The United States Political Adviser for Germany (Murphy) to the Secretary of State
[Received 8:10 p.m.]
637. In view of the over-all political implications involved, the following submitted for the Department’s information and comment.
Private banks are operating in the Western Zones of Germany on a fairly unrestricted basis in terms of both old and new accounts. In the Soviet Zone private banks have not reopened and reports indicate that some sort of a state, or at least municipal, banking system is emerging. In Berlin, private banks have not reopened even for new accounts. A municipal bank, or Stadtkontor, has been established with 21 branches throughout the city.
Allied military authorities have deposited 100 million Marks in the Berlin Stadtkontor. The bank now makes only loans of a purely commercial character (no industrial loans) all of which are first approved by the Finance Division of the Berlin Kommandatura.34 There are insufficient funds to satisfy extensive borrowing needs of enterprises located in Berlin but of national character.
The continued operation of private banks in the western zones with closed head offices in Berlin and with no Reichsbank or central clearing system is an anomalous situation. The Soviet view is that all German banks are insolvent because of their huge holdings of the Reich debt. (For the official Soviet view as to the value of such debt, see our telegram 612, September 25, 4 p.m.) The American Military Government detachment in Berlin, apparently reflecting Kommandatura views, feels that the problem of opening Berlin banks is outside their scope and is a matter for Control Council action.
It is generally believed that reopening of headquarters of private banks will require (1) some compromise on the amount of devaluation of the Reich debt. There has been no explicit devaluation in the Western Zones although the ultimate need for such action is generally realized. (2) A central clearing system and (3) a central currency issue. These matters are under consideration, but little positive progress has yet been made in the Finance Directorate of the Control Council.
Private German bankers in Berlin believe that the Soviet intends to establish a system of municipal, industrial and provincial or Agrarian banks in the Soviet Zone, including Berlin. These institutions [Page 1562] would monopolize all financial transactions and through control of credit could run the entire economy—within the area concerned—without the need for formal nationalization. If such development should occur, the question arises as to whether a compromise central banking system could be established which would allow the continuation of private banking in the Western Zones.
There are already indications that some bankers in the Western Zones are attempting to establish a makeshift central system in the West. For example, the Dresdner Bank is attempting to establish a central office to cover the Western Zones with Departments modelled after the Departments of the former Central Bank in Berlin.35
- The Inter-Allied governing body for Greater Berlin. For documentation on preliminary meetings of the Allied Kommandatura, see Conference of Berlin (Potsdam), vol. i, pp. 630–634, 638–639, and 755–756; for further documentation on the Kommandatura, see pp. 1033 ff.↩
- In telegram 855, November 13, 8 p.m., to Berlin, the Department stated that the United States policy on the German public debt was still that expressed in paragraph 47 of JCS 1067, but also asked for recommendations and a report on the effect of accepting the Soviet proposal for repudiating the debt (862.51/9–2745). Paragraph 47 read as follows: “Resumption of partial or complete service on the internal public debt at the earliest feasible date is deemed desirable. The Control Council should decide the time and manner of such resumption.”↩