The Minister in Austria (Erhardt) to the Secretary of State
440. Recent exchanges between War Dept and USFA deal with new policy recognizing that treatment of Austria as liberated country requires occupation costs collected to date should be refunded, and that USFA should pay all future expenses (Legation’s 343, April 2616). Representatives of Dept took part in Teleconference May 2517 and have full details, but I wish to add my strong recommendation that plan of implementation proposed by USFA in this Conference receive support of Dept.
Proposed plan not only would eliminate embarrassing questions of “dollar-backed” schillings (Legation’s 260, March 26) and avoid complications of prospective Austrian conversion operation, but also should strengthen our position here and that of Austrians most friendly to US.
Believe USFA proposal should be carried through irrespective of any Austrian conversion operation (Legation’s 241, March 21, and page 17, report 15, February 1718). Latter has been considered at intervals in past months and may not materialize for some time despite present tentative date of mid-June. Further delay probable due expected insistence by other Allies on one for one conversion for their own holdings. Austrians themselves are divided as to whether two out of three or one out of two schillings should be withdrawn from [Page 1180]circulation (exchange rate presumably to remain ten schillings per dollar), and appear not yet decided on fate of blocked bank accounts. Most desirable US be in position maintain that all such matters entirely Austrian affair.
Suggest if USFA proposal accepted that ensuing public announcement should be agreed upon in advance by both Washington and USFA to obtain most favorable effect in both countries, preferably authorizing General Keyes issue statement in Vienna first. Believe wiser not to stress impropriety of charging Austria with occupation costs since this might embarrass British and French. However, occasion would be suitable for recapitulating American aid to Austria since 1945 through Army, UNRRA, private channels, surplus property, new relief appropriations, and now remission of occupation costs.