862.5151/8–744: Telegram
The Acting Secretary of State to the Ambassador in the Soviet Union ( Harriman )
Washington
, August
12, 1944—8 p.m.
1923, ReDeptel 1855 August 4 and reurtel 2884 August 7.95
- 1.
- We have reconsidered with British and Treasury matters related to introduction and use of military marks and have agreed with British that parallel approach should be made to Soviets on lines indicated below. British here have recommended to London that similar instructions be sent to British Ambassador in Moscow. Impending entry of Allied forces into Germany makes matter urgent.
- 2.
- Points on which we agreed with British (subject to London’s
concurrence) and would like to reach agreement with Soviets are
as follows:
- (a)
- General rate of exchange for mark should not be established until some time following surrender but should be fixed as soon after our entry into Germany as circumstances require. In our judgment establishment of general rate will not be necessary for one month or so following surrender. General rate should be fixed by tripartite agreement and should be applied by Allied authorities to all transactions under their control.
- (b)
- Rate for military purposes will have to be fixed prior to entry of Allied armies into Germany and establishment of general rate. In case at least of American and British forces this rate would be used for converting troop pay from dollars and pounds into marks and for other essential military purposes. We believe that different armies should not give different values to the mark for military purposes and that rates used by the respective armies should result in uniform cross rate. Military rate should be between 8 marks to dollar (32 to pound) and 6 to dollar (24 to pound). This rate could be adjusted later if necessary.
- (c)
- Allied military mark should be freely interchangeable with Reichsmark and should circulate at par with it. We expect that military mark and Reichsmark will continue circulating at parity. Any adjustments made necessary by depreciation of Reichsmark should preferably be made by changing rate between military mark and Allied currencies rather than by establishing differential rate between Reichsmark and military mark.
- 3.
- Despite possibilities suggested in paragraph 2 of 2884, points which you raise do not in our view affect desirability of attempting to reach agreement. We attach importance to reaching agreement at least in form since this is one of first problems to arise in connection with occupation of Germany. We feel it would be undesirable to propose to Soviets that each army group act independently and, as [Page 838] result, reach different decisions. Question of whether Allied military mark is to circulate at par with Reichsmark is of great importance and must in any event be subject to agreement. Question of rate used by different armies is of lesser importance and divergence in rate would not, in our opinion, seriously hamper operations in Germany if Soviets do not agree to a uniform cross rate as suggested in 2 (b) above. We wish to make clear that we do not intend to raise questions or objections if Soviets follow course suggested in paragraph 2 of your 2884.
- 4.
- You are requested to obtain Soviet agreement on above points if possible. With respect to paragraph 3 of your 2884, you are authorized to present this matter to Soviets in whatever manner you consider most effective. Message in our 1855 was sent from Morgenthau to Commissar for Finance96 at suggestion of Soviet financial experts presently in Washington who had been authorized by the Soviet Government to discuss these matters with this Government. We understand they have reported our proposals to Commissariat for Finance. We suggest you inform Commissariat for Foreign Affairs of this fact and state that Secretary of Treasury would be grateful if our view could also be communicated to Commissariat for Finance on his behalf. No action should, therefore, be taken on Deptel 1855 but contents thereof will be useful to you for background in discussing subject with Soviets.
- 5.
- Your approach to Soviets on this matter should be parallel with that of your British colleague. It is suggested that you act on this message only after he has received similar instructions from London.
Stettinius