Foreign Relations of the United States, 1949, Council of Foreign Ministers; Germany and Austria, Volume III

740.00119 Control (Germany)/1–1349: Telegram

The United States Political Adviser for Germany (Murphy) to the Chargé in the United Kingdom (Holmes)

top secret
urgent

Berlin, January 13, 1949—4 p.m.

31.¹ Personal for Holmes. We are especially interested in the references made in your 22 of January 10² and 28 of January 12³ to the effect that Mr. Bevin and others believe that no compelling need exists for currency changeover on January 30 and that adoption of fifty-fifty plan would greatly ameliorate such difficulties as exist. We find this attitude discouraging and unsatisfactory. We suspect that as long as US continues to bear the major share of expense of airlift, to which, of course, the French contribute nothing, there will be no sense of urgency on their part. I have had a number of discussions on this subject with our financial and economics advisers here as well as with General Clay. Our Berlin representatives find the British and French attitude toward the technical situation incomprehensible except on the theory that they are fearful of eventual Soviet reaction and desire to take no risk whatever, content to see US pay the bill indefinitely. CC 7310 repeated to you on 5 January⁴ summed up OMGUS understanding of points at issue and described deterioration of Berlin financial and economic situation. Financial adviser who has again informally discussed matter with British financial adviser points out that thus far the Bank Deutscher Laender has advanced to Berlin 500 million marks on order of US/UK Military Governments without any legal backing. Furthermore, advances at minimum rate of 100 million monthly will be necessary. Western sector municipal finances, of course, are in a state of unbalance and there is inability to advance adequate unemployment relief and necessary aid. Politically the morale of Berlin population is important factor to US and confidence of population in West suffers as result of long period of waiting and hesitation. Financial adviser tells me that adoption suggested by British of fifty–fifty plan would only result in greater expense to West, further weaken the DM, increase inflationary spiral and provide no solution of difficulty. Psychological effect on Berlin population, of course, would be one of confusion and loss of confidence.

One of reasons back of British and French position may be French determination that Berlin is not to be tied in politically with West. Some time ago, I thought British position harmonized with ours and that British were firmly determined to affiliate Berlin with western German political structure. Indirectly more recently comments attributed to General Robertson indicate that British have swung around to French point of view. If this is true and the British and French view is to prevail, then position in Berlin becomes futile and expense of air lift, it would seem to me, is hardly justified. Obviously under those circumstances the question of Berlin currency would become relatively unimportant. This might explain UK/French tendency to procrastinate and their opposition to a firm and immediate resolution of currency issue.

Sent London as 31, repeated Department as 72, Paris 32.

Murphy

1. The source text is the copy in the Department of State files.
2. Same as telegram 120, January 10, p. 650.
3. Not printed.
4. Not printed; in it Clay advised that continued delay in currency reform had made banks and insurance companies insolvent, delayed settlement of private debts, created pay scale inequalities, and produced chaos in the prices for goods and services in Berlin (Department of Defense files).