740.00119 Control (Germany)/8–3048: Telegram
The Ambassador in the Soviet Union (Smith) to the Secretary of State
niact
1818. Eyes Only for the Secretary, Clay and Murphy, Douglas, and Caffery. Reference mytel 1816, August 30.1
[Page 1093]Meeting with Molotov and Vyshinski lasted two hours.2 We explained our governments agreed generally to the communiqué and directive drawn up at our last meeting3 but wanted one or two points clarified.4
With reference to balancing of budget (paragraph 2D) we assumed Molotov agreed that budget could not actually be balanced within the week which the military governors had to settle matters in Berlin and probably not for much longer time. On other hand our governments agreed that earliest possible balancing of budget was highly desirable and indeed essential. We asked Molotov whether he would agree to insertion of the words “earliest possible”. Molotov said he preferred not to change language which had resulted from many discussions. It must be left to the military governors to give a date for balancing of budget. However, in reply to specific question he said he thought this could be done within a week. We made it clear that in our opinion this was a job which must take considerable time and certainly more than a week or even a month. Molotov would agree only to leave matter to the military commanders but thought that since we were willing to reduce occupation costs agreement should be reached quickly in order to avoid leaving a loophole for undermining Soviet zone currency. We said we would not insist upon changing wording of directive but wished Molotov to understand very clearly that in our view, even with the greatest good will, this would take much longer and that balancing of budget within week could not be regarded as a condition of success in Berlin. Molotov finally said “let the military governors discuss it and see how long they would take.”
Our next question was on confirmation of explanations already given to us by Stalin and Molotov regarding functions of Finance Commission. We pointed out that while we had not insisted on agreed minutes of all our conversations, during which explanations of function of the Finance Commission made by Generalissimo Stalin and Molotov had seemed adequate, fact remained that our governments were in possession only of our version of these talks in connection with authority and responsibilities of the Commission. Therefore it was desirable to review previous statements to be sure that there had been no error in reporting the position of the Soviet Government. Molotov immediately [Page 1094] rejected this as “a new document” which he was not prepared to discuss or even consider. He said that the draft directive was what we were concerned with and it was perfectly clear in its implications. Discussion of this subject lasted more than an hour. We restated our position from every possible angle and Molotov continued to reject what he termed a “new document” or “new formula”. Finally after denying implication that he was not willing in interest of clarity to discuss matters on which we had reached a full understanding he indicated willingness to answer questions on subject in order that our reports to our governments of the Soviet view could be checked and corrected if in error. We then read to him following from minutes of previous meetings:
“Generalissimo Stalin replied that it was impossible to give up the phrase ‘about the German Bank of Emission’ because economically the Germany Bank of Emission controlled the flow of currency throughout the whole of the Soviet zone and it was impossible to exclude Berlin from the Soviet zone. However, if the question was asked whether it did so without being controlled itself the answer was ‘no’. Such control as was envisaged would be provided by the Financial Commission and by the four military governors in Berlin, who would work out the arrangements connected with the exchange of the currency and with the control of the provision of currency and would supervise what the bank was doing.”
Molotov declined to confirm exact wording of the statement attributed to Stalin saying that he had not committed Stalin’s remarks to memory. We then asked whether we were right in understanding that the control functions of the Financial Commission were as indicated in this statement by Stalin. He replied “quite true”. We then read following from minutes of meeting with Molotov on August 27.
“Mr. Molotov said that agreement had been reached in Moscow on the four questions for which the four military governors had to work out arrangements and agreement had been reached on the two questions of regulation of currency circulation and of the Financial Commission for controlling matters connected with those financial arrangements. When the four military governors have worked out the four questions allotted to them and when the measures which they work out are placed under the control of the Financial Commission, this will mean that the Financial Commission will control the currency circulation in Berlin in these respects. Therefore when one spoke concretely of the questions to be worked out with regard to the financial arrangements and the control by the Financial Commission one must at the same time recognize that principle which had been recognized in respect of the German Bank of Emission. This principle, which had been mentioned in the penultimate paragraph, did not need to be referred to the four military governors as it had been settled in Moscow. This was the point of view which he wanted to repeat.”
Mr. Molotov questioned some of the wording of this paragraph saying it was not entirely exact. What he had meant to say was that the [Page 1095] following two questions had been settled in Moscow: (1) The regulation of currency circulation by the German Bank of Emission as defined in the penultimate paragraph of the directive, (2) the setting up of the Financial Commission to control the financial arrangements listed in (A) to (D) which were to be worked out by the four military governors. We then read following extract from minutes of same meeting: “Mr. Molotov said that with regard to the Financial Commission it would not only be a controlling body but it would supervise the introduction of currency and its continued circulation.” Mr. Molotov agreed, adding “only to the extent envisaged by the four military governors”.
We consider this constitutes agreement to our minutes in so far as an oral agreement can be obtained or can be considered as binding in the circumstances. Presumably it is line which will be followed generally by the Soviet conferees in Berlin.
