740.00119 Control (Germany)/9–748: Telegram
The United States Political Adviser for Germany (Murphy) to the Secretary of State 1
2251. Personal for the Secretary and Lovett. Eyes Only. Today’s meeting started at 1600 hours and ended at about 2200 hours.2 Prior to meeting, Robertson advised us he was to pick several major points of difference to highlight for inclusion in report tomorrow. Robertson and Koenig both also instructed to report tomorrow.
Today’s meeting started with report of Finance Committee3 on a few additional details. It was marked by lengthy, futile discussions usually pointless;
First issue was Soviet unwillingness to replace unissued “B” marks made available to banks to maintain their solvency.
Second issue was Soviet refusal to exchange “B” marks held by western powers and their personnel. Both issues were returned to Finance Committee without progress.
Third issue was Soviet unwillingness to exchange on one to one basis without their investigation of and decision as to legitimacy of holdings in excess of 500 marks. This was listed as in full disagreement.
Fourth issue was Soviet unwillingness to exchange “B” marks borrowed by magistrat, credit institutions et cetera. These funds were loaned by US acting for Bank Deutscher Laender and a failure to exchange them would place these establishments at Soviet mercy. This question was also returned to committee without progress.
Fifth issue was permission for “B” mark holders to transfer holdings to western zone. This was refused by Soviets. Question was set aside for some future discussion.
Sixth issue was Soviet insistence that bank deposits would be exchanged only to extent cash was on hand in bank and not as covered by loans. This included also refusal of Soviets to credit reichsmarks holding being tax reviewed and not yet converted to “B” marks without investigation or check. Sokolovsky did offer here to complete conversion to “B” marks and then exchange on one for one basis or to convert entirely under Soviet law. Latter would permit, if we understood it, savings banks accounts to be converted at more liberal Soviet [Page 1133] rate. However, all was dependent on Soviet investigation and check. This question was then carried over for further discussion at some future meetings.
Seventh issue was the issuance of long term loans against pre-1945 bank accounts. Soviets insisted this be a German economic council (Soviet zone law) and our position being that it must be a magistrat law. This issue was completely disagreed.
Robertson then summed up major points of difference in the issues discussed to date. When he completed his statement I said it had been very helpful and that it proved to me the difficulties we encountered when we discussed details with principles unagreed. I then expressed my regret that I could not find in Soviet proposals any acceptance of the principle agreed in Moscow that the practical implementation of the financial arrangements involved in the introduction and continued circulation of the single currency in Berlin should be under a quadripartite financial commission. I had to repeat that the discussions at Moscow made it clear that while the regulation of currency and its issue would be undertaken for Berlin by the German Bank of Emission through the credit establishments now operating the activities of the Bank of Emission in this connection would be under the control of the financial commission. Highest Soviet authority did not object to control being used in listing the functions of this commission.
The American Delegation had not contended that the bank’s other activities should be in any way under the supervision and control at the quadripartite financial commission. As a practical solution, it had stated its willingness to accept this control by investing in financial commission the power of approval of instructions applicable to Berlin issued by the Bank of Emission and the supervision of the execution of such approved orders by the Berlin credit establishments. This would have assured equal and nondiscriminatory regulations which did not appear assured by Soviet proposal.
The American Delegation can not accept this apparent theory that the quadripartite financial commission is limited in its authority to observing and pointing out instances which may occur in the issue and regulation of currency which do not accord with general agreements. It is obvious that under such an arrangement, it would be advisory only and in no way able to exercise the control and supervision envisaged in the Moscow discussions which resulted in the joint directive to the four Military Governors. I suggested that since tomorrow was the date for our report, it might be well to have our Finance Committee develop and define clearly just what each of us proposed for the commission. I hoped to draw Sokolovsky out but he refused to say anything except that we knew his position and it was unchanged. The [Page 1134] Finance Committee was instructed to line out our differences in its report tomorrow.
Amazingly, Sokolovsky had complained of being tired so the reports equally futile of transport and trade committees were carried over until tomorrow.
Koenig asked if we would prepare a joint or separate reports tomorrow. Robertson and I agreed on desirability of joint report if possible. Sokolovsky stated he did not see what we would have to report. Koenig asked for an early meeting so we would have time to hear the committees and prepare a report. Sokolovsky indifferently suggested 17 hours and under presure accepted 16 hours being completely uninterested in Koenig’s suggestion for a morning meeting. I think this significant.
At no time during these conferences have Soviets agreed to early meetings or to continue meetings for long hours. This as you know is not characteristic and can only result from the desire to stall. Moreover, in meetings their attitude is indifferent almost to be contemptuous.
I am sorry we are getting nowhere. I have tried every tactical method I know of. All we have been able to do is to discuss a comparatively small number of details with almost no area of agreement. It is clear Soviets are making only those proposals which would give them complete control so as to make our acceptance impossible. They are then willing to discuss their proposals interminably but never to yield an inch. I can see no sign of a desire on their part to reach agreement.
Meanwhile, their tactics in Berlin are getting rough. Yesterday, a Communist mob prevented City Assembly from meeting. It manhandled three American reporters at the scene. Today a well organized mob was on hand again. The deputy mayor foolishly and without our knowledge took 40 odd plain clothes men from western sectors over to keep order. Uniformed police of Soviet sector under direct orders of Soviet officer started to arrest them. They rushed into offices of three western liaison representatives where some are still at siege. However, Soviet sector police broke into our office and led about twenty of the poor devils off to death or worse.
Sent Department 2251, London 581, Paris 597, Moscow 492.
- The copy of this telegram included in the USPolAd Germany Top Secret Files, Lot F–169, includes the following initial sentence: “Following is repeat of telecon from Clay to Dept of Army personal for Draper.”↩
- The agreed U.S.–U.K.–France report on this meeting of September 6 was transmitted in telegram 2245, September 7, from Berlin, not printed (740.00119 Control (Germany)/9–748).↩
- The reports of the finance, trade, and transport committees were transmitted as enclosures to Ambassador Murphy’s letter of September 10 to Bohlen, none printed (740.00119 Control (Germany)/9–748).↩