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Great Britain and the Post-War German Currency Reform*

Published online by Cambridge University Press:  11 February 2009

Ian Turner
Ian Turner
Affiliation:
The Management College, Henley
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Extract

British policy towards Germany during the period of occupation aimed at preventing a resurgence of German military might in the future, whilst ensuring stable economic conditions in the short term. By mid 1946, however, the scale of the economic problems confronting the occupying powers in Germany had already manifested itself in the reduction of food rations and the consequent falling off in the output of Ruhr coal. The fragile economy was to suffer an even greater setback during the cruel winter of 1946/7. The immediate restoration of economic activity became imperative, not least because the dollar cost of sustaining the British Zone with imported grain weighed heavily on the British exchequer.

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Articles
Information
The Historical Journal , Volume 30 , Issue 3 , September 1987 , pp. 685 - 708
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Copyright © Cambridge University Press 1987

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References

1 See Turner, I. D., ‘British occupation policy and its effects on the town of Wolfsburg and the Volkswagenwerk 1945–9’ (unpublished Ph.D. thesis, University of Manchester, 1984)Google Scholar.

2 The British tended to use the term financial reform rather than the German expression currency reform (Wahrungsreform) The implication is clearly that financial reform entailed wider measures than simply the issue of a new currency I have here used the terms alternately and refer to the narrower monetary operation as the conversion or cut

3 See, for example, Huster, E -U, Determinanten der westdeulschen Restauration 1945–1949 (Frankfurt/Main, 1972)Google Scholar, Schmidt, E, Die verhinderte Neuordnung 1945–1952 (Frankfurt/Main, 1970)Google Scholar, Badstubner, R and Thomas, S, Restauration and Spaltung (Cologne, 1975)Google Scholar

4 See, for example, Schroder, G et al. , eds., Ludwig Erhard Beitrage zu seiner politischen Biographie. Festschrift zum 75 Geburtstag (Frankfurt, Berlin and Vienna, 1972)Google Scholar and Wirtschaft, Bundesministerium fur, 30 Jahre Marktwirtschaft (Bonn, 1978)Google Scholar

5 See, for example, Abelshauser, W, Wirtschaft in Westdeutschland 1945–1948 (Stuttgart, 1975)CrossRefGoogle Scholar and Ritschl, A, ‘Die Wahrungsreform von 1948 und der Wiederaufstieg der westdeutschen Industrie’, Vierteljahrshefte fur Zeitgeschuhte, XXXIII, 1 (1985), 136–65Google Scholar

6 For a brief discussion, see Turner, , ‘Occupation policy’, pp 623–9Google Scholar See also Klump, R, Wirtschaftsgeschichte der Bundesrepublik Deutschland Zur Kritik neuerer wirtschaftshistonscher Interpretationen aus ordnungspolitischer Sicht (Wiesbaden, 1985)Google Scholar

7 P(ublic) R(ecord) O(ffice, London), F(oreign) O(ffice) 371/55417/C8747, O R C (46)71, ‘Internal financial situation in Germany’, memo by the Chancellor, of the Duchy, of Lancaster, , 26 07 1946Google Scholar See also Petrov, V, Money and conquest Allied occupation currencies in World War Two (Baltimore, 1967), p 196Google ScholarKollner, L, Chronik der deutschen Wahrungspolitik 1871–1971 (Frankfurt/Main, 1972), p 97Google Scholar, has slightly different figures, as does Reinsch, R, ‘Currency reform and reconstruction of the West German economy 1948–9’, (unpublished Ph D dissertation, University of Kentucky, 1950), p 12Google Scholar

8 For a comprehensive view of Allied price policy, see Mendershausen, H, ‘Prices, money and the distribution of goods in post-War Germany’, American Economic Review, XXXIX, 4 (1949), 646–72Google Scholar

9 F O 371/46738/C 10015, ‘Monthly financial report’, no 4, p 4, 10 1945Google Scholar

10 F O 371/46738/C 6599, 6th meeting of the Finance Directorate, 28 Sept 1945

11 See the documents cited in note 7 See also Walhch, H, Mainsprings of the German revival (New Haven, 1955), pp 66–7, 70Google Scholar, Mott, R L, ‘Public finance’, in Litchfield, E. H et al. , Governing postwar Germany (Ithaca, New York, 1953), pp 343–50Google Scholar, Newcomer, M, ‘War and postwar developments in the German tax system’, National Tax Journal, I, (1948), 1–11Google Scholar