Molotov asked irritably why he was expected to agree on “a new document,” and he was at a loss to understand the suggestion in a letter from our interpreter to his interpreter that the draft communiqué had already been agreed.
It soon became clear that he was arguing that the draft communiqué could not be regarded as agreed until it included a paragraph on the London decisions which he had previously proposed. We replied our impression had been that he intended London decisions should be covered by a separate statement. He was clearly determined to make the most of his imaginary grievance on this issue, and did so.
Some discussion followed regarding time limit for military governors in Berlin to complete their work. Molotov said he was ready to make it September 10 but we eventually agreed to September 7 (French were willing to extend this time limit, but Bevin wanted to make it September 4).
On question of an interim communiqué, Molotov asked first whether directive was now agreed. We replied in affirmative. Molotov at once said he regarded it inadvisable to issue anything but final agreed communiqué saying negotiations were confidential and we had agreed not to divulge them. We explained difficulties which our government would have with press and public opinion if nothing were said now that the four military governors in Berlin were to meet, a fact which would be known at once. We explained we wished to say as little as possible and did not propose to go beyond the two points suggested in our draft. Molotov was insistent that a brief communiqué of the kind we proposed could not be accepted by the Soviet Government although they might of course agree to one which “explained the position more fully”. We spent a lot of time on this to no purpose. Most we could get out of Molotov was that he did not raise positive objection when we warned him that if our governments were asked, as they [Page 1096] would be, whether talks were now proceeding in Berlin and whether further meetings would take place in Moscow, they would certainly have to answer in affirmative. He was most insistent that it had been agreed to keep these conversations confidential, that there was no reason why any more should be said in Berlin or our three capitals than had hitherto been said in Moscow, and above all that there should be no statement on substance of conversations unless it was a detailed one. He warned that otherwise Soviet Government would feel free to issue its own version. We finally agreed not to issue an interim communiqué on understanding that we should have to answer such questions as those we had mentioned. We assured him that we would keep substance of negotiations confidential.
We then informed Molotov that if and when final agreement was reached and final communiqué published we would be obliged to accompany it with a public announcement of reservation of our rights and duties as occupying powers in Berlin. He replied that Soviet position was well known and that question whether any similar Soviet statement need be made would be decided by Soviet Government in light of the situation at that time. It was agreed directive would be dispatched to four military governors before midnight (tonight August 30–31) so that they could start work tomorrow.
Molotov then returned to communiqué and asked whether we could not discuss tonight question of proposed Soviet addition about London decisions. We replied that, apart from the fact that we had not yet received final instructions on Molotov’s proposed modification of our formula, we now had to explain to our governments that the Soviet Government insisted upon this being included in communiqué and not as we had previously thought in a separate published statement. We could discuss this question later. Molotov agreed. We then confirmed with him definitely that there were no outstanding points of difference as regards rest of communiqué.
Roberts then said that now that we had settled directive and done all we could in Moscow to give military governors a reasonable chance of reaching agreement in Berlin, we were sure that Molotov would agree that they should be able to work next week in a local atmosphere favorable to their reaching agreement. We thought it necessary that the four governments should take all steps open to them to prevent these talks in Berlin being prejudicated by actions of any section of Berlin population. There had recently been troubles in Berlin with demonstrations and counter-demonstrations in different parts of the city. We believed our respective military authorities should do all they could to preserve a good atmosphere in Berlin while talks were in progress.
Molotov replied that Soviet military authorities had tried to do this. Chataigneau then associated himself with Roberts statement and [Page 1097] said it was to be hoped negotiations in Berlin would take place in a calm atmosphere. I added that if the military governors were instructed by their governments to maintain peace and quiet in Berlin they would certainly be able to do so. Molotov then said Soviet military governor already had his instructions and that he had kept them strictly. I suggested that a reminder might be sent to him. Molotov said this was unnecessary in case of Soviet military commander but perhaps the other military governors should receive such instructions. We stated they were cognizant of their responsibilities. Molotov fully understood our point.
Sent Department; Department pass Berlin 357, Paris 299 and London 187.
- Not printed; it gave a short summary of the meeting with Molotov (740.00119 Control (Germany)/8–3048).↩
- The meeting at the Kremlin at 5 p. m. was attended by Smith, Roberts and Lunghi, Chataigneau and Boyer de Fonscolombe, and Molotov, Vyshinsky, Pavlov and Yerofeyev. A full transcript of the meeting was sent to the Department in despatch 651, August 31, from Moscow, not printed (740.00119 Control (Germany)/8–3148)↩
- See telegram 1776, August 27, from Moscow, p. 1085.↩
- The Department of State’s instructions to Ambassador Smith were contained in telegram 1034, August 28, to Moscow, not printed (740.00119 Control (Germany)/8–2748). The instructions to Roberts and Chataigneau were reported upon in telegram 3899, August 28, from London, not printed (740.00119 Control (Germany)/8–2848).↩