Allied-occupied Austria - Marshall Plan

Marshall Plan

Austria finalized its Marshall Plan program in the end of 1947 and received the first tranche of Marshall Plan aid in March 1948. Austrian heavy industry (or what was left of it) concentrated around Linz, in the American zone, and in British-occupied Styria. Their products were in high demand in post-war Europe. Quite naturally, the administrators of the Marshall Plan channeled available financial aid into heavy industry controlled by the American and British forces. American military and political leaders made no secret of their intentions: Geoffrey Keyes said that "we cannot afford to let this key area (Austria) fall under exclusive influence of the Soviet Union." Marshall Plan was deployed primarily against the Soviet zone but it was not completely excluded: it received 8% of Marshall plan investments (compared to 25% of food and other physical commodities). Austrian government regarded financial aid to the Soviet zone as a lifeline holding the country together. This was the only case when Marshall Plan funds were distributed in Soviet-occupied territories.

The Marshall Plan was not universally popular, especially in its initial phase. It benefited some trades such as metallurgy but depressed others such as agriculture. Heavy industries quickly recovered, from 74.7% of pre-war output in 1948 to 150.7% in 1951. American planners deliberately neglected consumer goods industries, construction trades and small business. Their workers, almost half of Austrian industrial workforce, suffered from rising unemployment. In 1948–1949, a substantial share of Marshall Plan funds allocated to Austria was used to subsidize imports of food. American money, effectively, raised real wages of Austrian workers: grain price in Austria was at about one-third of the world price, while local agriculture remained in ruin. Marshall Plan aid gradually removed many of the causes of popular unrest that shook the country in 1947, but Austria remained dependent on food imports.

The second stage of the Marshall Plan, which began in 1950, concentrated on productivity of the economy. According to Michael J. Hogan, "in the most profound sense, it involved the transfer of attitudes, habits and values as well, indeed a whole way of life that Marshall planners associated with progress in the marketplace of politics and social relationships as much as they did with industry and agriculture." The program, as instructed by American lawmakers, targeted improvement in factory-level productivity, labor-management relations, free trade unions and introduction of modern business practices. The Economic Cooperation Administration, which operated until December 1951, distributed around 300 million dollars in technical assistance and attempted steering the Austrian social partnership (political parties, labor unions, business associations and executive government) in favor of productivity and growth instead of redistribution and consumption.

Their efforts were thwarted by the Austrian practice of making decisions behind closed doors. The Americans struggled to change it in favor of open, public discussion. They took a strong anti-cartel stance, appreciated by the Socialists, and pressed the Austrian government to remove anti-competition legislation. But ultimately they were responsible for the creation of the vast monopolistic public sector of Austrian economy (and thus politically benefiting the Socialists).

According to Bischof, "no European nation benefited more from Marshall Plan than Austria." Austria received nearly a billion U.S. dollars through Marshall Plan, and half a billion in humanitarian aid. The Americans also refunded to Austria all occupation costs charged in 1945–1946, around 300 million. In 1948-1949 Marshall Plan aid contributed 14% of Austrian national income, the highest ratio of all involved countries. Per capita, aid amounted to 132 dollars compared to 19 dollars for the Germans. But Austria also paid more war reparations per capita than any other Axis state or territory. Total war reparations taken by the Soviet Union including withdrawn USIA profits, looted property and the final settlement agreed in 1955, are estimated between 1.54 and 2.65 billion U.S. dollars (Eisterer: 2 to 2.5 billion).