12 F O 371/55415/C 6733, ‘Financial policy in Germany’, draft paper for O R C, 11 June 1946 For details of taxation legislation, see Monthly report of C C G (B E), I, 1, June 1946, 29 and ibid, II, 11 Nov 1947, 10–11

13 F O 371/46738/C 9923, 12th meeting of the Finance Directorate, 28–30 Nov 1945 Horstmann, T, ‘Bankpolitik und Haushaltsfinanzierung in der britischen Besatzungszone’, in Euchner, W and Petzma, Dietmar, eds, Wirtschaft und Wirtschaftspolitik im britischen Besatzungsgebiet 1945 bis 1949 (Dusseldorf, 1984), pp 215–34Google Scholar

14 F.O. 371/46747/C 4700, 21 Army Group Financial Report, no. 8, June 1945, p. 6. Income from taxation amounted to forty per cent of pre-occupation level in country districts but only some twenty five per cent in industrial areas.

15 F.O. 371/55417/C 8747, O.R.C. (46)71, ‘Internal financial situation in Germany’, memo by the Chancellor, of the Duchy, of Lancaster, , 26 07 1946Google Scholar.

16 P.R.O./T(reasury) 236/946, Jennings to Waley, 1 June 1946. T 236/949, Chambers brief for Playfair at Washington, 1 Nov. 1946. See also House of Commons 147 and 148, 8th Report from the Select Committee on Estimates (British Expenditure in Germany) (London/HMSO, 1947), p. 289Google Scholar.

17 F.O. 371/55415/C 6325, F.W.P./P(46)5, S. P.Chambers, Chief of Finance Division C.C.G., 30 May 1946. Mendershausen, , ‘Prices’, p. 655Google Scholar, reports that by September 1947 Military Government estimated that between one-third and one-half of all business transactions in the bizonal area were through compensation trade.

18 F.O. 371/55415/C, ‘Anti-inflationary measures in Germany’, paper by Chambers, , 29 12 1945Google Scholar.

19 T 236/944, E.I.P.S./81, ‘Draft directive on the control of inflation’, 19 Apr. 1945, p. 3. Miss Jennings of the Treasury commented on 25 Apr. 1945: ‘…I personally applaud, but politically speaking it takes a great deal for granted.’

20 T 236/944, ‘The problems of reparation, restitution and prevention of inflation in Germany’, by Lloyd, E. M. H., economic adviser to the Minister Resident in Cairo, 07(?) 1944Google Scholar.

21 T 236/944 comments on the above by Turner, Rowe-Dutton, Waley and Playfair, 21–5 July 1944.

22 T 236/944, A.P.W. (44) 88, ‘Inflation in Germany’, report by , E.I.P.S., 22 09 1944Google Scholar.

23 T 236/944, ‘Attitude to inflation in Germany’, 1 Dec 1944

24 T 236/945, DFIN/P (45) 42 ‘Proposal with regard to a programme of anti-inflationary action’, 15 Nov 1945

25 Sir (Stanley) Paul Chambers (1904–81) Income tax adviser to the Government of India, 1937–40 Secretary and Comptroller Board of lnland Revenue, 1942–7 Chief of Finance Division, C C G, 1945–7 Director of I C I, 1947–, Deputy Chairman, 1952–60, Chairman, 1960–8 Director, National Provincial Bank, 1951–69 and National Westminster Bank, 1968–74 President, Institute of Directors, 1964–8

26 ‘Programme for immediate action to reduce the inflationary potential’, 6 Dec 1945 Curiously neither this paper nor the previous proposal are mentioned by Wandel, E in Die Entstehung der Bank der deutschen Lander und die deutsche Wahrungsreform 1948 (Frankfurt, 1980)Google Scholar and ‘Historical developments prior to the German currency reform of 1948’, in Zeitschrift fur die gesamte Staatswtssenschaft, CXXXV, 3 (1979), 320–1Google Scholar

27 F.O. 371/55410/C 60, F.W.P. (45) P27, ‘Anti-inflationary measures in Germany’, 29 Dec. 1945. The Chambers proposals are paraphrased, or, rather parodied, in Gottlieb, M., The German peace settlement and the Berlin crisis (New York, 1960), pp. 107–9Google Scholar, and Gottlieb, M., ‘The failure of quadripartite monetary reform’, Finanzarchiv, XVII (1957), 398–416Google Scholar.

