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

740.00119 Control (Germany)/8–348: Telegram

The Secretary of State to the Embassy in the Soviet Union ¹

top secret   us urgent
niact

Washington, August 3, 1948—7 p. m.

889. For Ambassador Eyes Only. We agree to outline draft statement contained your Niact 1507² with the elaboration of point 2 given below.

Our acceptance of Soviet zone currency in Berlin cannot be unconditional and its use must be subject to some form of quadripartite control. This requirement is essential for the maintenance of our position in Berlin and is made doubly necessary because of Soviet action of last few days in freezing accounts of western sector enterprises in Berlin.

The substitution of the Soviet zone mark for the B mark in Berlin can now be accepted in principle but our agreement must be supplemented by a satisfactory agreement providing for quadripartite control of the availability and use of the Soviet currency in Berlin.

In our opinion confirmed by Gen Clay such agreement should include control of credit, uniform application of credit rules and currency issue within Berlin, availability of sufficient funds for occupation powers, and some arrangements to cover trade between the Western zones and Berlin. Arrangements of this character are necessary for the orderly use of separate currencies in Eastern and Western zones coexistence of which we note Stalin acknowledged “until other matters in dispute could be settled.” (Your Niact 1508³) This is a point we feel should be stressed in future discussion with Soviets.

We would much prefer that lifting of the blockade should take place simultaneously with our agreement in principle to the acceptance of the Soviet mark as the sole currency for Berlin and recognition by the Soviets of the necessity to provide for the application of the foregoing requirements. However, if the Soviets insist that the lifting of the blockade shall take place simultaneously with the cancellation of the B mark and the substitution their own, instructions should be sent to the military governors in Berlin to work out without delay such arrangements as may be satisfactory for the use of the Soviet mark. This would of necessity postpone announcement of any general agreement but delay should not be longer than 48 hours. We wish to avoid acceptance of the Soviet mark and its introduction without prior Soviet commitment to the essential measures of control.

We have following alternative wording for point 2 to take care respectively of these two approaches (a) the Soviet zone mark will be accepted as the sole currency for Berlin through suitable four-power agreement which will insure equitable rights as to supply of currency, adequate budgetary provisions, currency basis for trade between Western zones and Berlin and freely accessible banking and credit facilities for all of Berlin, (b) The Soviet zone mark will become the accepted currency in Berlin and the Western zones mark will be withdrawn at an early date and under mutually satisfactory conditions determined by occupation authorities.

Either formula is acceptable to Clay with whom he had a telecon this morning and whose comments related principally to point 2.

We note with gratification that you were able to eliminate abandonment of western German governmental organization as a Soviet condition. This is question respecting which we must retain a free hand and we request you to continue to safeguard our position in this matter should it be brought up again by the Soviets. If further argumentation ensues you may wish to point out on the subject of the provisional government that any organization which results from the deliberations of the Consultative Council will allow all the German states to subscribe as soon as circumstances permit and the form will be established by the Germans.

As regards point 3, (a) we assume that immediately following announcement negotiations on Berlin will begin between the military commanders in Berlin, (b) we would prefer a simple announcement that a four-power meeting would be held. If Soviets however insist upon inserting a date in the announcement, we would be prepared to agree to any date after Sept 1 and would prefer Paris which is next in normal rotation.

We desire Moscow to be coordinating center for purposes of present approach and Dept will address you directly repeating all messages to London, Berlin and Paris. Within terms of outline in your Niact 1507 and foregoing comments we wish to allow you desirable latitude in drafting of statement but before final agreement governments must have opportunity to examine the text.⁴

Marshall

1. This telegram was repeated to London as 3067, Paris as 2970, and Berlin as 1365.
2. Not printed; the draft statement read as follows: “1. Removal of all transport restrictions, both those between Berlin and the western zones and on transit traffic to and from eastern zone, and simultaneously, 2. Cancelation of mark B in Berlin and introduction of Soviet zone deutschemark in Berlin, and 3. Announcement of resumption of negotiations on Berlin and Four-Power meeting to consider other outstanding problems affecting Germany.” (740.00119 Control (Germany)/8–348)
3. August 3, p. 999.
4. For the text of supplementary instructions sent to Ambassador Smith in telegram 898, August 4, to Moscow, not printed, see The Berlin Crisis, pp. 21–22.