840.50 Recovery/4–2048: Telegram

The Acting Secretary of State to the Legation in Austria


365. Pass to High Commissioner. About 4 weeks ago Aus Mission, Wash requested to submit 3 months ERP program on basis availability $65 million ECA funds. Promised to have this program ready for submission within few days. Discussions involving this program as well as entire year program have been held with members of Mission, including Leopold and Igler. We are concerned that they lack realization or appreciation of basic principles on which success of ERP is predicated. They apparently believe that US has committed itself to make dollars available to enable Aus to receive all imports shown in Country Study regardless area of trade. Tried to emphasize to Mission that total program in Country Study can be achieved only by common effort all CEEC countries, and that US had made no commitment but will endeavor to finance uncovered deficit at least with Western Hemisphere, and in addition in first quarter of program at least certain imports such as coal and fertilizer from other areas.

In order to prevent break in pipeline Mission was also requested to submit 30 day program based on ⅓ of $65 million. This done and tentatively a 30 day program agreed upon. To date only food items this program authorized for procurement by ECA Administrator. Tentative 30 day program includes in millions of dollars: Food—13.0, coal—4.0, agricultural supplies—2.0, medical supplies—0.3, other—2.6. [Page 1391] Breakdown of $8 million given Deptel 310 and rest in Deptel 351.1

In discussion with Mission it was pointed out that amount allocated for food this program almost $3 million more than cost monthly food expenditure under PL 84 and 389 and approval this sum for food does not constitute precedent for future program under ERP funds. Further, pointed out to Mission reason for approval this relatively large sum for food to enable gradual accumulation reserve rather than for immediate consumption on arrival in Aus. Estimated caloric value approx 215 billion after allowing for 3% loss factor, or approx 65 billion calories in excess current US contribution to Aus food plan under 1700 caloric normal consumer ration scale. Dept feels higher food imports should be used for reserve and does not agree with plan brought by Leopold that increased food supplies financed under ERP permit Aus consumption 2100 normal consumer beginning June 1948. We have avoided being drawn into discussion any particular ration scale which Austrians might have, saying it is matter primarily for determination by themselves on basis of indigenous and imported supplies. Mission was told no commitment can be made this time how much ERP funds would be approved for food import, and emphasized that ERP a recovery program and therefore the tendency likely to be not to approve relief type program in which practically entire available fund is used to finance food and fuel. Mission was also reminded that altho ERP funds might enable increased food imports, a substantial increase in consumption level in Aus could come about only by increase in availability indigenous supplies.

Approximately $4 million coal includes 170,000 tons Ruhr coal Apr and 45,000 tons special coal Poland and 20,000 tons coke Czech. May shipment Polish coal provided in PL 389. Pointed out to Mission that this additional Pol and Czech coal and coke not necessarily in addition provision Polish coal already provided from US funds but rather tentative pending agreement on 3 month program when it will be possible determine whether these additional amounts could be financed from available ERP funds. If funds not sufficient, then Polish coal in particular would probably be credited against payment due May 20 for June shipments.

On arrival Leopold requested Dept to instruct High Commissioner to release increased supplies to permit an 1800 calorie ration scale 39th ration period. He was informed that until we had assurance sufficient supplies on hand in Aus, a full pipeline and a firm operating program for several months ahead, we do not believe advisable promise release US supplies at rate higher than heretofore. He stated US supplies on hand and scheduled under PL 84 and 389 sufficient to permit additional release. Dept indicated would request info from High [Page 1392] Commissioner. Will appreciate your submitting info all PL 84 and 389 food supplies physically on hand both Austrian and USFA custody, as well as such supplies in pipeline at end 39th ration period. Show also amount supplies available from indigenous and other sources same date. Supplies given Deptel 310 Apr 2 are from ERP funds, therefore, please show time separately when these are estimated to become available for consumption Aus.

Due to short supplies, not believed that raising consumption level in Aus before harvest would be desirable, except for political reasons. If political situation requires it and supplies permit, therefore, Dept would agree to Aus utilization additional US food supplies about 15–20 billion, total consumption US supplies in Austrian food plan would he approximately 165–170 billion calories per ration period. Should it be possible to make these additional supplies available to Aus food plan without drawing on ERP financed supplies for breadgrains before about July 1, and other ERP food items before 43d ration period, and providing sufficient reserve is assured in face of your recently expressed doubts concerning indigenous collections, suggest it be done beginning 41st ration period.

Dept feels strongly that US contribution to Aus food plan be in fixed amounts in terms of calories beginning with 40th ration period rather than by way of making up deficit. Since PL 84 and 389 supplies would permit contributions both on basis 150 and 165–170 billion calories in excess next two ration periods, suggest Aus Govt be notified as early as possible of the amount of supplies it can count on to receive from US for next 2 ration periods. Pls advise what effect above would have on ration scale from 41st ration period to next harvest assuming continuation current rate supplies from indigenous sources.

On putting this procedure into effect would be desirable to give it appropriate publicity so as to relieve US of blame in case short-fall in ration scale if Aus Govt falls down on collection indigenous supplies.

Sagmeister proposal Legtel 4682 to include youth 12–48 years and certain others in employed category for ration purposes estimated to require about one-third food needed to raise ration scale to 1800 present basis of consumer categories. However desirable such change might be on social grounds, appears to us that immediate result would be added strain on US supplies without political benefit which would accrue from raising normal consumer scale to 1800.

No definite arrangement worked out procedure for supplies under ERP financing. For time being, however, at least under 30 day program it will be necessary to assist Aus Govt, and, therefore, will continue present arrangement whereby goods are largely govt procured [Page 1393] and shipped to High Commissioner except perhaps for difference that such goods raider ERP may be turned over directly to Aus Govt. Will advise you on further developments procedure.

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