Quadripartite Activity: During a brief meeting held on July 26, 1949 the deputy military governors agreed to a protocol for future discussion of quadripartite problems. Under the agreement, drawn up to implement the June 20 communiqué of the Council of Foreign Ministers, discussions were to be held on the level of the chiefs of occupation authorities or deputies and a subordinate level of conferences of experts. The commandants were to concern themselves with “consideration of questions of common interest relating to the administration of the four sectors of Berlin with a view to normalizing as far as possible the life of the city” and the experts were to deal with problems such as expansion of trade, economic relations between the western zones and the eastern zone, facilitation of movement of persons and goods, and the exchange of information between the zones. At the August 18 meeting of the commandants there was considerable difference of opinion between Brig. General Frank L. Howley (United States) and General Alexander G. Kotikov (Soviet Union) over a Soviet proposal that any decision made in a meeting would be formalized in a quadripartite agreement. General Howley stated that he opposed the idea because the foreign ministers Paris communiqué had instructed the commandants to come to “points of view” on Berlin problems; not to issue four-power agreements on them and such a procedure as suggested by General Kotikov would turn the meetings back into the Kommandatura procedure.

In the Allied Council meeting on August 13, 1948, the Soviet High Commissioner (Kurasov) attacked the United States–Austrian ECA Agreement of July 2 as contradictory to the obligations set forth in the Moscow Declaration of 1943 and as making Austria entirely dependent upon the United States. The United States High Commissioner (Keyes) stated that the actual working performance of the ERP would disprove these statements and the British and French High Commissioners joined him in rejecting the Soviet proposal for cancellation of the United States–Austrian ECA Agreement.

Quadripartite Activity: The only quadripartite activity which was carried on during the period under review was the discussion of Germany at the meeting of the Council of Foreign Ministers in Paris from May 23 to June 20, 1949. A series of informal conversations between Philip C. Jessup, Ambassador-at-Large of the United States, and Yakov A. Malik, Soviet Representative on the Security Council, in New York had led to an agreement for the lifting of the blockade of Berlin on May 10 and the convening of the Council of Foreign Ministers ten days later. The blockade was only partially lifted, however, due to restrictions on auto traffic between Berlin and Helmstedt, and a strike of railroad workers in the Eastern Sector of Berlin. On June 3, the Russian Commandant in Berlin, Major-General Alexander Kotikov, met with the United States, British, and French Commanders for the first time since June 16, 1948, to discuss the rail strike. No agreement was reached, however. The rail strike was finally settled on June 29, 1949.

The regular quarterly meeting of the Consultative Council of Western Powers was held in London on January 27 and 28, 1949. A communiqué issued on January 28 announced that agreement had been reached on the establishment of a “Council of Europe,” which would consist of “a ministerial committee meeting in private, and a consultative body meeting in public.” There had been sharp controversy over the form which the Council should take, the British favoring representatives with cabinet status and the French, supported by Belgium and Luxembourg, preferring parliamentary representatives.

The sixth session of the Council of Foreign Ministers met in Paris from May 23 to June 20, 1949, to discuss the German question and the Austrian treaty. The fifth session, held in London in November–December 1947, had closed without agreement as to the drafting of peace treaties for Germany and Austria. At the recent meeting France was represented by Robert Schuman, the USSR by A. Y. Vishinsky, the United Kingdom by Ernest Bevin and the United States by Dean Acheson. A preliminary requirement for the opening of this meeting was the lifting of the Berlin blockade and counterblockade measures by members of the Council. Informal discussions in New York between Soviet and United States representatives (Jacob Malik and Philip Jessup) resulted on May 12 in preliminary agreement on this problem, which had stood for ten months as an obstacle in the way of any consideration by the members of the Council of the German question as a whole.

The Council of the Organization of American States met several times during the early part of 1949. At its meeting on January 5, the Council approved in principle the report of the Committee on Finance for the 1949–1950 budget and received the report of the Committee on Privileges and Immunities submitting a projected multilateral agreement on privileges and immunities of the Organization of American States and a draft agreement between the Council and the United States. The Council also approved the conclusions of the Committee on Inter-American Organizations which had submitted a project of agreement between the Inter-American Statistical Institute which, financially, brought the Institute under the administration of the Council. At a special meeting convened at the request of the Ambassadors of Chile and Guatemala on January 24, the Council resolved not to consider the matter of asylum and safe-conduct for the ex-President of Venezuela since the conditions demanding it no longer existed, but approved a resolution to appoint a committee to study the competence of the Council to consider matters of this nature.

