Department of Defense Files

The Under Secretary of the Army (Draper) to the United States Military Governor for Germany (Clay)

top secret

WAR 84710. Personal for Clay from SAOUS. Secretary feels and State agrees that underlying question is introduction Western mark B in Western sectors, Berlin on 10 March. In view of evidence that French will agree to introduction of Western mark on basis so-called plan X, reference WAR, 844581 and CC 7817,2 it is desired that Military Governors in Berlin undertake immediate discussions to settle technical arrangements for full introduction Western mark. You may point out to French Military Governor, that US has not relinquished its position that best financial arrangements would be through membership relationship between Western sector banking system and Bank Deutscher Laender. US discounts French fears on political issue. However, in view of urgency caused by rapidly deteriorating economic situation in Berlin, US as a last resort is willing to proceed with currency arrangements for changeover on basis of correspondent relationship between Western Berlin and Western zone bank. US, however, should point out to French that plan X designed to maintain parity Western zone and “B” mark, in the event experience shows that correspondent arrangement results in any adverse effect upon either Berlin or Western currency other measures would have to be taken. It is the view of our experts here, that, if legal tender status of Berlin mark is maintained in Western zone, Berlin currency will not depreciate below Western currency.

In any event, after introduction on full legal tender status of B mark in Berlin, we will be in much stronger position to a correct relationship of banking systems at a later date as this becomes necessary, since French obviously will not be in position to withdraw currency. Our agreement to go ahead on the basis of plan X should, in no way, be interpreted as prejudicing in any way, decision on the political issue of the relationship of Western sectors, Berlin, to the West German Government.

[ Draper ]
  1. For the text of this cable, see telegram 592, February 19, to London, p. 678.
  2. For the text of this cable, see footnote 4 to telegram 592, to London, p. 678.