501.BC/11–1948: Telegram
The Acting Secretary of State to the Embassy in France
us urgent
niact
Gadel 537. For Jessup. Bramuglia revision of SC resolution contains interesting ideas which might be pursued with benefit (Delga 8141 and Delga 8222). We are impressed with proposal under para 4 for SC committee. On the other hand we are concerned about proposal in present form for gradual lifting of blockade since to some extent this might be represented as acquiesence in illegal blockade. Objectionable features might be reduced if proposal were linked with and justified by development of inspection system which western powers would undertake themselves to apply to prevent smuggling operations in Sov zone mark.
We consider it essential that Mil Govs discussions be based on agreement previously reached in Paris on program developed by expert group. Such program should of course be more detailed and explicit than Moscow Aug 30 directive. It does not appear from your messages that composition of expert group has been decided since you state Lie has terminated secretariat work in this field. We are agreeable to leaving [Page 1256] resolution of this problem to you and SC neutral members, not leaving out of account possibility of invoking assistance of outside experts from neutral countries.
Language assumes that Soviet mark is to be sole currency in Berlin. Nevertheless we presume neutrals will wish to examine alternatives in view of difficulties of establishing and continuing effective four-power control over Soviet mark in Berlin.
If decision is that Soviet mark be accepted as sole currency in Berlin, then revised resolution may develop to be acceptable basis provided (a) Military Governor agrees that projected time schedule gives adequate time to complete steps in Berlin by December 20 or other agreed date; and (b) resolution is supported by detailed plan of four-power control which might develop from agreed answers to neutrals five questions.3 Knapp fully briefed on preceding points. Related subject: It is noted from London that British may be willing to agree to quadripartite control of proceeds of imports. U.S. has always been opposed to such control.
We feel that if plan is further developed it should be tried out on Sovs at early date in order to obviate loss of time consumed on a program which Sovs might ultimately reject. We would like this to be cleared up as soon as possible in order that a decision may be taken on changeover to western B mark in event Sovs are unwilling to accept formula.
It is in fact questionable whether the financial situation in the western sectors can sustain, without currency changeover, delays imposed by process envisaged in Bramuglia’s proposal, particularly if we launch on procedure and it subsequently breaks down from Soviet intransigence. You will doubtless wish to discuss this point with representatives from Berlin before reaching your determination on course of action.
There is one question which seriously concerns us both generally and in specific relation to any agreement which may be arrived at in Paris, and this is the deteriorating political situation in Berlin where the German authority for the entire city has been destroyed by Sov action. Dec 5 elections may lead to real crisis in Berlin and it is difficult to envisage revival of a uniform German authority which would be able to fulfill functions devolving upon it from any agreed currency arrangement. General Clay may be able to advise you how the problem should be considered in connection with SC action.