Quadripartite Activity: Failure to find a solution of the Berlin currency problem after the question had been considered by the United Nations Security Council was evident when the replies of the western powers and the Soviet Union to Dr. Juan Atilio Bramuglia's questions about the problem were made public on November 26, 1948. The Soviet reply stated that an agreement on the four-power control plan would mean the simultaneous lifting of the Berlin blockade and a return to four-power collaboration in the administration of Berlin, which in effect would mean resumption of direct conversations on the currency questions among the four military governors. The western powers made it clear that they considered the unity of Berlin city administration as the basic prerequisite for an agreement. Several days later, on November 30, a city government was installed in the Soviet sector of Berlin, with Friedrich Ebert as its mayor and on December 21, the western military governments announced formal reconstitution of the Allied Kommandatura on a three-power basis. In announcing the move, Brig. Gen. Jean Ganeval, French sector commandant, stated that fourparty administration of the city could be resumed any time that Soviet authorities decided to abide by agreements to which the four powers were committed.

Following the close of the sixth session of the Council of Foreign Ministers in Paris on June 20, 1949, negotiations for an Austrian treaty were resumed by the Deputies in London. With 22 articles of the treaty still unagreed, the Deputies received a directive on major questions which they were to spell out in detail, reporting to the Council by September 1, 1949, on the draft treaty as a whole.

In July 1949, negotiations for a European payments agreement to finance international trade, which had been delayed by a dispute between the United Kingdom and the United States over currency convertibility, were blocked by a difference between the Swiss and the United States governments regarding the terms of Switzerland's participation. The Swiss government had refused to sign the bilateral agreement with the United States which all other members of the Organization for European Economic Cooperation receiving dollar aid had done, on the ground that it needed no dollar aid for itself and that the bilateral agreement would give the United States a right to check on the Swiss economy. The payments committee of the OEEC Council had attempted to bring Switzerland into the payments plan to widen the area of more liberal trade, urged by the United States. The committee's proposal that half of Switzerland's trade surplus be financed by a grant of dollars and half by trade credits on the terms of the Economic Cooperation Administration as advanced by Switzerland to her debtors was submitted to the Swiss Federal Council. Following the statement by the Economic Cooperation Administration that dollars could not be had without signature by Switzerland of a bilateral accord with the United States, the Swiss Federal Council refused to sign the accord.

The terms of a protocol signed by the Soviet Union, Poland, Czechoslovakia, Hungary, Bulgaria and Rumania in January, 1949, when they formed the Council for Mutual Economic Assistance were released on June 3, 1949. Under the provisions of the agreement the Council was established to coordinate eastern European economy, standardize industrial production of member nations, provide mutual aid through trade, exchange of experience, loans and investments, for a period of twenty years.

The second session of the South Pacific Commission was held from October 25 to November 2, 1948, in Sydney, Australia. At this meeting the Commission was formally established as a permanent organization, the agreement creating it having been accepted by all six participating governments.

On December 6, 1948, a note was sent to the United States, France, USSR and the United Kingdom by the Austrian Federal Government pointing out that no progress had been made in the preparation of the Austrian peace treaty since the adjournment of the Deputies of the Council of Foreign Ministers at London in May 1948. The note declared that Austria was anxious for the conclusion of the treaty, the subsequent withdrawal of occupation forces and the elimination of the four zones artificially dividing the country, as it considered the occupation an impediment to Austrian economy.

At a meeting on November 12, 1948, members of the Allied Commission considered the Austrian Chancellor's letter concerning the abduction on November 5 of Dr. Margarethe Ottillinger, a high Austrian official of the Ministry of Property Control and Economic Planning who had been detained by Soviet forces at the Enns bridge demarcation line between the United States and Soviet zones. The Chancellor pointed out that this was a serious interference with the functioning of the Austrian Government and requested the Commission to obtain her release. The Soviet High Commissioner (Kurasov) declared that this, as well as other abductions of federal officials by the Soviet authorities, was within the exclusive competence of the Soviet Command and that Dr. Ottillinger had been working against Soviet occupation forces. The Soviet explanation of the case was not accepted by the three other high commissioners.

