740.00119 Council/7–946: Telegram
The Acting Secretary of State to the Secretary of State, at Paris
3334. Secdel 434. For Byrnes. Following is text of USFA cable to War Dept No. P–0877 of July 6, 1946 repeated for your information:
“Austrians first reaction to Soviet Commanders order quoted my unclassified message P–0876,32 declaring all German assets in Eastern Austria had become Soviet state property under Potsdam, was that it gave bulk of all property in Eastern Austria to USSR and stripped entire Austrian economy to point where country’s independence impossible. Immediately upon reading it, the Chancellor got in touch with us about our position. I reiterated to him by letter33 the United States position as is already defined in earlier directives. I also suggested to him that the Austrian Government issue a clear-cut definition of his own conception of the meaning of German assets (which corresponds with ours) for the guidance of Austrians complying with Kurasov’s order. I also sent a letter33 to the Chancellor urging him to block efforts of Soviets to withdraw funds from Vienna banks standing to credit of owners of such seized property. I have also addressed a strong letter to Kurasov pointing out that his order contains no definition of German assets, and that he has persistently refused to discuss such definition with me in spite of the fact that USSR tries to justify its claims on the basis of a United States Government agreement. British informed of my steps.
Peoples Party press did not publish text of order, but merely a statement about it promising Austrian Govenment would ascertain official status of order. All other Saturday morning papers published text.
Although published 5th July order was dated 27th June, one day before signature of new control agreement.
[Page 358]Special session of cabinet called for this afternoon to consider question of German property. Extraordinary session of Austrian Parliament scheduled for 10th July to bend public expression to Austrian views.
In response to War 92600, I am recommending under Paragraph 9, my message P–0870 dispatched today early public renunciation by the United States of all claims to German assets in Austria, including German interest in enterprises in Austria, under reparations. I feel strongly that such renunciation should be made and indications are that United States Government has this in mind. In view of today’s announcement by Soviets that all German assets in their zones will be absorbed by them and the extremely adverse effect of this announcement, I believe that constructive prestige of United States and western policies would be greatly forwarded by our immediate renunciation of claims to German assets in Austria.
I realize that as custodians of such assets for UN nations, the policy could not be implemented without consent of other United Nations countries (besides Soviets). If British and French could be persuaded to make similar pronouncement it would increase pressure in balance to concur. But even without British or French concurrence, and to take full advantage of timing, I ask authority to make the announcement now in name of United States.
If German assets here were turned over to Austria, they could be offset against Austrian claims to property in Germany and reparations nations claims could then all be directed towards Germany.
The effect of this immediate announcement of United States renunciation of German assets would be specially forceful in view of today’s Soviet declaration which has caused real consternation here. Controls would still be maintained until agreement other UN Nations to go along and would do more to stimulate business confidence and to restore faith in western orientation lost through Potsdam agreement and failure of UNRRA and South Tyrol than anything else.
Erhardt concurs.”