740.00119 Control (Austria)/12–1848: Telegram

The Secretary of State to the Legation in Austria


97. Dept has reviewed problem occ costs raised Aus Leg’s note Nov 301 light of considerations mentioned urdesps 538 Nov 24 and 29 Jan 13; urtel 1303 Dec 19; USFA’s P 2923 Jan 18.2 We agree new approach this question now essential and approve general course outlined in reftel 1303.

We have been reluctant to see further levy and collection occ costs in view (1) our position treating Aus as liberated country; (2) effect on financial stability Aus Govt; (3) large schilling balances already in possession UK, Fr and Sov elements. Recognize, however, desirability quadripartite solution, particularly since Figl and Schaerf [Page 1263] prefer quadripartite decision (P 29223 and P 2923, Jan 18). If impossible to agree on abandonment occ costs, we believe every possible effort should be made to obtain settlement on minimum sum in accordance with fol principles: (1) equal split; (2) equal obligation to pay civilian occ costs from mil occ cost funds; (3) prior use of existing; schilling balances; (4) agreement on total levy in schillings without basing it on percentage Austrian budget, and (5) assessment by quarters on basis progressive reduction.

Re points 2 and 3, it might be desirable to discuss with Brit and Fr informally question of furnishing regular confidential reports by Aus Govt on unused balances. We understand Aus Govt now considers such reports would be violation banking secrecy principles. At least, unless you see objection, amounts existing balances and total Sov occ costs, including unreimbursed civilian costs, might be appropriately publicized.

Re point (4) (Dulles4 records indicate) quadripartite Finance Directorate unanimously agreed on abandonment percentage of budget principle in its meetings Dec 1946, which reflected in its subsequent reports substituting conventional 3 billion schilling figure.

Resistance to allocations, or more than minimum allocations, for 1949 should take fully into account since investment program appears in excess probable counterpart schillings and since tax income cannot be speedily increased, levy occ costs of several hundred million schillings may well occasion inflation almost corresponding amount.

If there is doubt settlement along foregoing lines serious consideration should be given to withholding US agreement, at least for some time. Meanwhile study of extent civilian occ costs should be urged prior to further allocation of military. In any event, it may be advisable view London Treaty negotiations to delay action that would bring issue to showdown.

Your comments desired whether any objection reply to Aus note in sense para 2 above.5

  1. Not printed; a summary of this note was transmitted in telegram 922, from Vienna, December 8, 1948, printed in Foreign Relations, 1948, vol. ii, p. 1444.
  2. Of the messages under reference here, telegram 1303 is printed ibid., p. 1445; the others are not printed.
  3. Not printed; in it Keyes had reported, inter alia, that Chancellor Figl preferred a unanimous Allied Council decision on occupation costs rather than disagreement and subsequent bilateral settlements with the British, French, and Soviet authorities. The Austrian Chancellor felt that negotiations with the British and French on 1948 occupation costs looked promising, but that the Soviet Union remained adamant in demanding full payment of the 149 million schillings due them for the year. (740.00119 Control (Austria)/l–1849)
  4. A reference to Mrs. Eleanor L. Dulles, who served as an economic analyst in the Office Of the United States Political Adviser for Austria during 1946.
  5. In telegram 130, February 18, from Vienna, not printed, Erhardt reported that Legation Vienna had no objection to this procedure. He also indicated that the United States representative in the informal quadripartite discussions on occupation costs had based his position on the principles enumerated in this message. (740.00119 Control (Austria)/2–1849)