28 F.O. 371/55410/C 386, F.W.P./M (46) I, 2 Jan. 1946.

29 Ibid.

30 Conceivably they were influenced by European, and particularly German, emigrés with vivid memories of the consequences of excessive liquidity in an economy. See Gurley, J. G., ‘Excess liquidity and European monetary reforms 1944–1952’, in American Economic Review, XLIII (1953), 76Google Scholar.

31 F.O. 371/55410/C 386, F.W.P./M (46) I, 2 Jan. 1946.

31 T 236/945, Playfair to Calvert, 5 March 1946. U.S. policy-making seems to have suffered, after the eclipse of Morgenthau and the Treasury, from a dearth of financial expertise. Moreover, the objectives of the C.D.G. plan ran counter to the declared policy of the United States as set out in J.C.S. 1067. See Gottlieb, , Peace settlement, p. 111Google Scholar, and Smith, J. E., ed., The papers of General Lucius D. Clay. Germany 1945–1949 (Bloomington and London, 1974), (= Clay papers), pp. 208–10Google Scholar, Clay for Echols, 23 May 1947.

33 F.O. 371/55413/C 4337, ‘Outline of a tentative plan for the liquidation of war finance and the financial rehabilitation of Germany’, 8 Apr. 1946. See Möller, H., Zur Vorgeschichte der Deutschen Mark. Deutsche Währungsreformpläne 1945–1948 (Tübingen, 1961), pp. 214–15Google Scholar.

34 T. 236/945, SCOPC/P (46) 13, memorandum by chief of Finance Division, 18 May 1946.

35 Percy, , Viscount, Mills P.C., K.B.E. (1890–1968)Google Scholar. Member of F.B.I. delegation to Germany, 1939. Ministry of Production: Controller-General of Machine Tools, 1940–4, Head of Production Division, 1943–4. President of Economic Sub-Commission, C.C.G. 1944–6. President, Birmingham Chamber of Commerce, 1947–8. Chairman, National Research Development Corporation, 1950–5. Chairman, W. T. Avery Ltd and Soho Foundry, 1955–6. Paymaster-General, 1959–61. Minister without Portfolio, 1961–2. Deputy Leader of House of Lords, 1960–2. Chairman, EMI Electronics Ltd.

36 SirPlayfair, Edward Wilder, K.C.G. (b. 1909)Google Scholar. Joined Inland Revenue, 1931. Treasury, 1934–46. C.O.G.A., 1946–7. Treasury, 1947. Permanent Undersecretary for War, 1956–9. Permanent Secretary, Ministry of Defence, 1960–1. Chairman, International Computers and Tabulators Ltd, 1961–5. Director, National Westminster Bank, 1961–79. Director, Glaxo Holdings Ltd, 1961–79.

37 T 236/945, SCOPC/M (46) 5, minutes of the 5th meeting of the Standing Committee (Policy Co-ordination) on 21 May 1946. The fear was that a mortgage of fifty per cent on industrial holdings was tantamount to a transferral of ownership to the state-administered, equalization fund. For background details of the ‘battle-lines’ within the C.C.G. see F.O. 944/739, Playfair to Jenkins, 6 July 1946.

38 F.O. 371/55415/C 6600, minutes of the meeting of the C.O.G.A. interdepartmental working party on finance and property, 3 June 1946.

39 This was the type of currency reform most usually, although not most successfully, carried out in post-war Europe. See Gurley, , ‘Excess liquidity’, pp. 77–87, 92–5Google Scholar.

40 F.O. 371/55416/C 6985, Playfair to Waley, enclosing note by C. F. Cobbold of the Bank of England, 20 June 1946.

41 Gen. SirRobertson, Brian Hubert, G.C.B., G.B.E., K.C.M.G., K.C.V.O., D.S.O., M.C., Robertson, Baron of Oakridge, (1896–1974)Google Scholar. War Service, 1914–9. Professional soldier, –1933. Managing Director, Dunlop (South Africa), 1935. War Service, 1941–5 in Middle East and Italy. Deputy Military Governor, 1945–7 and Military Governor and C.-in-C, Germany, 1947–9. U.K. High Commissioner, Germany, 1949–50. C.-in-C. Middle East, 1950–3. Chairman, British Transport Commission, 1953–61.

