Foreign Relations of the United States, Diplomatic Papers, 1945, European Advisory Commission, Austria, Germany, Volume III

740.00119 Control (Austria)/10–3145: Telegram

The United States Political Adviser for Austrian Affairs (Erhardt) to the Secretary of State

Vienna, October 31, 1945—8 p.m.
[Received November 1—12:06 p.m.]

404. Supplementing P–4685 to Agwar signed Clark, October 30,⁷⁷ Allied Council considered principally: governmental powers to be reserved, currency conversion, police supervision, property control and electoral law.

Approved Executive Committee recommendation October 26 for Internal Affairs Division supervision of Austrian police, assistance with technical equipment, and [garbled group] to Executive Committee re police.

Instructed Executive Committee to study measures to protect property and interests of occupying powers and their nationals by collaboration between four commanders or direct negotiation of one of them with Austrian Govt with assistance of commander of zone concerned.

Sanctioned validity throughout Austria of Austrian electoral law 198 of October 19.

Council disagreed on governmental powers to be reserved and decided to refer question to governments and request views in time for next meeting November 10.

Executive Committee had October 23 ordered Chiefs Political submit report for consideration Executive Committee October 26. Political Directorate accordingly agreed unanimously to recommend that “following functions should not be exercised by Austrian Provisional Government (a) demilitarization, etc., (b) military and paramilitary organizations, (c) scientific military research (d) construction or acquisition of aircraft or equipment, and operation of airfields, (e) “foreign owned property”, (f) border control of persons and (g) displaced persons.

Directorate reported it could not reach any agreement on inclusion of control of currency credit and international financial transactions or on question whether Austrian Government should have right without consent of Allied Council to exchange representatives with foreign states other than four occupying powers. It suggested that Political Division, consulting other divisions should undertake immediate study of form and method of Allied Council control of functions of Austrian Government.

Zheltov declined to discuss this report in Executive Committee October 26, thus postponing it to October 29 when he suggested following alternative: “In accordance with the memo of the Allied Council to Dr. Renner on October 20, 1945,⁷⁸ and by way of an addition to it, the Allied Council reserves the following functions for itself:

(1) Foreign Affairs and diplomatic representation except in the case of countries who are members of the Allied Council,

(2) Demarcation and alteration of frontiers and lines of demarcation,

(3) Displaced persons and repatriation,

(4) Measures for demilitarization on land, water and air,

(5) Settlement of all problems concerning property of foreigners,

(6) Trade and financial relations with foreign countries except those countries which are members of the Allied Council.”

Others questioned points 1 and 5 and especially 6, both then and in Council meeting October 30.

General Clark took exception to opportunity in point 6 for individual members to make unilateral trade arrangements with Austria. Since bulk Austria’s normal trade is not with other three powers but with other central and eastern Europe, practical effect of 6 would be Soviet hegemony or monopoly of it accompanied by analogous diplomatic relationship under point 1 Soviet formula “property of foreigners” instead of “foreign owned property” apparently made with Potsdam ex-German assets in mind.

French suggested dropping point 1 until after elections. British suggested dividing it into Foreign Affairs wholly prohibited and diplomatic representation except with member countries. Soviet member disagreed. US member pointed out Soviet view affected very foundation of Allied Commission and that US Government intended to act through its representative on Allied Council in Austrian matters.

French noted point 6 implied modification of EAC agreement (article V),⁷⁹ All three others told Koniev they could not accept the exception in point 6 since Council must, as a whole, deal with Austrian trade matters. Clark said Soviet element showed, by insisting on this exception, it wants to [conduct?] business on whole guts of Austrian situation on direct unilateral basis rather than through Council whereas US Government expects to act through its commissioner in Council and not through direct unilateral diplomatic representation.

Council agreement being impossible, it was decided to refer matters to Governments for view.⁸⁰

Erhardt

77. Not printed. This telegram for the Joint Chiefs of Staff, repeated to the Department for information, reported details of the discussions in the Allied Council on October 30 concerning currency conversion. Though it had been accepted by the Western Allies, Marshal Koniev rejected General Béthouart’s compromise plan for immediate conversion of reichsmarks into Austrian national currency to the extent that existing stocks of Austrian currency permitted, and for supplementary conversion into Allied Military schillings. In the absence of agreement General Clark proposed that an investigation be made of the possibility of conversion step by step and zone by zone, beginning with the three Western zones and using the supply of Austrian national schillings currently available. (740.00119 Control (Austria)/10–3145) In the unofficial U.S. minutes of the October 30 meeting of the Allied Council for Austria (transmitted in despatch 405, November 1, from Vienna), General Clark is quoted as saying that he would regret to take action on a zonal basis, but that the need for immediate conversion to stop a flood of reichsmarks into Austria was so urgent that he was willing to take any possible forward steps. (740.00119 Control (Austria)/11–145)

    In telegram P–4752, October 31, from Vienna, to the Joint Chiefs of Staff, repeated to the Department for information, General Clark commented further on this incident: “In my opinion we are going to lose the battle because the Soviets can stall long enough until their proposal will be the only logical one. From a standpoint of logic we have defeated them at every turn and their attempts to answer our arguments are indeed feeble. However, they always end up by stubbornly insisting that their proposal is the only correct one. I introduced the proposal for a tripartite conversion for the purpose of throwing consternation into Soviet ranks and it gave them quite a jolt. However I have no hope that it will have any real effect in forcing a change in their position.” (740.00119 Council (Austria)/10–3145)

78. Not printed, but see footnote 66, p. 636.
79. This article provided that the Allied Council would initiate plans and reach decisions on questions affecting Austria as a whole. It would also ensure appropriate uniformity of action in the various zones of occupation. See Conference of Berlin (Potsdam), vol. i, p. 353.
80. In telegram P–4752, October 31, from Vienna, to the Joint Chiefs of Staff, repeated to the Department for information, General Clark summarized his position: “Points 2, 3, 4, and 5 were agreeable to all but it was decided to suspend communication of any reservations to Austrian Provisional Government until points 1 and 6 are settled. I consider that controversial points are important to Allied Council control in Austria and I shall not give in to Soviet point of view unless instructed by you to do so.” (740.00119 Control (Austria)/10–3145)