740.00119 Control (Germany)/8–1348: Telegram

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

secret

2032. Although semblance of unified Berlin city government still being maintained, unity is only fiction in most important branches of government. Except for outward appearances, split has already taken place in police and food departments and to great extent in city postal administration; it furthermore appears inevitable in labor, economics and financial departments.

I.
Police. After suspension of Police President Markgraf by Magistrat on July 26, Soviets continued recognition of him as Berlin police president. Western military governments upheld suspension and recognized as acting police president of Berlin Markgraf’s former deputy, Stumm. Latter established headquarters in US sector because Markgraf remained in physical possession of old police praesidium located in Soviet sector. Neither recognizes orders of other. Thus two separate police systems are actually functioning, one under Stumm for western sectors, other under Markgraf for Soviet sector.
II.
Food. Food department of Magistrat is still under nominal direction of its regular chief, Fuellsack, who, according to information subsequent to that reported in mytel 1993 August 11 (repeated London 455, Paris 461, Moscow 3761), still occupies his office in Magistrate central food office located in Soviet sector, thus theoretically still supervising food distribution for all sectors. Actually, however, the [Page 1039] separate sub-section of central food office, which was illegally set up under Letsch by unilateral Soviet order, controls all food for Soviet sector while food distribution for western sectors is being taken over by office presently being established in British sector. Latter office headed by Anton Schoepke, LDP, deputy to Fuellsack in central food office.
III.
Deutsche Post administration. Contrary to legitimate procedure, Dr. Schroeder, head of Soviet zone postal administration, has been issuing orders to Soviet sector post offices which, like those in western sectors, are supposed to take orders from Berlin Deutsche Post headquarters located in British sector. On Schroeder’s orders, for example, an office was established in Soviet sector where beginning August 3 western sector residents must go if they want to effect money transfers with Soviet sector or Soviet zone, all transactions to be handled in east marks. Furthermore Soviets blocked all western sector postal checking and savings accounts in eastern marks, refusing payments to western sector residents from their eastern mark accounts. Because of this a special postal checking account and money order service has been established in western sectors for both eastern and western marks. Split in Berlin Deutsche Post thus already widened to considerable extent.
IV.
Labor. As reported mytel 1974 August 9 (repeated London 446, Paris 450, Moscow 3662), Soviets have ordered Magistrat to recognize only those wage agreements negotiated by SEDFDGB and refuse recognize those negotiated by FDGB (UGO). Western military governments and Magistrat previously and subsequently ordered labor department of Magistrat to recognize FDGB (UGO) contracts. LPD head of labor department, Waldemar Schmidt (SED), has refused to accept these orders declaring he will follow only Soviet orders. Situation as yet undetermined but split in labor department appears inevitable.
V.
Social insurance. In view of Soviet action last week blocking payments to western sectors, and western military governments reply August 11 which blocked transfers of funds to Soviet sector, split in Social Insurance Institute of Berlin (VAB) seems unavoidable due to necessity of handling separate receipts and payments.
VI.
Economics and finance. The German Economic Commission (DWK) for Soviet Zone, and agencies subsidiary to it, have gradually withdrawn most of Soviet sector economy from Magistrat control. Trusteeship administration for sequestered enterprises (Deutsche Treuhand Gesellschaft), which was established some months ago under direct control of Soviet Military Government for Berlin but [Page 1040] is now under control of DWK, administers every major Soviet sector manufacturing firm which is not a Soviet AG. German currency bank (Deutsche Notenbank) which is also under DWK and is agency which issued new eastern currency, has largely taken over Soviet sector credit control in alliance with central office of city bank (Stadtkontor) located in Soviet sector. Berlin Trading Company (Handelsgesell-schaft fuer Gross Berlin) centralizes all wholesale trade and has arranged with German currency bank and Soviet Military Government to unblock funds of only those west sector firms which agree to trade exclusively with Berlin Trading Company. Furthermore, DWK lias notified west sector firms (my A–622 August 103) that trading company was established for purpose of providing raw materials, fuel and power to those west sector firms ready to cooperate with the company; and that latter was also authorized to handle entire trade of such firms by providing markets in Soviet sector, Soviet Zone and foreign countries. Thus it is evident that Magistrate departments of economy and finance, although still located in Soviet sector, have little or no authority in Soviet sector and that DWK and its agencies are attempting to usurp their authority even in western sectors. In view of crescendo of Soviet propaganda attacks against heads of these departments (Klingelhoefer and Heinzelmann, respectively), it is questionable how long the departments will be able to continue even nominal operation from present location in Soviet sector.

Above demonstrates that simultaneously with Soviet-SED attempts to split or neutralize the present city government, agencies wholly under Soviet control are attempting to usurp the functions of that government. These processes have proceeded with undiminished tempo during Moscow negotiations, in contrast to western military governments attitude of avoiding any action which would exacerbate situation.

Sent Department as 2032, Moscow 392, London 470, Paris 477.

Murphy
  1. Not printed; in it Murphy reported the Magistrates order of August 9 which moved the central fuel office to the western sectors of the city since the Soviets had made it impossible for the office to operate in their sector (740.00119 Control (Germany)/8–1148).
  2. Not printed.
  3. Not printed.