Department of Defense Files: Telegram
The United States Military Governor for Germany ( Glay ) to the Department of the Army
top secret
priority
priority
Berlin
, May 2,
1948.
CC 4140. From CINCEUR Berlin Germany personal sgd Clay to Dept of Army for CSCAD Wash DC. Reurad April WX 80633.1
- 1.
- Agree it would be most desirable to maintain uniform currency
for Berlin to circulate freely in all sectors. Fear, however,
Soviet plans for Berlin might be based on political rather than
economic factors. Do not believe maintenance of reichsmark
currency in Berlin at all practical after Soviet Zone currency
conversion:
- (a)
- Because people would be forced to repudiate currency by lack of confidence and flood of reichsmarks from other areas, and
- (b)
- Because Berlin and surrounding areas so closely related economically.
- 2.
- While impressed by your arguments as to sovereignty and prestige consideration, consider establishment of separate western sector currency most difficult and probably untenable in long run. Defacement of Deutsche marks by perforation or otherwise psychologically inadmissable since it would be tacit admission that we plan to withdraw from Berlin and invalidate our own currency issue. If forced to issue currency separately in Western sectors, we would have to issue Western Zone Deutsche marks in absence of prepared separate currency.
- 3.
- Therefore propose when time comes to negotiate with Soviets for monetary union of Berlin with Soviet Zone, provided that issue of Soviet mark in Berlin is under Kommandatura agreement and control. This would provide for reaffirmation of existing 4-power Kommandatura sovereignty in Berlin. As in case of monetary union between Liechtenstein and Switzerland, sovereignty would not be questioned if such agreement can be obtained.
- 4.
- In event no satisfactory terms can be reached for monetary union of Berlin with Soviet Zone, we would have to issue Western Zone Deutsche marks in Western sectors. Agree unofficial circulation of Soviet mark in Western sectors would be tolerated but do not fear inflationary effect as long as no effort made to fix official rate of exchange between the two for such circulation and as long as Deutsche mark remains sole legal tender in Western sectors. In fact, assume tendency to hoard Deutsche mark both in Berlin and in surrounding Soviet Zone would more than counteract any inflationary effect, while free exchange rate would automatically reduce value of Soviet Zone mark if too great a supply flowed into Western sectors. Anticipate no [Page 904] difficulty over occupation costs as long as our large food imports into Berlin continue, irrespective of currency which circulates these [there?].
[
Clay
]