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

740.00119 Control (Germany)/8–2448: Telegram

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

top secret   us urgent
niact

Washington, August 24, 1948—11 p. m.

1007. For the Ambassador. Following is redraft of proposed communiqué and directive which we have made here after consultaion with Clay to reflect to greater extent principle of quadripartite administration of Berlin.² This redraft adheres as closely as possible to wording you sent us. Roberts is receiving comments thereon direct from Robertson at Bevin’s request.³

At end of quoted text reasons are given for such of our changes as are not immediately apparent.

Text of communiqué “The Governments of France, the U.K., the U.S.A. and the U.S.S.R. have agreed that the following measures (under (A) and (B)) shall be put into effect simultaneously, and have approved detailed arrangements for their implementation jointly worked out by the four military governors:

(A) The restrictions which have recently been imposed on communications, transport and commerce between Berlin and the western zones and between the various zones of Germany shall be lifted, and freedom of communications, transport and commerce shall be maintained.

(B) The German mark of the Soviet zone shall be accepted, on the basis agreed between the four military governors, as the sole currency for Berlin and the western mark ‘B’ shall be simultaneously withdrawn from circulation in Berlin.

The four Governments have also agreed that in addition to meetings of the four 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:

(1) Any questions regarding Berlin.

(2) Any problem affecting Germany as a whole.”

End text of communiqué. Text of directive: “The Governments of France, the United Kingdom, United States and U.S.S.R. have decided that the following steps should be taken simultaneously, subject to agreement for their implementation being reached among the four military governors responsible for Berlin:

(A) Restrictions on communications, transport and commerce between Berlin and the Western zones and to and from the Soviet zone of Germany which have recently been imposed shall be lifted;

(B) The German 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 consult together with your colleagues so as to make, in the shortest time possible, the detailed arrangements necessary for the implementation of these decisions, and to inform your Government not later than August 31 of the results of your discussions, including the exact date on which the measures under (A) and (B) above can be brought into effect. The four commanders will work out arrangements involved in the introduction of the German mark of the Soviet zone in Berlin and the regulation by the commission referred to in paragraph (F) below of its circulation in Berlin.

The arrangements relating to the currency changeover and to the continued provision and use in Berlin of the German mark of the Soviet zone shall ensure:

(A) No discrimination or action against holders of western marks ‘B’ in connection with the exchange of those western marks ‘B’ issued in Berlin prior to the effective date of this agreement. These shall be exchanged for German marks of the Soviet zone at the rate of one for one with an equitable compensation for different bases of issuance of the two currencies in Berlin.

(B) Equal treatment as to currency and provision of fully accessible banking and credit facilities throughout all sectors of Berlin.

(C) A satisfactory basis for trade between Berlin and third countries and all zones of Germany to be incorporated into an equitable trade agreement. Modification of the agreed procedure will be made only by agreement between the four Military Governors.

(D) The provision of sufficient currency for budgetary purposes and for occupation costs, reduced to the greatest extent possible;

(E) The regulation of currency circulation in Berlin, under the supervision of the Financial Commission referred to in paragraph (F), to be undertaken by the German Bank of Emission of the Soviet zone through the medium of the credit establishments operating at present in Berlin;⁴

(F) A Financial Commission of representatives of the four Military Governors shall be set up to control the practical implementation of the financial arrangements indicated above, involved in the introduction and the circulation of a single currency in Berlin. This commission shall endeavor to prevent the foregoing arrangements from leading to disorganizing currency circulation or disrupting the stability of currency in the Soviet zone of occupation”.

Explanation re changes in communiqué:

Under (A) words “transport and commerce” were added.

In (1) and (2) regarding Four Power meetings we changed sentences since we were disturbed that reference to questions and problems “which have not been settled by the Four Powers” might exclude discussion of matters which Soviets might claim were definitively settled by Yalta, Potsdam Agreements, etc.

Explanation re changes in draft directive:

At Clay’s suggestion, preamble was re-worded to emphasize responsibility of all four Military Governors for Berlin. He thought this amendment might help in reasserting principle of quadripartite Berlin administration, although he realized this did not fully and emphatically meet the issue.

Under (A), words “transport and commerce” were added to conform with similar provision of communiqué and reference to “traffic of goods” was amended.

Under second sentence (B) reference to Finance Commission was added.

Second set of lettered paragraphs.

Under (A). Amended to cover currency issued subsequent to time of introduction currency reform. Second amendment designed to provide non-discrimination for holders western mark who were originally issued considerably less converted currency than holders Soviet zone mark.

Under (B). Reference to protection stability Soviet zone currency could operate as a crippling reservation in this provision and is more appropriately related to functions Financial Commission mentioned under (F).

Under (C). We were disturbed by reference to “existing procedure” which might confirm claim present Soviet zone trade monopoly to handle all Berlin trade. Amended text suggested by Clay.

Under (D). We were disturbed that balancing of Berlin budget could be made a condition for payment occupation costs and prefer amended less rigid wording.

Under (E). Amendment self-explanatory.

Under (F). Pro vision originally under (B) added to this paragraph.

Marshall

1. This telegram was repeated to London as 3362, to Paris as 3292, and to Berlin as 1514.
2. The draft texts that follow were revisions of the drafts transmitted in telegram 1729, August 24, from Moscow, p. 1069. They were prepared following a teletype conference between the Department and the Embassy in London during the afternoon of August 24. (740.00119 Control (Germany)/6–3048)
3. In his telegram 4379, August 25, from Paris, not printed (740.00119 Control (Germany)/8–2548), Ambassador Caffery reported that the French Foreign Ministry generally agreed with the draft texts presented here and with the substance of the instructions contained in telegram 1006, August 24, to Moscow, supra.

4. In telegram 1012, August 25, to Moscow, not printed, the Department sent Smith substitute language for this paragraph which had been received from Clay. It read:

   “(E) The regulation of currency circulation and credit in Berlin to be under the supervision of the Financial Commission, referred to in part (F) through the medium of the credit establishments operating at present in Berlin. Appropriate agreements to be arrived at with the approval of the Financial Commission between the Berlin credit establishments and the German Bank of Emission of the Soviet Zone to insure adequate currency and credit supplies for the Departments of the city and the Berlin budget.” (740.00119 Control (Germany)/8–2548)