The United States High Commissioner for Germany ( McCloy ) to the Acting Secretary of State
2940. In addition to French opposition to US suggestions for dealing with the Berlin problem in face of East German government, it became clear from conversations which I had this morning with Bérard that the French are equally opposed to the UK proposal set forth in Bonn’s 15, October 9 to Department.1 Bérard indicates that the French Government remains unalterably opposed to Berlin as a twelfth Land and believes that this position will not change upon the formation of a new French Government. He claims to have had several conversations over the weekend with German political leaders of the present coalition in which the leaders displayed a lukewarm attitude toward Berlin as a twelfth Land. This impression is somewhat confirmed in my mind by reports I had received of Adenauer’s attitude, which is likewise described as lukewarm. Obviously the coalition is disturbed by the prospect of increased SPD representation which would probably result from the inclusion of Berlin as a twelfth Land.
Bérard indicated, however, that his government was now prepared to consider certain steps for the strengthening of the Berlin position. They would agree to the establishment of Kaiser’s Ministry in Berlin and perhaps certain other federal representation. They would also agree to an acceleration of cultural activities in Berlin and would support additional economic cooperation.2
In this situation it seems unlikely that we shall make much progress in the Commission meeting scheduled for this afternoon,3 but in view of the urgency of taking some action within the next two days, I am most anxious to have some specific announcement prepared for early issuance. Therefore, I plan to propose the financial assistance program indicated in the succeeding paragraphs and would enlist the Department’s aid in obtaining the required clearance as quickly as possible.[Page 410]
In addition to financial assistance, we are examining the possibility of creating some sort of “territorial status” for Berlin, and I propose to discuss this idea with the Germans, if it obtains any acceptance in principle in the Commission.
Recent survey of Berlin financial and economic situation reveals the following approximate status. A 90 day food stockpile is deemed necessary for the coming winter. This would require a minimum of DM 20 million and actual amount is probably higher. Present five months’ coal supply stockpile presently established is adequate but needs to be financed which will require approximately an additional DM 35 million. Propose to have Federal Republic establish a corporation and vest title to food and coal stockpiles in the corporation. Corporation could then obtain loan from BDL utilizing food and coal as collateral. Subsequent sales of food and coal to individuals would finance additional purchases in order to keep stockpiles at desirable levels.
Survey further indicates immediate needs of city of Berlin for other purposes a total of approximately DM 150 million to be disbursed between now and January 1, 1950. This is resulting deficit after considering maximum amount of tax receipts and other income for the city. Propose to recommend the following program to Adenauer. Federal Republic should make application through High Commission to ECA for release of DM 75 million from ECA counterpart funds to meet emergency condition of city of Berlin.
If approved, ECA could deblock to credit of High Commission who in turn could divert this amount to GARIOA counterpart and thereupon make this amount available to city of Berlin as a GARIOA grant. High Commissioners would also signify their intent to repay to the ECA counterpart fund DM 75 million when such amount has accrued to the GARIOA counterpart fund by reason of current and future GARIOA dollar expenditures for aid. Would also require that Adenauer agree to raise the remaining DM 75 million by direct tax measures authorized by Federal Republic. This equal division of ECA versus Federal Republic aid might have to be adjusted for practical considerations. Simultaneous with above would recommend that Federal Republic, with some assistance from Allied High Commission, appoint an expert committee with powers to survey Berlin municipal finance condition and make recommendations soonest on measures to be taken by Berlin Magistrat to bring municipal budget as near to balance as is practical. ECA loan could also contain conditions along above lines in order to apply pressure for financial housecleaning. Nevertheless, urgent requirements of Berlin make it mandatory that assistance be given immediately and not await further financial studies. Believe earliest date for effecting economies in Berlin budget would be January 1.[Page 411]
Above program could be legally made under existing bilateral agreements since High Commissioners have already in case of Berlin certified that Western sectors are a part of occupied areas. It would require promptest action by OSR/ECA Washington, and NAC if it is to accomplish its objectives. If Adenauer agreeable would recommend he make press announcement of this aid and the manner in which he is making application for counterpart. I would also make press announcement that I recommend ECA approval.
- In telegram 4255, October 11, from Paris, not printed, Bruce reported that the Trench Foreign Ministry had expressed similar views to him. It considered that the Soviet Union was hoping to stampede the Western allies into some act with respect to Berlin that would leave their rights in the city open to question. Because of this the Foreign Ministry was agreeable to measures assisting Berlin, but was wary of any act that might change its juridical status. (862.00/10–1149)↩
- In telegram 2943, October 10 (9 p. m.), from Frankfurt, not printed, McCloy reported on the High Commission meeting. As anticipated Bérard had opposed Robertson’s proposal and the lifting of the suspension of Article 23, since Berlin had not been included in the East German Government. In response to requests for some action by the High Commission with regard to Berlin, Bérard, acting as French High Commissioner, indicated that he could proceed no further, but would refer to Paris for instructions. (862.01/10–1049)↩