48 F.O. 371/55416/C 8454, comments by Robertson on second draft of O.R.C. paper, 22 July 1946.

43 Ibid. minutes of meeting at Norfolk House, 22 July 1946.

44 See also Chambers, S. P., ‘Post-war German finances’, in International Affairs, XXIV 3 (1948), 373Google Scholar.

45 , E. F. (‘Fritz’) Schumacher, , C.B.E. (1911–1975)Google Scholar. Educated at New College, Oxford and Columbia University, New York. Economics adviser to C.C.G, 1946–50. Economics adviser, N.C.B., 1950–70. Chairman, Intermediate Technology Development Group Ltd, 1966–75. Several publications on economic policy and ecology including Small is beautiful, (1973).

46 F.O. 371/55418/C 11513, SCOPC/P (46) 27, 14 Sept. 1946. Such statistics are of questionable accuracy. Compare the figures in Bry, G., Wages in Germany 1977–1945 (Princeton, 1960), pp. 238, 255 and 264Google Scholar.

47 F.O. 371/55418/C 11513, SCOPC/P (46) 27, 14 Sept. 1946. See also Wood, B., Alias papa (London, 1984), pp. 205–7Google Scholar.

48 F.O. 371/55418/C 11513, comments by Chambers on Schumacher's papers, no date (Sept. 1946).

49 Ibid

50 FO 371/55417/C 10711, DFIN/P (46) 141, statement of the U S member at the 73rd meeting of C O R C, 2 Sept 1946. See Gottlieb, , Peace settlement, p 112Google Scholar

51 FO 371/55417/C10711, DFIN/M (46), minutes of the 41st meeting of Finance Directorate, 10 Sept 1946

52 FO 371/55417/C10711, DFIN/M (46) 27, minutes of a special meeting of Finance Directorate, 12 Sept 1946 For the background of Chambers' new proposal, see FO 371/55418/C 11409, Playfair to Waley, 17 Sept 1946

53 For the ZAC deliberations, see FO 371/55418/C, BERCOS/P (46) 84, Conference of the Deputy Military Governor, 71st policy meeting on 31 Sept 1946, 8 Oct 1946 Also Dorendor, A, Der Zonenbeirat der britisch-besetzten Zone Ein Ruckbhck auf seine Taugkert (Gottingen, 1953), pp 56–67Google Scholar, Moller, , Zur Vorgcschtchte, pp 282–332Google Scholar and Akten zur Vorgeschtckte der Bundesrepubltk Deutschland (A V B), vol I (Munich, 1976), pp 851–3Google Scholar

54 See above note 52

55 T 236/949, Chambers Brief for Playfair in Washington, 1 Nov. 1946. The Soviet Union had printed an undisclosed amount of Allied Military Marks for use by their forces in Germany and the U.S. evidently feared a repetition of this if the Russians were given access to the new plates. See Clay papers, pp. 302—3, Clay, for Noce, , 17 09 1947Google Scholar. For two different versions of Russian actions by American participants, see: Bennett, J., ‘The German currency reform’, Annals of the American Academy of Political and Social Science, 1 (1950), 43–55CrossRefGoogle Scholarand Gottlieb, , ‘Monetary reform’, pp. 411–15Google Scholar and Peace settlement, pp. 106—13. Fora thorough and damning assessment of Soviet currency practices in Germany, see Petrov, , Money and conquest, pp. 197–202Google Scholar.

56 F.O. 371/65004/CE 37, Chambers to Robertson, 30 Jan. 1947.

57 Gen. Lucius Du Bignon Clay (1897–1978). Son of a Senator. Graduated from West Point into the Corps of Engineers. Responsible for the design and construction of the Red River Dam, 1938. Assistant to the Administrator of Civil Aeronautics, 1940. Assistant Chief of Staff for Material, 1942, then Director of Material. Served in France, 1944, and then under James Byrnes as Deputy Director of War Mobilization Reconversion. Deputy Military Governor of Germany, 1945. Commander-in-Chief, European Command, an d Military Governor, 1947. Chairman of Continental Can Corporation, 1949. President's personal representative and ambassador in Berlin, 1961–2. Merchant banker, 1962 onwards. See Milward, A. S., Tke reconstruction of Western Europe 1945–51 (London, 1984), pp. 71–2Google Scholar.

