740.00119 Control (Germany)/8–1748: Telegram

The Ambassador in the Soviet Union ( Smith ) to the Secretary of State

top secret   us urgent

1664. Eyes Only for the Secretary. British and American staffs have collaborated in producing following which is our suggestion and recommendation for conduct of final meeting with Stalin (re Embtel 1663, August 171). Begin text proposed opening statement:

“Draft opening statement for final meeting with Stalin.

“Since our last meeting with you, Generalissimo, we have had four further discussions with Mister Molotov. At those meetings we have exchanged views in a frank and, I think, a friendly way, and our talks have perhaps served a useful purpose inasmuch as they have at least cleared some of the ground. We have not, however, reached agreement.

“The main obstacle to joint agreement on a communiqué is one of principle. All four governments have stated that they would be willing, under certain conditions, that the various restrictions on communications should be lifted, that Four-Power meetings should be held to discuss any other outstanding questions affecting Berlin or Germany, and that the Soviet zone mark should be accepted as the sole currency in Berlin. The essential point on which we have failed to reach agreement is the conditions under which the Soviet zone mark should be accepted as the sole currency for Berlin. On this issue, the standpoint of the three Western governments, put at its simplest, is that before [Page 1050] we can agree to that arrangement we must have an adequate guarantee, in the form of joint Four-Power regulation of the flow and use of Berlin currency. Our governments cannot accept an arrangement which might result in the undermining their unquestionable right to be in Berlin or in making it impossible for them to exercise that right, or to discharge fully their obligations as occupying authorities. On that question of principle there is no possibility of our governments altering their position. There is no hidden motive behind this attitude and no idea of trying to produce a situation which would be damaging to the economy of the Soviet zone. Our object, as I hope we have made clear, is simply to safeguard our own position if the German mark of the Soviet zone becomes the sole currency for Berlin. If we cannot secure those safeguards, we shall have no option but to continue to maintain ourselves in Berlin and discharge our obligations in our respective sectors by methods we are now employing at the present time.

“For the rest, it seems to us that the respective points of view expressed by Molotov for the Soviet Government and by ourselves for the three Western governments are not too far apart to preclude agreement.

“At our first meeting with you, we were glad to hear you say that the Soviet Government had no wish to oust the Western powers from Berlin, and we think it would probably enable us to reach an agreement almost immediately if you and Molotov found yourselves able to give practical expression to that attitude by meeting us on this question of quadripartite regulation of the Soviet zone currency within the strict limits of its use in Berlin.

“Speaking personally, I think that that would be a gesture which would amply repay the Soviet Government. To the Western governments and to their peoples Berlin, which has always been one of the tokens of the common allied victory, has become more than a piece of territory to be controlled by this or that power. It has come to be a symbol. The possibility of peaceful co-existence and collaboration of the Soviet and Western systems in which you yourself have more than once expressed belief will be largely judged by what happens there. If we are able to get along together in Berlin, we can hope to get along in other spheres, too. If we break down over Berlin, then a lot of ordinary folks will give up hope altogether.

“To come back to our immediate problem—we are now putting before you the best suggestion for a solution which it has been possible for our governments to arrive at in the light of the series of talks we have had in Moscow. We have prepared a draft communiqué which conforms as nearly as possible to the basic formula stated by you at our initial conference, while at the same time providing what our governments consider to be the minimum essential safeguards on the fundamental question of our position with respect to Berlin.” End text.

At conclusion of opening statement we would recommend that Generalissimo Stalin be presented with a Russian translation of the following draft but which has been foreshortened by combining paragraphs one, two, and three thereof into a single paragraph one, now reworded so as to be identical in form and provisional implications [Page 1051] with currency paragraph previously presented to Molotov,2 and now included as paragraph two. Paragraph three covers the question of meetings. The paragraphs are arranged in this draft in same order as the subjects mentioned by Stalin in his basic statement at our initial conference.3 This we consider of some importance.

Draft begins: “Third Western draft.4

  • “1. On August 25 all restrictions which have been imposed, both on the transport of persons and goods in either direction between the three Western zones of Germany and Berlin, and on the traffic of goods to and from the Soviet zones of Germany, shall be removed and freedom of communications maintained, provided that before that date the four Military Governors shall have worked out the necessary arrangements.
  • “2. As from August 25, the German mark of the Soviet zone shall be accepted as the sole currency for Berlin and the Western mark ‘B’ shall be simultaneously withdrawn from circulation in Berlin, provided that before that date the four Military Governors shall have worked out arrangements for that changeover and for the continued flow and use in Berlin, under quadripartite authority, of the German mark of the Soviet zone.
  • “3. In addition to meetings of the Military Governors, meetings; among representatives of the four governments, in the form of the Council of Foreign Ministers or other conferences of representatives of the Four Powers, shall be held in the near future to discuss:—
    • “(a) Any questions which may be outstanding as regards Berlin, and
    • “(b) Any other outstanding problems affecting Germany as a whole.”

Draft ends.

