740.00119 Control (Germany)/8–448: Telegram

The United States Military Governor for Germany ( Clay ) to the Department of the Army

top secret

CC–5432. Personal for Gen Bradley and Secretary Royall. I am sorry that I had not seen Smith’s second and longer message giving a detailed account of conversation with Stalin.1 Having seen this report, I must say that I consider it far less optimistic intone than indicated in the summarized first version.2 It becomes clear in the second message that no specific mention was made with respect to Quadripartite control of Berlin economy in the event Soviet currency is accepted. Without such control we would in fact in short order have no real say in Berlin Government.

I hope that the subsequent negotiations either in Moscow or here can clarify this situation. It would appear from the conversations that the full import of this problem was not fully understood by the three Western representatives. Soviet measures now being introduced indicate quite clearly their determination to obtain full control of Berlin banking and credit systems. German political leaders who visited us last night believe that the acceptance of such measures would in fact destroy the present city government. I bring this up now only to emphasize [Page 1012] the importance of obtaining a satisfactory agreement as a condition precedent to our withdrawal of Western mark currency. State Department instructions to Smith seem very clear and to the point on this question.3

The conversation also makes it clear that there is no real change in Soviet position with respect to the German problem, and in maintaining this position, there remains the implied threat of a renewal of the blockade if and when Western German Government is established. It seems important that we recognize this possibility now. A second imposition of the blockade might take on the nature of an overt act insofar as public opinion is concerned.

Assuming a reasonably satisfactory solution is obtainable for the Berlin currency issue, there is obviously no other course of action left open to us except to accept in principle the Soviet proposal. However, we should do so with our eyes open as to the possibilities which may develop from such acceptance. It is obvious that the Quadripartite meeting at governmental level will be held during the period Western German Government is under consideration, and that political uncertainties will be increased during such a period. It will add to our difficulties in the execution of present policy in Germany, although it seems to us here that the prompt execution of this policy becomes of even greater importance.

Our net gain from the proposal, as I see it, is the lifting of the blockade with some increased prestige as a result, which will be offset in whole or in part by our loss of prestige in Berlin particularly, as we withdraw our currency. However, the lifting of the blockade does remove an immediate risk which might lead to war, and thus gains valuable time. Our net loss, in addition to some loss of prestige in Berlin, [is] the creation of an unsettled political atmosphere for the formation of Western German Government and the economic recovery of Western Germany. This can be offset by careful and delicate handling of the situation within Germany provided the three Western Allies still give full allegiance to the London Conference and no one of the three Western Allies uses the Quadripartite conference either to delay its own decisions or to foster discouragement and delay in German minds.

In finding a solution for the short-range problem of blockade, we have complicated our long-range problem. This is not intended in criticism since I fully agree there is no alternative. However, it does seem imperative to me that some high governmental voice use the time now ahead of us to thoroughly educate American public opinion with respect to our policy in Germany and the necessity for its early implementation [Page 1013] in the interest of European recovery and the prevention of Soviet dominated Communist expansion.4

[ Clay ]
  1. Telegram 1508, August 3, from Moscow, p. 999.
  2. Telegram 1507, August 3, from Moscow, not printed.
  3. Transmitted in telegram 889 to Moscow, August 3, p. 1008.
  4. In telegram 3490, August 3, from London, not printed, Ambassador Douglas bad expressed bis interpretation of the conversation with Stalin along the same lines as Clay. In addition he stressed that under Stalin’s analysis of the western rights in Berlin “… the only way in which we can maintain and enjoy the right to remain in Berlin and to occupy our sectors is to suspend, if not cancel, the London decisions.” (740.00119 Control (Germany)/8–348)