740.00119 Control (Austria)/4–2249

The Department of State to the French Embassy 1

confidential

The Government of the United States hopes that in the current discussion of the question of occupation costs by the Allied Commission for Austria, the French Government may consider this problem with a view to affording relief to the Austrian people.

The Government of the United States has endeavored since 1945 to limit the amount of occupation costs imposed on the Austrian Government. An agreement was signed with the Austrian Government on June 21, 1947,2 in an effort to relieve the Austrian Government of a portion of this burden and thus to contribute to the financial stability of Austria. At the same time, the United States Government refrained from taking any unilateral action which would weaken the position of the Four High Commissioners in respect to occupation costs. In addition, the United States High Commissioner continued to work closely [Page 1276]with the French and British Representatives to safeguard Austrian interests and to oppose the excessive and inequitable demands of the Soviet authorities.

In keeping with these objectives the United States Government wishes to express its concern as to the probable effect that any further levy for occupation costs may have on the attainment of its objectives with respect to Austria. A demand at this time for Austrian schillings to finance occupation costs will threaten the beneficial results achieved by monetary reform3 and will form a new basis for Communist efforts to combat the European Recovery Program in Austria. The request for occupation funds for 1949 may lead to the printing of new schillings in spite of the proposed imposition of a special tax and disturb the present delicate price-wage balance.

It is recognized also that the imposition of a special tax will focus on any of the occupying powers demanding schillings a measure of political resentment which will add to the problems of the occupation.

With these considerations in mind, the Government of the United States considers that agreement should be reached by the three Western powers to renounce or reduce to a small fraction of the 1948 figure any further levy of schillings for occupation costs in 1949. The lifting of this burden from the Austrian people would be an important factor in aiding economic recovery and would elicit the sympathetic response of the Austrian people.

With reference to the current consideration being given by the Allied Commission for Austria to the schilling requirements for occupation costs, no action will be taken by the United States High Commissioner pending an expression of views by the British and French Governments, to which identical notes have been addressed.

In view of the urgency of the question, an early expression of views would be appreciated. The Government of the United States hopes that it will be possible subsequently for the three Governments to draw up parallel instructions to their respective High Commissioners in Austria which will govern their future position on this question.4

  1. A similar note was sent to the British Embassy.
  2. Regarding the United States renunciation of its share of occupation costs, June 21, 1947, see Foreign Relations, 1947, vol. ii, p. 1184.
  3. For documentation relating to the Austrian currency reform in December, 1947, see ibid, pp. 1208 ff.
  4. In an aide-mémoire dated May 26, not printed, the French Embassy informed the Department of State that France could not reduce its occupation costs in Austria, still less renounce them entirely. French policy, which aimed at the maintenance of Austrian territorial integrity, called for troops of occupation, and the costs of these troops should not be demanded of the French Government. (740.00119 Control (Austria)/5–2649)