740.00119 Control (Germany)/8–847: Telegram

The Political Adviser for Germany (Murphy) to the Secretary of State



. . . . . . . . . . . . . .

1. Meeting discussed General Clay’s proposal for printing currency (mytel 1816, July 3066). Soviet member said his position unchanged and would not accept General Clay’s proposal. French and British [Page 880] indicated they would accept any solution enabling printing under quadripartite control and gladly agreed General Clay’s proposal.

British member made long statement on Soviet obstructionism: said failure to agree on currency printing was most humiliating of all disagreements as quadripartite organization. All agreed currency reform urgently needed and can’t be carried out without new currency. No technical reason for producing currency elsewhere than Staatsdruckerei Berlin (this clearly established by quadripartite experts). Berlin is obvious place as capital, seat of quadripartite government and itself under quadripartite administration. Soviet insistence on printing also in Leipzig is unreasonable but we would even agree that if only under quadripartite control. Question has never been answered why Soviets insist on Leipzig. If they would give clear answer perhaps we could reach arrangement. Important factor is not where currency printed but what control is exercised over currency once printed. Allocation of currency to Four Powers must be by Four Power agreement. If misgivings as to size allotment is behind Soviet stand please say so frankly and perhaps their needs can be satisfied. British will not tolerate that matter to drag on in present ridiculous manner. That Control Council will make clear that those responsible for holding up matter are taking grave responsibility upon themselves.

United States member stated that if central German finance agency created he would agree to printing in Leipzig as well as Berlin but until then Berlin was only place acceptable to US.

Soviet member took exception British statement that this was “most humiliating of all disagreements”; said failure agreement on liquidation war potentials bordered not only on shame but on crime. Refused to re-state Soviet position on currency printing or answer British questions.

French member asked if US linked printing of new currency with creation of central German finance agency. US replied we favored latter but would not hold up new currency that account. Matter referred to Control Council.

. . . . . . . . . . . . . .

  1. Not printed; it reported on the proceedings of the 67th Meeting of the Allied Control Council, July 30, at which General Clay had proposed the following interim measure for the printing of a new German currency issue. The German State Printing Office would be removed from the United States sector of Berlin and be constituted as an enclave under the Allied Kommandatura. The Kommandatura would be instructed to proceed with the printing of a new currency issue without prejudice to the settlement of the question of whether currency would ultimately be printed in two places (740.00119 Control (Germany)/7–3047).