58 F.O. 371/65004/CE 520, note by Chambers, on ‘Outstanding differences between U.S. and U.K. elements on financial matters’, 5 03 1947Google Scholar. See also Clay papers, pp. 350–1, Clay, for War Department, 10 05 1947Google Scholar.

59 F.O. 371/65005/C 1419, Playfair to Chambers, 19 Apr. 1947. F.O. 944/741, Playfair to Chambers, 30 Apr. 1947.

60 F.O. 944/741, State Department aide-memoire, 21 July 1947. See also Wandel, , Die Entstehung, pp. 127–8Google Scholar, 131.

61 SirCoates, Eric, Kt, C.S.I, C.I.E. (1897–1968)Google Scholar. Armed Services, 1916–20. Joined Indian Civil Service, 1921. Numerous financial posts rising to Financial Secretary to the Government of India, 1946. Chief of Finance Division, C.C.G, 1947–9. Chairman, Overseas Food Corporation, 1951–5. Member and chairman of several official commissions, 1955–65. Director, Thomas Cook & Son, 1959–64.

62 T 236/950, FIN/20361/4 (Sec), Coates to Robertson, 14 July 1947. Ibid, note on ‘Major questions of policy outstanding’ by Chambers, 10 July 1947. T 236/951, ‘A new approach to financial reform in Germany’, note by Coates, , 28 08 1947Google Scholar.

63 T 236/950, note on financial reform by Jenkins, 11 Aug. 1947.

64 T 236/951, Playfair to Jones, 22 Sept. 1947. Playfair quotes Bennett as objecting to the initiative ‘on the argument (in which there is much force) that it is a waste of time to act on the assumption that the Russians, at the moment, will agree to anything which improves the economic position our zones’.

65 Ibid. Strang to M. Dean, 30 Oct. 1947.

66 Ibid Hampshire to Selwyn (Board of Trade), 4 Nov 1947

67 T 236/952, Coates to Jones, 24 Nov 1947

68 Ibid Anglo-US conversations, 18 Dec 1947 See also Bennett, ‘Currency reform’, p 45Google Scholar, Foreign Relations of the United States, (F R U S), 1947, II, (Washington, 1972), 882 ffGoogle Scholar and Clay papers, pp 514–6 Compare also the version offered by Petrov, , Money and conquest, p 242Google Scholar and by Murphy, Robert, Clay's, political adviser, in Diplomat among warriors (New York, 1965), p 312Google Scholar

69 T 236/952, Bennett to Coates, 23 Dec 1947

70 Ibid telegram, Jones to Coates, 16 Jan 1948

71 IbidJones to Chancellor of Duchy of Lancaster, draft brief for talks with Robertson, 21 Jan 1948

72 Ibid. telegram, Jones to M. Dean, 28 Apr. 1948. The advice came from Coates, Anderson, Schumacher and Holgate of Lloyds Bank.

73 Ibid. Rickett: ‘Finance reform’, 6 Feb. 1948.

74 Ibid. telegram, Jones to M. Dean, 28 Jan. 1948. The consequence of a final breakdown in relations with the Soviet Union was clearly a matter which weighed heavily on Robertson's mind in 1948 and would cause him to propose a plan for the mutual withdrawal of all occupying forces in Germany and the establishment of a unified and neutral German state. See Steininger, R., ‘Wie die Teilung Deutschlands verhindert werden sollte. Der Robertson-Plan aus dem Jahre 1948’, in Militärgeschichtliche Mitteilungen, xxxiii, I (1983), 49–90Google Scholar.

75 T 236/952, Playfair to Rickett, 31 Jan. 1948.

76 Information supplied to the author by Sir Kenneth Anderson, Deputy Chief of Finance Division, 1947–8.

77 T 236/952, telegram, Coates to Jones, 31 Jan. 1948. See also Wandel, , Die Entstehung, p. 130Google Scholar; F.R.U.S., 1948, II, 870–3; Clay papers, pp. 553 and 561 and Backer, J. H., Winds of history: the German years of Lucius DuBignon Clay (New York, 1983), p. 224Google Scholar.

