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

740.00119 Control (Germany)/8–2548: Telegram

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

top secret   us urgent
niact

Moscow, August 25, 1948—7 p. m.

1750. Personal attention the Secretary, Eyes Only. My comments on Department’s 1007, August 24:¹

Draft communiqué:

(a) Addition good and would probably be accepted. Under subparagraphs (1) and (2)—see no real difference in actual significance in English meaning of words “which have not been settled” etc., and the word “outstanding” used in our original proposal. Former words inserted to get around difficulties of Russian translation as Molotov said Russian equivalent of word “outstanding” was either “unsettled” or “unsound”. This change would simply open up another argument from Molotov for inserting additions proposed by him which we rejected. Doubt if there has yet been a Four-Power conference where Molotov did not attempt exclude items as having been settled “by Yalta or Potsdam” and see no reason to expect him to refrain from doing so in future regardless of wording in communiqué. Recommend change not be insisted on, or take original word “outstanding” which British prefer.

Draft directive:

Preamble—The shade of meaning between the two versions² is so relatively insignificant that it hardly justifies the counterproposals it will provoke simply in an attempt to slip in the word “responsible” which Molotov will reject anyway. Also do not see any particular reason for omitting the word “practical”. It must be remembered that every word changed or omitted gives an opening for counterattacks. Recommend change not be insisted on.

(A) Addition of “transport and commerce” and omission of the words “on the traffic of goods”, essentially same meaning and may get by.

(B) Molotov might accept insertion of some supervisory reference to the Financial Commission referred to in paragraph F, but sure he will not accept deletion of reference to the function of the German Bank of Emission. Recommend latter be retained.

Second set of lettered paragraphs:

(A) Molotov would probably accept an extension of wording to cover those issues of western currency made by authority of Military Governors subsequent to the initial issue. He might also accept the second amendment in some form. We are poorly equipped to argue such points which I visualized would be raised during the technical discussions in Berlin and referred here if necessary for us to fight out with Molotov while these discussions in progress. We are not capable of evaluating the counterproposals on wording which Molotov is sure to make in an effort to slip back in some of the points he has so far failed to make. It seems that our people in Berlin might well argue that the proviso re nondiscrimination should clearly be interpreted to cover this point and we here might put Molotov on notice re second amendment without actually adding the proposed words if he objects strongly. Such objection would mean, of course, trouble in Berlin. Recommend that second amendment not be insisted on.

(B) If “equal treatment” is actually going to lead to possible disorganization of currency circulation or disrupting stability of currency in Soviet zone, as the omission of this phrase will imply to Molotov, then we might as well stop right now. The inadequate wording proposed under (F) will not satisfy him by any means. This is another technical matter which we are not competent to argue here but which should be discussed in Berlin, and is one of the reasons why the phrase “subject to agreement being reached among the four Military Governors” is inserted in the preamble. Recommend this change not be insisted on.

(C) Concur. I was suspicious of this paragraph from the start, but my technical knowledge re Berlin’s trade is nil, and your 1007 does not give me much ammunition for argument. See my final comment under (B) above.

(D) Molotov will fight omission of reference to balancing Berlin budget. However, he does not seem to visualize this as a short-term job, although like other items in the directive he has probably inserted it for later tactical use against us. I doubt if he will break on this point alone, however, and we may be able to water down the phrase but hardly to eliminate it. It is hard for us to argue against trying to balance Berlin budget. Recommend this change not be insisted on.

(E) Concur. Added wording is good. Similar formula might be used in first paragraph following first numbered series where reference to German Bank of Emission has been deleted by you.

(F) To say to Molotov that a commission suggested by Stalin shall “endeavor” to prevent disorganization of currency in the Soviet zone conjures up mental picture which I hope, on further consideration by Department, will provide there a touch of humor which has been lacking here in our proceedings so far. I really think that this commission must be at least “charged with” this duty, but my comments under paragraph (B) apply here and I recommend we adhere as far as possible to original arrangement and wording. This is another matter “subject to agreement in Berlin”. Recommend this change not be insisted on.

General comment:

I have just reread in Deptel 889³ the 32-word formula (B) which Clay at that time considered acceptable to cover the currency question and I cannot help wondering where the rest has come from.

I must say my reaction to all the foregoing, as a whole, is that if our governments want us to start this thing all over, we are of course prepared to do so, and proposed redraft more or less puts us in that position. But if we really want a decision, we must make up our minds on fundamental lines suggested my preceding telegram.⁴ If it is to be a break, then let us break on the basic issue of the quadripartite control of Berlin. The language changes suggested in reference telegram slide indirectly toward this issue, but they do not constitute an acceptance of such quadripartite control and would not be regarded as a commitment to this effect by the Soviet Government.

My recommendations as to tactics in present situation are as follows:

1. We should get coordinated text with British and French as quickly as possible. I hope within a matter of 24 hours.

2. We should secure such concessions as we can extract from Molotov in one further meeting.

3. Our governments should accept the resulting directive and refer the matter to Berlin as quickly as possible under a one-week time limit. If the conferees in Berlin stick on any point which we might solve here, it can be referred here for concurrent conference with Molotov. Together we may succeed.

4. If failure is inevitable, then let it come at the end of that week and clearly on the issue of quadripartite control.

5. At the end of the week we would have our final meeting with Stalin and speak our closing piece as clearly and forcibly as possible.

6. We would proceed thereafter in accordance with the plans already worked out by the Department for the eventuality of a breakdown in these talks.⁵

Since dictating the above, I have read the instructions just received by Roberts in which Bevin state he has informed Douglas that subject to amendments he has suggested (and they are few) he is prepared to agree to the text we submitted. He then adds: “There may be some justification for our fears. But there comes a point in every negotiation when a decision must be taken and I do not consider the difference between the drafts which you presented to Stalin and the drafts which you have now submitted for approval would be sufficient to justify in the eyes of our public a breakdown in negotiations. We have a chance of wrecking the agreement if we put up a long series of amendments.”

On the assumption that if possible an agreement without sacrifice of major principle is desired, I completely concur in Mr. Bevin’s opinion as quoted and believe that this opinion should be taken as reinforcing the recommendations on tactics which I have submitted in this message.

Sent Department 1750; Department pass to Paris as 283 Eyes Only for Caffery, London as 171 Eyes Only for Douglas, Berlin as 338 Eyes Only for Clay and Murphy.

Smith

1. Ante, p. 1074.
2. The two versions under reference here are those transmitted in telegram 1007, August 24, from Moscow (p. 1074) and in telegram 1716, August 23, from Moscow (p. 1061) as amended by telegram 1729, August 24, from Moscow (p. 1069).
3. August 3, p. 1008.
4. Telegram 1749, supra.
5. During the month of August the United Kingdom, France and the United States were working on the texts of a joint note to be sent to the Soviet Government in the event of a breakdown in the talks at Moscow and a joint press release explaining the failure of the talks. Both documents were updated as each succeeding meeting in Moscow failed to produce the expected breakdown. The various drafts and revisions are included in the August 1948 segment of the Department of State file 740.00119 Control (Germany).