CFM Files
Memorandum of Conversation, by the Assistant Economic Adviser to the United States Delegation at the Paris Peace Conference (Boardman)
| Participants: | Mr. Gruber, Prime Minister of Austria50 |
| Mr. Bischoff, Austrian Minister to Paris | |
| Mr. Thorp51 | |
| Mr. Boardman |
Mr. Gruber called particularly in connection with the transfer of German assets in Austria and Austria’s requirements after the termination of UNRRA, but also spoke of other matters, including the U.S. trade proposals.
German Assets
Mr. Gruber said he thought it would ease a difficult situation if the U.K. and U.S. would make a statement clarifying their position on the transfer of German assets in Austria to the U.S.S.R. He said he had made this suggestion to Mr. Turner of the British Control Office and that he (Mr. Gruber) thought it important for the U.S. and [Page 365] the U.K. to follow a common policy. He indicated that there was no real question about the facts of what constituted German assets before 1938 and asserted that the Potsdam Agreement referred only to assets which were German before 1938. It was because the Soviets have been taking as German all assets which the Germans seized after the Anschluss, legally or illegally, that Mr. Gruber hoped that a statement would be made to the effect that holdings obtained after 1938 should in principle be considered Austrian unless the claimant could prove otherwise. Mr. Thorp said that a similar burden of proof question might come up at the conference, but that the U.S. position in general was to assume that if property had been moved to an ex-enemy country from another, it had been done by force. He said that the last he knew, we were going to treat transfers in Austria on a case by case basis. Mr. Gruber considered this policy satisfactory, but pointed out that the U.S.S.R. has stated that this is not a problem for the four powers. In answer to Mr. Thorp’s questions as to the British and French positions, Mr. Gruber said that the British favored a quadripartite determination as to what German assets are (this being opposed by the Soviets), but that the French usually end by siding with Soviet views on property questions. He agreed with Mr. Thorp that it might be difficult for the French to do otherwise in view of their interests in other areas.
In answer to a question as to the extent of direct investments of capital and machinery made by the Germans in Austria after 1938, Mr. Gruber said there had been quite a few and cited the cases of an aircraft factory and of a chemical works. In answer to another question, he replied that he knew of no case in which the Soviets had returned property which had had German owners only for a short period, and agreed with Mr. Thorp that the Soviets seemed to be taking every opportunity to seize or hold shares in which there had been any German flavor. He said the U.S.S.R. had taken over the Danubian Shipping Company by force and without just compensation, although it had been an Austrian company for 150 years. This had been made a 50–50 company with a Soviet Director General and was being run as a monopoly which would be tied in with other such companies in other Danubian states. Mr. Gruber noted that the Austrians were opposing the formation of these 50–50 companies. He thought that one advantage of a declaration would be to give the public a chance to know that the Austrians were not willfully entering into this type of exclusive trade, but were doing it only under Soviet pressure.
Post-UNRRA Problems
Mr. Gruber indicated that Austria’s problems would be serious after the cutting off of UNRRA shipments and that this was the [Page 366] main reason for his visit. He said that Austria needed purchasing power. It wanted to build up its tourist trade which used to make up one-fourth of its budget, but it needed materials and food first. There was a vicious circle. Mr. Thorp described the background of the decision to discontinue UNRRA. Nevertheless, Mr. Thorp said, it was recognized that Austria, Italy and perhaps Greece would have to have some kind of assistance. He added that we had a great desire to help Austria, although the circumstances have been against it. The problem of providing assistance would be difficult because, unless help could be obtained from the army, there might have to be a new appropriation of funds. In sum, Mr. Thorp said that we were aware of the problem and had developed some estimates of requirements but that the last he knew we did not have any specific program to succeed that of UNRRA. He said he would gladly cable to Washington on the matter. Later, he noted that we might have difficulties in sending in food on a basis comparable to UNRRA. He inquired what the Austrian view, in case there were no other facilities, would be towards some kind of a long range credit arrangement. Mr. Thorp made it clear that he was not suggesting this officially. Mr. Gruber indicated that he did not mind how the machinery was worked out; the important thing was to get food.
Mr. Gruber said it was hard for him to say what estimates of requirements were available. UNRRA help for the present year was $117 million. He said he would take this up in Vienna, though he was not sure how to communicate information that might be available. He said that the greatest need was for foodstuffs, particularly grains and fats. UNRRA shipments might continue until March or April. The great need would probably be between February and July of next year at which time the harvest would start coming in. Whether or not Austria could then take care of its agricultural requirements would depend on how much had to go to neighbors and how free the market was. Coal was also needed; some was being obtained from the Ruhr in exchange for electric power from Western Austria. Raw materials were another need. Mr. Gruber mentioned Austria’s arrangement for importing cotton from the U.S., paid for with the proceeds of textiles into which it was manufactured, and said that a similar arrangement was being made with Great Britain on wool. Some machinery was needed. A lot of rolling stock had been taken away, but Austria had a number of repair shops with which it could restore what remained. The country was short of gasoline, for which it had to apply to the U.S.S.R. authorities. The Soviets were shipping [Page 367] 30,000 tons of Austrian crude oil a month to Germany and Czechoslovakia. In reply to Mr. Thorp’s question, Mr. Gruber said that the number of occupying troops had been reduced from 200,000 to 100,000 and that he thought it was now stabilized at the latter figure. He added that a third of the Austrian budget went to the provisioning of troops.
As to health, Mr. Gruber said that on the whole the condition of the Austrians had not been too bad during most of the war and that it must be admitted the Germans had treated Austria better than other countries under German domination. Conditions had been bad, however, when the Germans left, destroying or taking food and equipment with them. After the liberation it had been hard to organize the food supply. There had been some epidemics from the East, and one month last winter, one-third of the children born did not live.
Trade
Mr. Gruber said that Austria had started to export again. He mentioned magnesite, timber, electric power, special steel for tools, and some finished goods. He said that Austria had many skilled workers and that rather than try to develop mass production it wanted to build up its production and exports of specialized goods. He felt that Austria could do considerable trade with the United States, and Mr. Thorp agreed that the United States should be a good market for Austrian goods, pointing out that American middle class purchasing power had grown considerably. Mr. Gruber also felt that Austria’s tourist trade was important to rebuild.
In a discussion of the extent of Austria’s inability to be self-supporting, Mr. Thorp remarked that purely from an economic point of view it probably would have been better not to break up the Austro-Hungarian Empire. Mr. Gruber expressed agreement and said he did not think Hitler could have accomplished what he did if the Empire had not been broken up. Mr. Gruber then said he thought Mr. Clayton’s trade proposals were the only hope. Mr. Thorp commented briefly on the problem raised by the U.S.S.R., which by itself has never been important in world trade, and by India, Australia and some of the Latin American countries which wish to industrialize and protect their infant industries. Mr. Gruber seemed appreciative of the problems but nevertheless anxious to see the establishment of conditions which would permit more or less free trade.