78 T 236/953, telegram, Robertson to Strang, 8 Feb. 1948.

79 Ibid, telegram, Bevin to Robertson, 8 Feb. 1948. Ibid. Rickett minute, 19 Feb. 1948.

80 F.O. 944/743, Coates to Jones, 22 Feb. 1948.

81 T 236/953, Coates to Robertson, 26 Feb. 1948. Coates, it must be said, had a poor opinion of some of his American colleagues and of Bennett in particular. In Finance Directorate relations were much better with the technically competent Soviet member Maletin, and the able Oxford-educated Frenchman, Leroy-Beaulieu, than with the American financial experts. Information supplied by Lady Chambers and Sir Kenneth Anderson.

82 Yergin, D., Shattered peace: the origins of the cold war and the national security state (Boston, 1977), p. 369Google Scholar. F.R.U.S., 1948, II, 879–80.

83 T 236/953, telegram, Berlin to F.O. (G.S.), 19 March 1948.

84 As a good example of this, see Bevin's instructions to Robertson (note 79): ‘If at the meeting [of the Control Council] Clay should work for a break on grounds which you consider insufficiently substantial or not easily defensible to public opinion here or elsewhere, I confidently leave tactics to you. But you will no doubt confine yourself to acquiesce rather than show open opposition or support.’

85 Franklin, A. A. E., C.V.O., C.B.E. (b. 1914)Google Scholar. Consular service, 1937–74. F.O., German Department, 1945–6.

86 SirBurrows, Bernard, G.C.M.G. (b. 1910)Google Scholar. Foreign service, 1934. F.O., 1945–50. Washington, 1950–3. Ambassador in Turkey, 1958–62. Deputy Under Secretary, 1963–6. Permanent Representative N.A.T.O. Council, 1966–70.

87 See above, n. 52.

88 F.O. 371/55418/C 11409, comments by Franklin and Burrows, 17 Sept. 1946. See also F.O. 371/55417/C 9040, minute to Troutbeck, on O.R.C. (46) 72, 29 07 1946Google Scholar.

89 T 236/132, GEN 155/57, memo of meeting held in State Department, Washington on 26 Nov. 1946, 6 Feb. 1946. Ibid. GEN 155/60, Anglo-American discussions on Germany on 3 Dec. 1946, 9 Dec. 1946.

90 T 236/950, BIB/P(47) II, report submitted to the Bipartite Board on ‘Financial reform in Germany’,28 09 1947Google Scholar. Amongst other difficulties the report lists the possibility of an influx of R.M. into the western zones, the vulnerability of Berlin and the anomalous position of the French Zone.

91 F.O. 371/65005/C 1419, Playfair to Chambers, 19 Apr. 1947. F.O. 944/741, Chambers to Playfair, 23 Apr. 1947.

92 T 236/954, ‘Financial reform’, draft paper by Hampshire, , 13 03 1948Google Scholar.

93 T 236/953, Sonderstelle Geld und Kredit, ‘Summary presentation of the currency plan’, no date (this scheme was known to the Germans as the Homburg Plan). See also Ambrosius, G., Die Durchsetzung der Sozialen Marktwirtschaft in Westdeutschland 1945–49 (Stuttgart, 1979), pp. 171–2Google Scholar; Möller, , Zur Vorgeschichte, pp. 5, 15, 477–503Google Scholar. Idem, ‘Die Geldreform: ihre wirtschaftliche und politische Bedeutung’, in Zeitschrift für das gesamte Kreditwesen, XXVI, 12, (1973), 536–42. The Chairman of the Sonderstelle was Ludwig Erhard.

94 The Sonderstelle Plan was approved by Coates in mid-February 1948. See T 236/953, Rickett to Gunston (Bank of England), 14 Feb. 1948.

95 T 236/953, extract from BIB/M (48) 4, 24 Feb. 1948. Ibid. telegram, Weir to Robertson, 25 Feb. 1948.

96 F.O. 944/838, ‘The story of the currency reform in Western Germany’, June 1948 (annexe 20, memo from Bennett to Clay), 5 Mar. 1948.

