Foreign Relations of the United States, 1951, European Security and the German Question, Volume III, Part 2

762A00/7–1651: Telegram

The Director of The Berlin Element of HICOG (Page) to the Office of the United States High Commissioner for Germany, at Frankfurt¹

secret

Berlin, July 16, 1951—6 p. m.

73. Berlin Govt circles distressed at failure of Bundestag to effect final action on budgetary aid to Berlin prior to summer recess, thereby deferring action until after resumption of sessions on Sept 1.

Senator for finance Dr. Haas now at Bonn attempting to obtain commitment for DM 50 million monthly pending final agreement. Berlin political leaders circulating reports even more pessimistic than serious situation justifies; this is apparently done to improve Berlin’s bargaining position with FedRep and to enlist allied support in Berlin’s cause.

Monthly average revenues first quarter current fiscal year (June figures estimated) total DM 143.4 million, of which 45.8 million constitutes Federal budgetary assistance pending definite agreement; average monthly expenditures same period DM 155.7 million. Average budgeted revenue (as provisionally approved by Senate July 11) DM 166.3 million, which DM 67.9 million constitutes Federal budgetary assistance; average budgeted expenditures (same basis) DM 166.3 milliion. Actual revenues first quarter previous fiscal year were DM 124.2 million, of which DM 41.7 million constituted Federal budgetary assistance; average monthly expenditures same period were DM 125.7 million. Increased expenditures of this year are primarily due to social legislation to place Berlin standards on par with those of FedRep.

To support position, Senate has prepared list of urgent obligations which will remain unpaid as of July 31, totalling DM 49.8 million. While certain obligations will undoubtedly remain unpaid, Berlin element has not yet been able to examine proposed utilization of July revenues, which shld continue at current high level; analysis will follow.

June tax revenues, totalling DM 71 million, exceeded revenues of last comparable month by approx 10 percent.

Senate has also prepared list of additional monthly expenditures totalling DM 16 million of which assistance will be required. Examination reveals that the bulk of this amount is contingent upon legislation which has not yet been promulgated, involving such items as pensions, social welfare benefits, wages and salaries.

Actual Federal budgetary assistance received during first quarter current fiscal year averaged DM 47.3 million monthly; since a portion was received on account of next quarter, assistance allocated for first quarter averaged DM 45.8 million. Comparison with DM 50 million monthly now requested by Dr. Haas therefore indicates no substantial deviation.

While Berlin element considers that gravity of budgetary situation, as portrayed in reports of Berlin officials, shld be discounted, in the light of their intended use as bargaining weapons, Berlin element does feel that budgetary assistance of DM 50 million monthly is necessary pending final agreement, and that this amount will enable Berlin Govt to manage through careful screening of expenditures and deferral of payments where possible.

It is requested that HICOG exert all possible appropriate influence on FedRep to ensure that such assistance is granted.²

Page

1. Repeated to Washington and Paris. The source text is the copy in the Department of State files.
2. On July 17 the Department of State supported Berlin’s view on the need for budgetary assistance from the Federal Republic, instructing HICOG to take a strong position regarding the 50 million mark supplement to the Berlin budget and to press for an early conclusion of an agreement embodying such aid. (Telegram 425 to Frankfurt, July 17, 862A.10/7–1751)