At its meeting on March 31, 1949, the Far Eastern Commission recommended to its eleven member governments that investigation of suspected Japanese war criminals accused of offenses falling under paragraphs 1b and 1c of the policy decision of the FEC entitled “Apprehension, Trial and Punishment of War Criminals in the Far East,” approved by the Commission on April 3, 1946, be completed before June 30, 1949, and that all trials resulting from the investigations be concluded, if possible, before September 30, 1949. The offences referred to included violations of the laws or customs of war, or murder, extermination, enslavement, deportation or other inhumane acts committed against any civilian population, or prosecutions on political, racial or religious grounds. On March 16, 1949, the Commission had announced the termination of investigations of offences under paragraph 1a.

The nineteenth annual report of the Bank for International Settlements, which reviewed the period from April 1, 1948 to March 31, 1949, noted progress in the field of general economic and monetary affairs, especially in western Europe, with the fight against inflationary tendencies successfully waged in almost every European country. Noting the disappearance of the seller's market as the most outstanding development of the year, it called for more production through greater efficiency, but warned that it must be of goods demanded by a flexible price system. It was recognized that fewer restrictions on trade tended to develop a broader international outlook in individual countries, and the Report recommended further planning with an eye toward lessening restrictions as the goal for the year.

During the period from July 10, 1947 to December 23, 1948, thirteen policy decisions were adopted by the Far Eastern Commission. These fell primarily into three categories–disarmament, democratization, and the determination of a self-sustaining economy for Japan. In the first category the Commission adopted a policy decision on February 12, 1948, entitled “Prohibition of Military Activity in Japan and Disposition of Japanese Military Equipment”. Under the terms of this decision a ministry of war was forbidden, and possession by Japanese of arms, ammunition and implements of war and the development, manufacture or importation of these articles was prohibited

The eighth plenary meeting of the International Cotton Advisory Committee was held in Brussels from April 25 to 30, 1949, to review the world cotton situation and exchange information concerning the cotton policies of the member governments. Eighteen nations were represented at the meeting while twelve governments sent observers.

Currency Reform: On February 3, 1949, it was announced that the United States wished to discard the agreement reached in Moscow on August 30, 1948, whereby the Soviet Union would raise the Berlin blockade in return for the introduction of the eastern mark as the sole currency in the western sectors of Berlin. The United States introduced a new plan by which the western mark would continue to circulate in the western sectors and the Soviet mark in the eastern sector until a municipal government with effective control over the entire city was established. The United States proposal was submitted to the committee of experts appointed by the President of the United Nations Security Council to study the Berlin currency problem. Early in January 1949, the committee proposed a plan based on the principles of the August 30 agreement which recognized the division of Berlin into two separate administrations by recommending a split banking system with quadripartite control over the distribution and circulation of currency, with the eastern mark established as the sole currency of the city, and with additional safeguards against the possibility that the Soviet Union would use its control over the actual issue of the mark to harm the economy of the western sectors. The USSR did not wholly accept the plan, France and the United Kingdom were prepared to work from it, but the United States found it entirely unacceptable and submitted another. The second United States plan called for the use of the eastern mark as an over-all currency, with currency and trade exchanges controlled by a permanent board of trustees made up of citizens of neutral powers.

The eighteenth session of the Assembly of teh Inter-Allied Reparation Agency closed on July 2,1948, after allocation to member nations 80 million Spanish pesetas from the sale of Spanish property owned by the German state and nonresident German nationals. Thiswas the first payment to be followed by much larger amounts, under an agreement reached with Spain on May 10, 1948.

The Council of the Organization for European Economic Cooperation, composed of cabinet members of the governments of the United Kingdom, France, Italy, Greece, Norway, Portugal, Belgium and the Netherlands, held a series of secret meetings during May and June in an attempt to solve the problem of intra-European trade and the intra-European payments system which was scheduled to end June 30, 1949. The principal objections to the existing payments system were that it was originally formed in a series of bilateral agreements between each of the countries, that the original agreements were based on estimates of the expected balance of payments which had in some cases been erroneous, and that existing quotas had stifled trade.