740.00119 Control (Germany)/2–1248: Telegram

The Acting United States Political Adviser for Germany ( Riddleberger ) to the Secretary of State

secret
urgent

342. Personal for Saltzman and Hickerson (Eyes Only). Reourtel 258, February 11 Control Council held executive session at end of [Page 874] yesterday’s meeting2 to consider report of finance directorate on currency reform.3 The report showed no complete unanimity and the chairman asked if all the delegations maintained the positions taken in the directorate. Upon indication by the US and UK members that their positions were maintained, Sokolovsky then made explanatory statement along following lines.

Agreement had been reached in the directorate on some points and positions were not far apart on others, citing place of printing, rate of exchange, Reich debt, prices and wages. In opinion of Soviet Delegation it is therefore possible to start printing new currency in Berlin under quadripartite control. This printing will take some months which will give time enough to settle other questions on which agreement has not yet been reached. If agreement cannot be reached in Control Council on certain of these questions, they can be referred to the governments for decision. He would therefore make the following proposal:

With a view to hastening monetary reform for all Germany and in order to maintain uniform currency, finance directorate should be instructed (a) to begin printing of new German currency based on principle that it be prepared at the Staatsdruckerei in Berlin under quadripartite supervision, (b) to continue discussion on draft law on financial reform for purpose of presenting to Control Council in near future proposals on questions which require a decision by Control Council.

General Clay stated there was merit in the Soviet proposal but before accepting he wished to offer three amendments as follows:

(1)
In proceeding with printing of money a period of 60 days must be set within which agreement must be reached. This would give all the time needed to consult governments and work out disagreements. It would be useless to have the currency if we could not agree on principles under which it would be issued.
(2)
US Delegation will not be prepared to establish a central German finance department unless by time agreement is readied on currency reform we have come to agreement on all the wider issues that separate the Control Council. General Clay held that these wider issues are not a deterrent to printing and issuing currency when ready.
(3)
When Control Council has finished using Staatsdruckerei for this purpose it revert to US sector.

Robertson then stated that UK views coincided very closely with Clay on points (1) and (2). On amendment (1) it must be clear what Soviet proposal means. He understood it as a proposal to print a new currency and not one that resolves problem of financial reform. Printing [Page 875] of currency is only a means to an end and it is therefore necessary to have assurance that those ends will be reached. Discussions on these matters have been taking place for several years and agreements are infrequent. He cited recent failure to get agreement on price of coal. Under Soviet proposal disagreements would be referred to governments but Robertson doubted if issues of this sort can be settled quickly.

On second amendment offered by Clay, Robertson wanted to hear from Sokolovsky whether he withdrew his reservation currency reform could not be effected unless central finance agency is established. This reservation is not compatible with desire for rapid progress. Such a central administration obviously cannot be set up in absence of agreement on larger issue of economic unity. In conclusion Robertson accepted Clay’s proposal and felt that time allowed was generous.

Koenig accepted Clay’s first amendment and on second stated that French position in opposition to central agencies before economic unity and before other political problems are settled is well known.

In reply Sokolovsky stated that if delegations are serious in wanting uniform financial reform they can all make concessions when discussing unagreed questions. Only the Soviet Delegate has made concessions to date. He was disposed to agree with Clay that other questions should be settled within 60 days and thinks this period is long enough to make agreement possible if good will is shown.

Clay said he assumes Sokolovsky will approach all questions involved with an open mind as do the other delegations. He attaches great importance to uniform currency reform and therefore has only one position which is fixed, as explained in his amendment. If Soviet proposal permits Council to go ahead, then it can be done.

Koenig as chairman then suggested that the Soviet proposal as amended by US proposal be agreed and the secretariat should draft a resolution incorporating these points for approval at the next session. The finance directorate would be instructed to start the currency printing and to begin work on its report. This proposal was adopted.

Riddleberger
  1. Supra.
  2. This was the 79th Meeting of the Allied Control Council for Germany. Regular transactions of the meeting are reported upon in the following document.
  3. The report under reference is not printed.