Foreign Relations of the United States, 1948, Germany and Austria, Volume II

740.00119 Control (Germany)/6–2848: Telegram

The Secretary of the Army (Royall) to the United States Military Governor for Germany (Clay), at Berlin¹

top secret

[Washington, June 28, 1948.]

Reur CC 4875 of June 25² and telecon 9677 of June 26.³

Your proposal and telecon have been considered at highest level here. We are in full accord with your overall estimate situation. We agree that controversy over currency is probably just a phase in major Soviet effort drive Western Powers from Berlin. We agree with your doubts whether any approach to Sokolovsky on currency alone will accomplish any settlement of long duration if any settlement at all. Basic Berlin problem seems not currency but quadripartite authority.

We feel early discussion with Sokolovsky would be desirable to feel out present Soviet intentions with respect to Berlin. Therefore agree your proposal for a meeting with Sokolovsky.

1. Unless you have overriding reasons, suggest you make following points at meeting:

a. Inform Sokolovsky that by agreement between the four powers, and at the request of the Soviets, the Western Powers are feeding the population of the western sectors of Berlin, and you are concerned that the present bans on rail and highway shipments if persisted in will raise major governmental questions.

b. Point out that statements have been made that traffic stoppage and other hardships on the population in the western sectors have been imposed as protective measures because of the currency situation. If the currency situation in Berlin is in fact the underlying reason, you will be glad to discuss that problem again looking toward a solution of the Berlin currency situation. Also point out some of the hardships imposed upon the western sectors were initiated during the time when old marks were still in use in the eastern zone; that situation is now changed with new currency in the eastern zone as well as in the western zones.

c. Make clear that agreement cannot be reached on currency except in conjunction with lifting traffic ban.

2. As you consider proper, in light of current situation you are authorized to use following as possible basis for discussion with Soviets:

a. Trade arrangements: Trade arrangements for Western Germany—Berlin and for Western Germany–Eastern Zone as subjects of separate agreements. Agree your thought trade should be held as nearly equal as possible. Do not feel advantages of face saving gained from use of DM in Berlin–Western Zone trade are sufficiently great to outweigh confusion use DM for this purpose might make.

b. Berlin currency: Use of Soviet currency in Berlin with essential condition that Soviets guarantee free access to Berlin. Principles of quadripartite control and assurance of adequate supplies of currency and banking credit facilities for Western sectors are regarded here as important as is also establishment of satisfactory foreign exchange regulations and controls, but agreement these points left your discretion. Also important Western Powers retain full control over disposition Soviet marks acquired through sale all commodities imported Berlin by Western Powers.

3. Coordinate this with Robertson and French. State is repeating this message to Douglas who will be of such assistance with Bevin as you may require.

[ Royall ]

1. The source text was included in telegram 2440, June 28, to London (to Paris as 2342), not printed, with instructions to Ambassador Douglas to discuss the message with Foreign Secretary Bevin.
2. Ante, p. 917.
3. The teletype conference under reference has not been further identified: it may be the conference described and briefly quoted in Clay, Decision in Germany, p. 366.