763.0221/11–2450: Telegram

The Secretary of State to the Legation in Austria

secret

1055. Legtel 1012, Nov 24 and Deptel 963 Nov 20.1 Presume you assured Gruber Dept has recently urged UK and Fr to assume their occupation costs without success. Further conversations not practical. No device known here for absorbing or disguising costs unless govts [Page 425] of occupying powers willing to include in their budgets. We interpreted Gruber’s housing proposal as meaning allocating of schillings labeled for housing construction in Br, Fr and other zones equivalent to probable total requirements of schillings by occupying powers, title to any houses built to be held by these powers but to be restored to Austs later. Schillings to be available provisionally to meet non-housing expenditures. If this correct interpretation, questions arise as to probable effects on Sov attitude, internal political controversy on housing, extent and nature and timing of building actually to be undertaken, acceptability to US [Br?] and Fr, possible effect on US requirements for schillings and pay-as-you-go system.

If however, Gruber’s plan means schillings equivalent only to practical possibility of housing construction for dwellings to reduce rent believed here plan would eliminate only small fraction of total requirements.

If it seems necessary to follow this suggestion further clarification of nature of plan would be desirable but explorations shld be handled in manner to avoid any implications that US wld favor action along these lines since difficulties seem to outweigh possible advantages and there might be danger new areas of controversy with Sov.

Continued postponement of decision on allocation see (Deptel 963 Nov 20), causing Fr and Sov to use balances and Aust to meet in various ways portion of civilian occupation costs judged to be procedure for present best calculated to lighten burden on Aust. No apparent reason why US policy on important matter of occupation costs shld be conclusively influenced by Fr shortage schilling Paris (Tel 2951 Nov 242) for expenses over and above legitimate costs already paid by Aust Govt. This view reenforced by London 3118 Nov 283 just received.

Acheson
  1. Neither printed; in the former Donnelly reported that Gruber hoped “the British and French will agree to drop their costs and that our government will continue to support the Austrian Government in urging the British and French to cease collection costs at once;” in the latter the Department of State told Donnelly that it considered “further delay in agreeing on allocations of schillings for ‘mil’ occupation costs is best course of action at present.” (763.0221/11–950 and 11–2450)
  2. Not printed; it reported that the French were “in dire financial straits in Austria” due to the lack of disbursement of schillings for occupation costs. (763.0221/11–2450)
  3. Not printed; it reported that the British did not relate occupation costs to the strength of their troops in Austria. The British believed “that statement of French military commander re possible necessity withdrawal some French occupation troops … might be feeler to determine whether shock treatment on Western allies would be sufficient to make them (particularly British) come to agreement on occupation costs.” (763.0221/11–2850)