Foreign Relations of the United States: Diplomatic Papers, 1945, European Advisory Commission, Austria, Germany, Volume III

Vienna Legation Files, 1945, Part 28, 851.5: Telegram

Major General Alfred M. Gruenther, Deputy United States Commissioner for Austria, to the Joint Chiefs of Staff ⁶⁰

[Vienna, October 19, 1945—3:55 a.m.]

PV 8337. Subject is Currency Conversion in Austria. Reference is PV 8184.⁶¹

1. At the October 16 meeting of the Executive Committee, the Soviet representative challenged the figures previously presented with respect to the amount of Austrian national currency required for the conversion and the time required for printing. The Executive Committee therefore directed the Quadripartite Finance Committee to re-study these questions in consultation with Austrian representatives. At the Executive Committee meeting of 18 October the Finance Committee presented a report containing the following conclusions:

“a. The minimum quantity of notes required for conversion into Austrian National Schillings on the proposed partial basis under present conditions would be Schillings six billion with a supporting production of new notes at the present level. This estimate depends on there being no substantial increase in prices, wages and economic activity or in the volume of currency held by the forces of the occupying powers.

“b. It would not be wise for the Executive Committee to count on a conversion of Reichsmarks and Allied Military Schillings into Austrian National Schillings before April 1946. The difficulty of obtaining supplies of special colors might cause even further delay. A date in the first half of February however might possibly be achieved in the Soviet representative’s estimate, if all bottlenecks in production could be entirely eliminated and all supplies became available without interruption.” The Soviet representative signed this report only after consultation with General Zheltov.

2. Although Zheltov accepted the report and approved its submission to the Allied Council for its meeting on 20 October, he would not change Soviet position that the conversion should be from Reichsmarks directly into Austrian National Schillings. In spite of the fact that this involves delay until at least 15 February and more likely until 1 April 1946, Zheltov could give no arguments in favor of such a delay nor could he challenge the statement that all relevant facts had been before the Allied Council when it passed its resolution on 20 September 1945 calling for conversion into AM Schillings and that the plan had the complete approval of the Provisional Government, including Kenner himself. The US, British and French representatives continue to support the proposal to convert Keichsmarks at once into Allied Military Schillings. Matter will come before the Allied Council on 20 October but there is no indication that the Russians will recede from their position. Meanwhile the US, British, and French financial experts are studying technical aspects of possible tripartite action.

3. US, British and French financial experts are unable to explain the Soviet attitude upon financial grounds. However, some possible reasons for Soviet position are:

a. Desire to continue unrestricted spending of Reichsmark holdings in order to purchase materials for export from Austria to USSR and Soviet dominated areas and perhaps to influence the forthcoming elections.

b. Pressure tactics to force delivery of additional supply of Allied Military Schillings.

c. Part of a recent general policy of delay.

[Gruenther]

60. This telegram was sent for information to the Secretary of State and to General Clark, who was temporarily in Washington.
61. See footnote 51, p. 628.