501.BC/2–1549: Telegram

The Secretary of State to the United States Mission at the United Nations

top secret

85.1 It had originally been our intention to reserve for subsequent UN proceedings in NY, following submission of the neutral experts’ report to the SC Pres, full development of our comprehensive program based on the US counter-proposal2 for the use of the Soviet mark on an autonomous basis in the western sectors. This program was outlined in Deptel 299 to London3 and will be recapitulated hereinafter. In order to make such development possible and to obviate Sov rejection at technical comite level of the pol elements involved, we instructed Knapp in Geneva to present a brief outline of our program, as reported in Deptel 100 to Geneva.4 We were justified in believing [Page 674] that the implications of our plan should not be dealt with at the experts level but were matters for consideration between the governments at a later time. Knapp’s presentation of the outline met with a favorable reception from the UK and Fr experts as well as the comite chairman, who felt we had done much to improve our previously adverse position in the comite.

Since the above assumptions were made two developments have taken place which change the picture. Knapp states that on two occasions in Geneva the Sov expert summarily rejected our counterproposal within the setting it was presented. The Brit in meantime have made up their minds that agreement on a currency solution in SC is most unlikely and have agreed to introduce western mark in western sectors on Mar 10, as we have been pressing them to do. Fr have been told that if there is no prospect of an early solution in NY, we must proceed with introduction of B mark on Mar 10.

We understand that the experts report will present a brief factual survey of the Geneva discussions with no attempt to make recommendations or to place responsibility for failure. Brit are of opinion, which we are coming to share, that it would be useless and time-consuming to revive currency discussions in UN on the basis of experts report. Brit FonOff as well as Canadian Chairman oppose publication of report and believe Sovs may also be interested in preventing publication because of the commitments they made at Geneva. Knapp reports that neutral experts after their labors in Geneva have lost interest in currency problem and it is therefore likely that no initiative for further discussion will come from them or from their Govts.

Over and against the uncertainties of further UN action, introduction of Western mark seems to us and Brit to be of capital importance in order to permit a stabilization of our economic position in Berlin so that other events can be dealt with as they occur. We hope to obtain Fr agreement. We appreciate that with circulation of the comite’s report by SC Pres to other members, initiative may be taken in one quarter or another to place the question on SC agenda. Furthermore, leaks concerning the report may occur which will be highly unfavorable to US position, although we believe we could handle these by explanatory publication in the nature of a white book on the Geneva discussions, which we are preparing. Everything considered however we would like to see the experts report filed without SC action, except perhaps an announcement by SC Pres that the efforts of the neutral comite resulted in no agreement and that therefore there was nothing further for the SC to do at this time. This would enable the Western powers to proceed with the introduction of the Western mark.

We would be completely justified in adopting this procedure by the certainty that if the report came up for discussion Sovs would seek to [Page 675] confuse and delay the issue for an indefinite period. Once Western mark had been introduced we would consider returning to SC with a new offer, namely, the introduction of a third and independent currency for Berlin under four-power control, together with a proposal of the terms for the re-unification of the city admin. We have always felt this to be the logical solution of the currency problem, which, besides protecting the economic position of all four powers in Berlin, would permit a resumption of quadripartite control. If blockade were lifted on this basis, we would then proceed with a CFM meeting on the general subject of Ger, as we have said we would do.

For your info, if we are unable to keep the currency problem quiescent in NY between now and Mar 10 we feel one possible course of action might be to go to the SC Pres and the other neutral members and develop more fully our proposal submitted in outline in Geneva. We would explain that our currency counter-proposal would offer means of providing an interim solution which would adequately protect the interests of all four powers. After it had been agreed to in conjunction with lifting of blockade, we had intended to negotiate with Sovs a reunification of the city admin on the basis of the new constitution proposed by Gers which was under consideration by Kommandatura at time the latter broke up.

We could request the neutrals’ understanding of this proposal as a fair standstill arrangement which would harm the interest of no one power in Berlin and would offer the prospect of lifting blockade and opening up discussions on a broader basis with Sovs. We could explain that unfortunately the preliminary recommendations which Sovs appeared to be willing to accept in principle were unworkable in light of the present pol situation in Berlin and would irreparably damage our position there. We would hope that our counter-proposal would meet with sympathetic response on the part of neutrals, and if this were the ease we would authorize them to place it once more before Sovs in its full setting with a view to obtaining an immediate answer concerning its acceptability. We could warn neutrals that we would have to take protective economic measures if Sovs refused and in this event we would proceed immediately with introduction of Western mark as sole legal tender.

Accordingly request you endeavor concert positions with Brit and Fr so that neutral report will be treated in NY as outlined above and so that we may proceed with Western mark. This could include agreement with Brit and Fr, which may be necessary to gain Fr acceptance, that after Western mark introduced we would submit definitive proposal before SC re third currency, Berlin pol re-unification, lifting of blockade and broader negotiations with Sovs.
We reserve our attitude re publication of the report but in meantime ask you to request SC Pres and neutrals to defer publication until we have had opportunity to examine contents. If leaks occur in meantime we will deal with public relations problem in statement emphasizing intent our proposal at Geneva and explaining it was not pursued because Sov experts negative reaction.
If course 1 above fails completely and neutrals or Sovs insist on SC action, we might then seek neutrals mediation for presentation our proposal to Sovs with aim obtaining immediate reply. If this procedure fails, we would then fully develop our proposal before SC.

  1. Repeated to London as 536, Berlin as 186, and Paris as 477.
  2. Regarding the U.S. counter-proposal, see editorial note, p. 658.
  3. Ante, p. 664.
  4. Not printed.