862.5151/9–944: Telegram

The Secretary of State to the Ambassador in the Soviet Union (Harriman)

2173. You are requested to convey to the Soviet Government the decisions outlined below. The impending entry of American troops into German territory has made decisions on a number of these points imperative.

[Page 842]
1.
It has been decided that upon their entry into Germany United States troops will receive their pay in Allied military marks converted at the rate of 10 marks per dollar. This is not a general rate of exchange and will not be publicly announced. The only purposes for which this military rate is to be used are for converting troop pay into marks and for such internal bookkeeping transactions as are made necessary by military operations.
2.
Allied military marks will be made equivalent to and will circulate at par with Reichsmarks.
3.
It is our view that a general rate of exchange between the mark and external currencies should not be fixed until some time after the entry of Allied armies into Germany. A general rate of exchange would be established as soon as desirable after the entry of our forces.

The considerations which have led us to make the foregoing decisions have been indicated in Deptels 1855 August 43 and 1923 August 12. As indicated in first reference telegram, they have also been given to Soviet financial representatives here.

In presenting the matter to the Soviet Government, you should make the following observations.

a.
With reference to the military rate, while there is no necessity for Soviet procedures regarding military expenditures to be identical in all respects with ours, we hope that the Soviet Government may find it possible, in making arrangements for military expenditures in marks, to adopt procedures which would be consistent with a rate of the order we have selected.
b.
We would appreciate receiving the agreement of the Soviet Government to the adoption of an internal rate of one Allied military mark to one Reichsmark.
c.
We will of course keep the Soviet Government closely informed of developments concerning currency in the territory occupied by our forces and of all action in this respect taken by our troops. We should be glad if we could be similarly informed as to action and developments in German territory occupied by Soviet forces.

We understand that the British Ambassador will also be receiving instructions from his government on these matters. We do not know whether they will be identical with the above or not but in any event you should proceed with the foregoing.

Sent to Moscow repeated to London.4

Hull
  1. Not printed.
  2. Repeated to London as telegram 7333.