740.00119 Control (Germany)/5–1749: Telegram

The Secretary of State to the Acting United States Political Adviser for Germany (Riddleberger)

top secret

580.1 For Riddleberger from Murphy. We are repeating to you separately text of urgent telegram we have sent Wilkinson through [Page 774] Army re trade negots.2 Understand Army is sending follow up indicating they also consider our comments and questions important.

We are seriously concerned over general approach being taken by Western reps, particularly US, in negots and fear there is basic misunderstanding between us and Berlin re subject. Main points we have in mind are following:

We doubt this CFM meeting can resolve currency issue regardless of how meeting goes in general and that split will in fact continue for some time. Pattern for interzonal trade arrangements now being worked out may, therefore, last some time and in any event be important precedent in further negots.
We deem it most essential that supervision and control be maintained over trade and payments arrangements to ensure
that we get countervalue for what we supply Soviet Zone;
application of 1A and 1B lists, as provided in WARX 88649;3
that Sov buying does not cut into availabilities to meet Western Zone’s requirements or ERP programmed exports;
that Berlin does not become an open conduit for escape from controls in West Zones.
We have not wanted to give detailed instructions, recognizing that we do not have adequate info. However, it seems to us that Sov proposals, as amended by West Reps, at last meeting are extremely dangerous.4 Furthermore, we believe that some kind of clearing or compensation system, operated in D–marks, is necessary to make certain we get goods for goods. In order to avoid an uncompensated drain on West Ger supplies, except for initial pump priming, no credit, neither bank nor commercial, shld be granted East Zone or East Zone firms.
We do not think we need be worried about having controls on our side. Sovs will have them on theirs.
We believe Brit thinking along same lines.
We appreciate that Wilkinson is in midst of difficult negotiation and these not intended as back seat driving but merely as expression our views for whatever help you can be.

  1. Repeated to Paris for Jessup and the Ambassador as 1642, to London for the Ambassador as 1702.
  2. See telegram 581, infra.
  3. Ante, p. 769.
  4. For the text of the Soviet proposals at the Quadripartite Trade Meeting May 14, and the amendments of the Western representatives thereto, see CC 8599, p. 766.