As a corollary we would then introduce a draft directive to Military Governors which is based on Molotov’s personal draft5 and which includes basic safeguards on which we have so far insisted. The slight modifications of wording are results of discussions which took place at our last conference.

Draft begins: “Directive to Military Governors.

“The Governments of France, the United Kingdom, the United States of America, and the Union of Soviet Socialist Republics have agreed that the following steps should be taken simultaneously:

  • “(a) Restrictions on communications between Berlin and the Western zones shall be lifted;
  • “(b) The Germany mark of the Soviet zone shall be introduced as the sole currency for Berlin, and the Western mark ‘B’ shall be withdrawn from circulation in Berlin.

“In connection with the above you are instructed to examine, together with your colleagues, within the shortest possible time, and if possible before August 25, the detailed arrangements necessary for the implementation of this agreement and to inform your government of the exact date on which the provisions under (a) and (b) above can be brought into effect. These arrangements shall include such regulations as may be necessary to safeguard the currency of the Soviet zone issued by the German bank of emission of the Soviet zone and to prevent illicit black market operations in currency; they shall also ensure: in connection with the substitution of the German mark of the Soviet zone for the Western mark ‘B’ in Berlin at the rate of one for one, there shall be no discrimination against holders of the Western mark ‘B’ or the German mark of the Soviet zone; equal treatment as to currency and provision of fully accessible banking and credit facilities throughout all sectors of Berlin; unhampered trade and economic connections with third countries and with all zones of Germany, subject only to such provisions as may be agreed from time to time among the four Military Governors; and the provision of sufficient currency for budgetary purposes and occupation costs” Draft ends.

If the question of occupation costs is raised, as it undoubtedly will be, we will present Stalin and Molotov with a translation of the following proposed directive on occupation costs to Military Governors, and will state that this directive might be submitted in conjunction with the Soviet6 preceding directive or might be held in abeyance until basic issues of traffic restrictions and currency change had been disposed of, after which the Military Governors would be able to devote time and attention to a serious study of alleviating, insofar as practicable, the burden of occupation costs upon the City of Berlin.

Draft begins: “Directive to Military Governors on occupation costs.

“During the discussions in Moscow resulting in the joint communiqué of (blank date) the question of occupation costs devolving upon Berlin was raised.

“In connection with the above you are instructed to examine, together with your colleagues, the general question of Berlin occupation costs with a view to the possible alleviation of the burden of such costs upon the city. In this connection due regard should be given to the value of food, fuel, and Other supplies imported into Berlin by each occupation power in relation to the value of goods exported.” Draft ends.

Finally, and only if insisted upon by Stalin, we would introduce the following proposed statement on the London decisions with respect to Germany and would inform Stalin we would agree to the inclusion [Page 1053] of this statement as a published annex to the communiqué. If he insisted on recording the full oral statements made by both parties at a previous conference, we would be obliged to decline with the statement that these had been recorded and were now a matter of record with governments concerned but with respect to publication, statement in our proposal represented extent, to which our governments were willing to go.

Draft begins: “Separate statement on implementation of London decisions regarding Western Germany.

“During the negotiations the Soviet Government expressed its wish that the implementation of the decisions of the London Conference should not result in the establishment of government for Western Germany before the representatives of the Four Powers had been able to meet to discuss the whole German problem. The representatives of the three Western powers affirmed the desire of their governments for a Four-Power agreement whereby a government for the whole of Germany would be established. They explained that the London decisions did not preclude such an agreement. They were not, however, able to agree to any postponement of the implementation of the London decisions.” Draft ends.

Request your comments, suggestions, and advice, not only as to form and content of above, but as to tactics of presentation. These should be given us as a matter of urgency since we believe that too much delay at this point is inadvisable. We have not consulted our French colleague. Reasons and suggestions for coordination with Paris in separate telegram.7

Sent Department as 1664; Department repeat to Berlin 314 Eyes Only for Murphy and Clay; Paris 257 Eyes Only for Caffery; London 147 Eyes Only for Douglas.

  1. Supra.
  2. The reference here is to the draft statement presented to Molotov on August 16 (see telegram 1648, August 17, from Moscow, p. 1042) and printed in The Berlin Crisis, p. 33 or Cmd. 7534, p. 32.
  3. See telegram 1508, August 3, from Moscow, p. 999.
  4. Regarding the first draft statement, see footnote 4 to telegram 1635, August 16, from Moscow, p. 1040; the second draft statement is identified in footnote 2 above.
  5. The reference is presumably to Molotov’s counterdraft of August 9; for text, see The Berlin Crisis, pp. 23–24 or Cmd. 7534, p. 26.
  6. In telegram 1635, August 18, from Moscow, not printed, Smith requested the Department to delete the word “Soviet” from the draft directive (740.00119 Control (Germany)/8–4848).
  7. In his telegrams 1665 and 1666, August 17, from Moscow, neither printed, Ambassador Smith asked the Department of State not to discuss telegrams 1663 and 1664 with the French Foreign Ministry because of the suspicion that coded messages to the French Embassy in Moscow were being read by Soviet authorities (740.00119 Control (Germany)/8–1748).