840.50 UNRRA/9–2046
Memorandum of Conversation, by Mr. Coburn B. Kidd of the Division of Central European Affairs
Subject: Austrian Economic and Political Situation
| Participants: | U–E—Mr. Clayton57 |
| Dr. Ludwig Kleinwaechter, Austrian Political Representative to the United States | |
| CE—Coburn Kidd |
Dr. Kleinwaechter opened the conversation by expressing his Government’s concern about the Austrian situation upon termination of the UNRRA program. It was felt that the months January to March would be especially critical, owing to the draining of the UNRRA pipe line sooner than had been counted upon.
Mr. Clayton stated that the Department had the problem under consideration and was actively studying ways and means of alleviating the situation when UNRRA ceased. The Department intended to make an approach to Congress for financial assistance for Austria. If Congress convened in November, the matter would be taken up at that time. It was thought that the Eximbank loan and the FLC credit might be of help to Austria before the larger relief program could be acted upon.
Dr. Kleinwaechter mentioned his understanding that the proceeds of an Eximbank loan would not be available for relief needs in the critical period, since such a loan is provided for reconstruction purposes mainly. In connection with the Eximbank loan, Dr. Kleinwaechter [Page 372] stated that strictly industrial needs, for raw materials and capital equipment, were estimated in the neighborhood of 80 to 100 million dollars. The application for an Eximbank loan to the amount of 50 million dollars had been made on the assumption that this, coupled with an FLC credit of perhaps 25 million dollars, would substantially cover the amount required for reconstruction purposes. He understood, however, that even the initial 10 million dollar FLC credit had not been fully utilized owing to the inability of the Austrian Government to provide dollar funds for the transportation costs of moving the equipment to Austria.
Mr. Kidd stated that inquiries and suggested alternatives had been addressed to the field, and the Department was at present awaiting replies, on the basis of which some solution might be devised for the transportation cost problem.
Dr. Kleinwaechter mentioned that he had seen a number of figures referred to in connection with the Eximbank loan, 25 million and 35 million dollars, as well as the 50 million dollars for which the Austrian Government was applying.
Mr. Clayton stated that the precise figure was still under consideration, and had not been decided upon since the Austrian application had been received only within the past few days. With the establishment of the International Bank, it was thought that countries would not have to rely upon the Eximbank, since one of the purposes of the International Bank was to provide loans for reconstruction.
Dr. Kleinwaechter was not sure whether his Government could apply to the International Bank since Austria was not a member, nor a member of the United Nations. A similar difficulty had already arisen in connection with ILO, where the Soviet representative on the AC had prevented Austria’s acceptance of an invitation to become a member of the ILO, on the grounds that Austria was not yet a member of the UN.
Mr. Clayton stated that he understood that Italy was applying for membership in the International Bank, and that if Italy could, though not a member of the UN, he saw no reason why Austria also should not apply for an International Bank loan. Mr. Clayton expressed a desire for Mr. Ness to prepare a memorandum on this point for his information. He would also like Mr. Ness to review the situation with reference to the Eximbank loan in the light of possible Austrian membership in or exclusion from the International Bank. With reference to the application for a Congressional grant for Austria, Mr. Ness might desire to get in touch with Colonel Tyler Wood, and might also advise whether it would be possible to increase the Austrian allocation of UNRRA funds. Mr. Clayton referred to the difficulties of [Page 373] obtaining a Congressional grant, but expressed the Department’s understanding of Austria’s position and intention to help where possible.
Dr. Kleinwaechter wished to inquire about the possible change in this Government’s policy in the light of Mr. Wallace’s statements.58 His Government felt apprehensive lest a new policy would occasion further delay in the Austrian treaty and would encourage the Soviet opposition to an early conclusion of the treaty.
Mr. Clayton stated that this matter had been entirely cleared up as of this morning. Mr. Wallace submitted his resignation, and the President had issued a statement in which there was no doubt of the continuance of this Government’s past policy and of the President’s support of Mr. Byrnes.59 Dr. Kleinwaechter expressed his great satisfaction that the matter was now entirely clear.
- William L. Clayton, Under Secretary of State for Economic Affairs.↩
- This is a reference to a speech by Secretary of Commerce Henry A. Wallace at Madison Square Garden in New York City on September 12, 1946; for text, see New York Times, September 13, 1946.↩
- See Public Papers of the Presidents of the United States: Harry 8. Truman, 1946 (Washington, Government Printing Office, 1962), p. 431.↩