Evening star., 1948-01-04
Austria Cuts
Its Currency
Set Russia Exampieby
Reconverting to
Curb Prices
Dy Brooks Mcclure

by Brooks Mcclure
Russia, which has been boasting
to the world about It's 1o-to-1 de1la-
ton, now has an example Of how
the system works in another coun-
try. Austria has completed .
similar reconversion Of its currency
with the immediate effect Of driving
the Communists out Of the govern
ment for the first time since 1915
and splitting the native party from
the Kremli1f.
With the approval Of Russia and
the three other powers on the Allied
Council In Vienna, the new republic
on Christmas eve ended 14-day
period Of conversion from currency
In circulation to new schilling notes
at . rate Of three old bills for one
new. By thus reducing the amount
Of money In the country, It k hoped
that spiraling prices can b stopped
and perhaps started downhill.
Opposed by Communists
The currency reform law, under
which the exchange has taken
place, passed the Austrian Parlia-
ment In November, but not without
last-ditch opposition by the Com
munists, who had been clamoring
for measures to fight imitation. Dr..
Karl Altman, Minister Of Powsr
and the only Communist IN the
cabinet, forced his own resignation
by his stand against the dedation.
It was assumed that the Russians
would kill the measure when re-
viewed by the Allied Council and
bar the new money from ~ sone.
Opposition was sxpsctsd n The 1usm
Of impossible demands, which would
force hte tlnking Of the whole pro-
gram.
But the Russians proved 70 be
more reasonable than xslal, al
though their demands still were
great. After rsvisions were made
to give the Soviet special profits
and benefits, the conversion bill was
approved on December 1. The
Austrian Communists we're re-
pudiated.
Unknown at the time, apparently
even to the Austrian and other
European Communists who opposed
revaluation, were the plans Of the
Russians for conversion of their
own money under q program far
more drastic than the Austrian
measure, but in principle the same.
Moscow Made Money
Whatever Russia's loss through
the sacrifice Of the native Com
munists, its financial gain as COM
pensation for approving the re-
valuation is appreciable. Each Of
the four occupying powers-the
United States, Great Britain, France
and Russia-received 10000, 900 new
schillings to make q one-to-one ex-
change for its civilian and military
personnel. AL old schillings in ex-
cess Of this amount would be re-
deemed Ut the three-for-one rate.
But in addition the Russians ar
ranged to get 4so.O00,00O schillings,
$49, ,000,0 900, for = one-for-one sx-
change with the understanding they
would block one-half Of this sum
for from three months to two years.
They also insisted on getting their
third-quarter occupation costs in
new schillings.
The Soviet got not only more
than 40 times the amount allotted
each Of the other occupying powers
for conversion ut the one-for -one
rate, but also an undetermined ad-
ditional sum from their extrater-
ritorial operation of Austrian in
dustries which they seized under the
Potsdam agreement.
Poor Man Hard Hit
Revaluation-which among other
! things has forced black marketeers
and others with large unaccountable
sums to reveal themselves-probabl
hit the poor man hardest despite ex-
ceptions for hardship. BY present.
ing his ration card and identifica-
ton at bank, each Austrian re-
ceived $50 new schillings ($l5) fos
$50 old ones and thereafter got one
for every three.
Money deposited in banks and
other financial institutions after
November IL was cut two-thirds in
conversion. Funds deposited be-
tween December, 1945, and Novem-
ber IL kept their full value, but only
half could be drawn out immedi-
ately. The other so per cent was
blocked for from six to nine months
In 1945, an Austrian currency re-
form replaced all marks and Allied
military money with new paper, and
all bank deposits over $50 schillings
We're blocked for use only with gov
ernment permission. The new law
now has wiped out 80 per cent OF
these blocked funds, amounting to
about 100000 schillings, and re-
placed the other 40 per cent with
government bonds.
Germany Interested
As a special concession, small
depositors were allowed to keep
$500 schillings which otherwise
could be Cancelled, or $500 II they
have children. Farmers dealing in
legitimate markets could get their
last six months receipts redeemed
at a one-to-one ratio to enable
them to meet their taxes and tide
them over the winter.
In order to maintain 4 balance,
the government has agreed to can
eel Is per cent Of its public deposits
and block another Is per cent for