The Department of State to the French Embassy 64



It has been almost a year since the United States introduced in the Allied Control Council a proposal for a program of financial reform for Germany. As was then stated, the United States views financial reform along the lines of the United States proposal as an urgent and essential requisite to the revival of the German economy and to the stability of any eventual new German Government to be established along Democratic lines.

[Page 877]

Tentative agreement was reached in the Finance Directorate last Fall on the most urgent aspect of the proposal, namely, the replacement of the reichsmark by a new currency to be called the Deutsche-mark. Agreement has not been reached by the Occupying Powers on where the new currency is to be printed.

The United States proposed the printing of the new currency in the Reichsdruckerei, which is located in the United States sector of Berlin, under quadripartite supervision which would extend to the distribution and issuance of the currency. To make the Reichsdruckerei more accessible to all members of the Allied Control Council, the United States volunteered to place this facility under direct control of the Allied Control Council. In the view of the USSR, printing should proceed simultaneously in Berlin and in Leipzig (Soviet Zone) under quadripartite supervision. The Governments of France and the U.K. are understood to have agreed to either proposal provided adequate quadripartite supervision is established.

This Government maintains its position that the appropriate place for the printing of a new German currency to be used throughout Germany is in Berlin where the advantage of equal access by each of the four powers to the printing facility contrasts to the very limited access which will prevail in Leipzig. In addition, there is a further advantage to be gained in the efficiency of printing in a single establishment. In contrast, no particular advantages have been advanced by the USSR in support of its position. The United States Government cannot, therefore, accept the Soviet position.

However, the United States Government believes this impasse should not be continued. So long as currency reform is not achieved, the attainment of economic revival in Germany, which is important to all of Europe and to the attainment of the objectives of the Occupying Powers in Germany, is retarded. The Government of the United States proposes, therefore, that the governments of the United Kingdom and France agree to support the following:

Printing of a new currency for all of Germany should proceed in the Reichsdruckerei in Berlin which would be placed under the direct control of the Allied Control Council. Should the USSR join in this view, the four powers should agree on the necessary measures to ensure effective and adequate quadripartite control over the printing, distribution, and conditions of issuance of the new currency.

The purposes of this proposal by the United States are manifest: Because of the urgency of a financial reform program it is considered essential that a new currency be available in the event of quadripartite agreement to proceed with such a program.

The United States cannot emphasize too strongly the importance which it attaches to this matter. The delay in introducing financial [Page 878] reform in Germany has retarded materially the progress of the occupying powers in the achievement of their aims. Inasmuch as it has been estimated that at least eight months is required after the taking of a decision to proceed with the currency printing, before the new currency is available, proceeding with the printing of a currency at this time will keep to the minimum the additional time required between the decision to undertake quadripartite reform and the carrying out of that decision.

If the governments of the United Kingdom and France agree to the United States proposals, the United States representative to the Allied Control Council will be instructed to state the United States position in the Allied Control Council.

  1. This aide-mémoire was also sent to the British Embassy. A memorandum of September 22, 1947, from Charles C. Hilliard, Assistant for Financial Policy, to Assistant Secretary of State Charles E. Saltzman, provides the following information regarding this aide-mémoire. During the spring of 1947, British and French representatives on the Allied Control Authority for Germany had agreed to a Soviet proposal that at least a portion of any new German currency issue be printed in Leipzig in the Soviet Zone of Occupation. At a meeting of State, Treasury, and War Department representatives in Washington on June 17, 1947, it was agreed to instruct General Clay to try to obtain British and French agreement to return to their original position, which was also the American position, that the entire new issue of German currency be printed in Berlin. If such British and French agreement were attained, General Clay was to offer to place the Berlin Printing Office, located in the United States zone of that city, under full quadripartite control. If such agreement were not attainable, General Clay was to propose to the British and French that the printing of a new currency issue be initiated on a tripartite basis with the Soviet authorities informed and perhaps invited to send an observer. On July 18, 1947, pursuant to a teleconference between General Clay in Berlin, and General Hilldring and Assistant Secretary of War Petersen in Washington, the aide-mémoire printed here was sent to the French and British Embassies. As of September 22, 1947, no replies had been received from the British and French in response to the Department’s aide-mémoire (862.515/6–1247).