The Minister in Austria (Erhardt) to the Secretary of State
548. US decision to pay occupation costs beginning July 126 has captured the imagination, of the Austrian public and enhanced significantly American prestige. These views are strongly reflected in the non-Communist press.
The Socialist Party which is daily becoming more markedly pro-US points out that our action is in line with Socialist program enunciated May 6. While Communist action may be developed later the initial efforts of local Communist press to distort US action have probably only brought further discredit on Communists.
Local British and French comments heard here have been favorable although they have observed neither had been consulted beforehand. Gruber tells me local British officials have pointed out that while British Treasury is not in a position to follow American policy, Lord Pakenham’s visit this week may bring forth a lesser gesture in that direction. French Commanding General understood to be recommending to his Govt the refund of part of the schillings they now have on hand and a renunciation of certain types of occupation costs in future.
In my opinion this tangible fulfillment our liberated area declaration, coupled with signing relief agreement,26 and arrangements make for continuing 1550 calorie ration scale until harvest, has not only greatly strengthened public morale but also the position of the present govt.
Sent Dept, London as 50, Moscow 55.