740.00119 Control (Germany)/8–1247: Telegram

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

secret

1933. 1. Soviet member at 68th meeting Control Council, August 11th, outlined following position re Clay’s proposal on currency [Page 881]printing (paragraph 1, my telegram 1906, August 8th67). Soviets had always maintained German financial reform is urgent. They did not feel that printing of currency should necessarily be tied up at this time with question of creation of issuing authority or central finance organization. They believed that in view of urgency of matter, ACC should not deny itself of large technical facilities existing in Leipzig in addition to Berlin printing plant. They would not object to currency printing under quadripartite control in any third or fourth place where there are facilities. Confining printing to Berlin would only increase difficulties. British member asked whether Soviet attitude on printing might be connected with occupation costs. Soviet member disclaimed any connection and reiterated reasons given above. As he saw it, length of occupation was related to progress in demilitarization and democratization of Germany and liquidation of war potential. Lack of progress in these fields would delay reduction in occupation and might even necessitate an increase in occupation force. French member expressed approval of any solution for printing under quadripartite control. Clay explained that his proposal was based on view that failing real quadripartite government of Germany, Berlin is quadripartite center where currency printing could best be carried out under necessary control; to show good faith he had suggested placing printing plant within an Allied enclave. British member pointed out he and French could accept either Soviet or United States position. At Clay’s suggestion ACC decided: (1) to keep question on agenda in suspense pending reports to their governments by respective delegations and receipt of possible new instructions; (2) to instruct Finance Directorate to collect raw material and arrange for supply of currency paper in order to save time pending later decision regarding nature of printing plates and place of printing.

2. Long and confused discussion ensued on question of preparation of further reparations lists, in course of which ACC was forced to seek clarification from French member Economic Directorate present at table (paragraph 5 my telgram 1906, August 8th68). Soviet and French position in effect was that (a) Economic Directorate should continue with liquidation and delivery as reparations of strictly war plants; (b) that Economic continue with the evaluation of other plants which may be delivered as reparations or be destroyed as war potential. Soviets maintained that work on reparations lists should not be stopped but should be gradually completed; corrections and even great changes might have to be made with respect to plants to be retained following ACC or CFM decision on new level of industry, [Page 882]but present uncertainty should not be allowed to obstruct liquidation war potential. French member asserted that knowledge of interruption of work on reparations plan would have bad psychological effect non-Germans. United States and British members insisted that preparation of lists additional to those relating to category one war plants, plants declared available as advance reparations or plants approved for evaluation would be waste of time since all delegations including Soviet had agreed that upward revision of industry level was necessary; it would be futile to evaluate plants that may not be allocated for reparations. ACC adopted following decision: (a) Economic will proceed with liquidation and delivery as reparations of strictly war plants and plants available for advance reparations; (b) Economic will complete evaluation of all plants placed on agreed lists for evaluation purposes; (c) ACC is unable to agree to compilation of additional lists for evaluation purposes at present time. Soviet and French delegations requested their position on latter point be recorded in minutes. (ACC incorrectly designated Economic for above functions which will be referred by Secretariat to RD and R Directorate).

Sent to Department as 1933; repeated to Paris as 339, London as 285, Moscow as 445.

Murphy
  1. Supra.
  2. The paragraph of the telegram under reference has not been printed.