasing power parities
considerably broader range of prices and costs
should be included in such calculation.
- “5. Factors not taken into account urad CC 4481 militating
against establishment 3–to–l commercial rate and in
favor 10–to–l rate are:
- A.
- U.S. Government opposed as matter of general
policy to employment multiple exchange rates.
Establishment of 3 reichsmarks per dollar
commercial rate without change in troop pay
conversion rate might be so construed. Change in
troop pay conversion rate would involve serious
difficulties.
- B.
- At 3–to–1 rate substantial volume of black
market transactions might be expected, especially
if troop pay rate remained at 10–to–1.
- “6. For your information, the U.S. Forces of
Occupation in Austria has proposed to Allied Council for
Austria establishment of interim general exchange rate
10 schillings per dollar.
- “7. Disposition dollar proceeds of remittances and
procedure for making remittances under
consideration.”