97 T 236/953, Coates to Robertson, 26 Feb. 1948. T 236/954, Hampshire to Berlin, 17 Mar. 1948.

98 Ibid. Coates to Bennett, 8 Apr. 1948 (encloses ‘Outline of financial reform as agreed at informal meeting of the Bipartite Board, 30 March 1948’). In the final plan the Reich debt holdings of private individuals were, in fact, cancelled, whilst banks and other institutions received compensation in the form of equalization claims against the government. Clay appears to have been under some pressure from Washington to revise the U.S. line, especially over Reich debt cancellation. See T 236/954, Playfair to Rowe-Dutton, 1 Apr. 1948; Clay papers, pp. 589–96, Clay for Royall, March 1948 and Backer, , Winds of history, p. 225Google Scholar.

99 T 236/954, Playfair to Rowe-Dutton, 1 Apr. 1948.

100 See Wandel, , Die Entstehung, pp. 106–17Google Scholar.

101 T 236/955, Coates to Robertson, 20 May 1948. F.O. 1046/98, minutes of meeting of financial advisers, 19 May 1948.

102 Ibid. Full details of the conversation are given in Wallich, , Mainsprings, pp. 68–71Google Scholar; and Wandel, , Die Entstehung, pp. 121–4Google Scholar.

103 F.O. 1046/98, Coates to Jones, 2 Sept. 1948. Clay, L. D., Decision in Germany (New York, 1950), p. 213Google Scholar. Backer, , Winds of history, pp. 226–7Google Scholar.

104 Information from Sir Kenneth Anderson. For further information on the Berlin situation, see Bennett, , ‘Currency reform’, pp. 51–3Google Scholar; Möller, , ‘Die Geldreform’, pp. 538–42Google Scholar; Clay papers, pp. 693–5, 748–69, 779–842 and passim, and F.R.U.S., 1948, 11, 958–60 and passim.

105 T 236/955, Ingrams (Frankfurt) to Berlin, 16 July 1948. Ibid. Ingrams (Frankfurt) to Berlin, 20 July 1948. Ibid. Frankfurt to Berlin, 27 July 1948. T 236/2020, note by J. A. Nasmyth (Treasury) to Playfair for the Chancellor of the Exchequer, 5 Aug. 1948. See also the Economist, 27 Nov. 1949.

106 T 236/2020, Eady to Wilson-Smith (Treasury), 17 Dec. 1948.

107 T 236/2020, Robertson (Paris) to F.O. (G.S.), 22 Sept. 1948. Ibid. Crawford (German Finance Department) to Administration of Enemy Property Department, 4 Oct. 1948. Paradoxically, this change in the announced conversion rates may have exacerbated the situation as more deposits were withdrawn in the expectation of inflation.

108 Sauermann, H., ‘The consequences of currency reform in Western Germany’, Review of Politics, XII (1950), 190Google Scholar. Sauermann's definition of money supply includes bank deposits.

109 T 236/2020, Frankfurt to Berlin, 4 Oct. 1948.

110 Ibid. Frankfurt to Berlin, 17 Nov. 1948; Sauermann, , ‘Consequences’, 190Google Scholar.

111 Mendershausen, H., ‘Prices’, pp. 661Google Scholar. Klopstock, F. H., ‘Monetary reform in western Germany’, Journal of Political Economy, LVII, 4 (1949), 289Google Scholar. Lutz, F. A., ‘The German currency reform and the revival of the German economy’, Economica, XVI (1949), 121–31Google Scholar. Veit, O., Changes in monetary policy and their consequences (Frankfurt/Main, 1957), pp. 125–31Google Scholar. See also F.O. 1030/103, Coates to Robertson, 9 Nov. 1948. This describes how British efforts to persuade the B.d.L. to raise the discount rate were impeded by General Clay's reluctance to intervene.

112 German influence on bizonal policy had already been increased by the reorganization of the bizonal organization in February 1948. See Backer, , Winds of history, p. 209Google Scholar; Clay, , Decision, pp. 180–1Google Scholar and Punder, T., Das Btzonale Interregnum (Waiblingen, 1966), pp. 125–32Google Scholar.

113 See, e.g. Benz, W., Von dir Besatzungshcrrschaft zur Bundesrepublik (Frankfurt/Main, 1984), pp. 156–62Google Scholar.

114 See, e.g. Turner, I. D., ‘British policy towards Germany 1945–9’, paper presented at a UACES conference at the L.S.E, 1983Google Scholar.