Ludwig Kleinwaechter and the Marshall Plan

Ludwig Kleinwaechter reached the pinnacle of his diplomatic career with his promotion to the rank of ambassador to the United States in December of 1951. By then, he had already served for five and a half years in D.C. as Austria’s top representative (in the rank of a "minister"), having been tasked in February 1946 with the reopening of an Austrian diplomatic representation ("Legation") since the diplomatic relations with the U.S. had been discontinued on March 13, 1938, by the dissolution of the independent Republic of Austria after the "Anschluss"  to Nazi-Germany. Kleinwaechter therefore represented Austrian interests vis-à-vis the new superpower United States at the beginning of the Cold War, as crucial political and economic issues were on the agenda during these important years (1946-1952).

Ludwig von Kleinwaechter was born in 1882 in Czernowitz/Bukovina into a noble family. He graduated sub auspiciis from Czernowitz University in 1909 with a degree in law, completed his studies at the Consular Academy in Vienna and launched his career as a diplomat in the Foreign Ministry of the Austro-Hungarian Empire in 1911. He gathered a rich professional experience in North America before and during World War I, first with a posting as consul in New York (1912-16) and Buffalo, NY (1916). He then served at the Embassy in Washington from mid-1916 until the entry of the U.S. in World War I in 1917. Returning to the US after the war as a representative of the Austrian First Republic, he was posted as consul to Chicago (1922-25), and then as counselor at the Legation back in Washington (1925-26). Before being posted as consul general to Ottawa (1930-1932), he worked for a few years the Federal Press Service in Vienna, an assignment he continued after returning from Canada. After the Nazi German invasion of Austria and "Anschluss" to the "Third Reich" in March 1938, Kleinwaechter was fired from the diplomatic service. The Gestapo locked him up as a "half Jew" on March 12 and sent him to Dachau and then Buchenwald concentration camps; he was released at the end of March 1939, locked up again by the Gestapo for two and a half weeks, and finally survived the war in Vienna in various odd jobs.

Like other experienced diplomats, he returned to the Ballhausplatz at the end of April 1945 after the reestablishment of an independent Austria and offered his services to help rebuild the war-torn country, by then under a four-power occupation regime. Here his prewar experience in North America came in handily and the Provisional government of Federal Chancellor Renner appointed him as the liaison with the American occupation forces.

After the election of the first postwar national parliament on November 25, 1945, the new conservative/socialist (ÖVP/SPÖ) "grand coalition" government led by Federal Chancellor Leopold Figl (ÖVP) received the assent from the occupation powers to reestablish diplomatic missions abroad. Given his experience with the Americans, Figl dispatched Kleinwaechter to Washington.

Arriving in mid-February 1946, Kleinwaechter and his information chief Hans Thalberg, who had survived the war in exile in France and Switzerland, first had to find quarters and rebuild the Austrian mission. The two lived in a Washington hotel and needed a $10,000 loan from the State Department to get the Legation started. The boxes of obsolete writing paper Vienna sent them had been issued by the Vienna Nazi Gau offices and therefore still carried the swastika on it. The two men wisely burnt them in a bonfire in the bathtub of their hotel. Thalberg wrily remarks in his informative memoirs Von der Kunst, Österreicher zu sein [The art of being Austrian] (1984)," had the paper been found even in our waste basket, our stay would have ended quickly in an eclat."

Then, the hard work could begin and the to-man team representing Austria had to cover all the issues – political, economic, cultural, and public relations.

They first had to convince the American public of the official "occupation doctrine." Both having been persecuted by the Nazi regime helped. The Ballhausplatz jumped on the Allied Moscow Declaration of November 1, 1943, which designated Austria as Hitler’s "first victim," eclipsing its second part by which Austria would be held accountable for her participation in the war on the side of Hitlerite Germany. Provisional Chancellor Karl Renner incorporated the Moscow Declaration statement into his "declaration of independence" of April 27, 1945. The international lawyers in the budding Vienna Foreign Office made the notion of Austria as the "victim" of the Nazis the basic legal doctrine of postwar Austria’s international status. Austria as "victim" would not have to pay reparations and could procrastinate on paying restitution to the Jewish victims of 1938 and World War II. Thalberg, who took over the public relations work in the legation, had to write letters to American newspapers almost on a daily basis to defend Austria’s "victims" status vis-à-vis Jewish emigres who expressed their doubt.

In this spirit, Thalberg organized a dense schedule for Foreign Minister Karl Gruber’s first visit to the U.S. in the fall of 1946: In New York, Gruber spoke before American journalists at the prestigious “Herald Tribune Forum” and at the elite Council on Foreign Relations, reinforcing Kleinwaechter’s plea for more economic aid for Austria, the acceptance of Austria’s victim’s status through the “occupation doctrine” and U.S. support in signing the state treaty. Gruber also successfully pleaded these issues at the State Department in Washington.

During Kleinwaechter’s first meeting with Secretary of State James Byrnes on February 18, 1946, he asked for a reduction of Soviet occupation forces in Austria, the negotiation of a treaty with Austria to end the occupation, and American support for aid from the United Nations Relief and Rehabilitation Administration (UNRRA). In March he attended the UNRRA conference in Atlantic City that finally agreed that Austria should receive UNRRA aid. Ironically, he needed to borrow money personally from Francis Williamson on the Austrian desk in the State Department to travel to Atlantic City. $135 million of UNRRA-aid, largely financed by the U.S., secured the survival of the Austrian population until the summer of 1947.

In 1946, the “Austrian Treaty” became part of the international diplomatic agenda. In January/February 1947, the Deputies of the Foreign Ministers began negotiating in London what became known as the “Austrian State Treaty”. In March/April of 1947, the Council of Foreign Ministers met in Moscow and worked on the Austrian and German “peace treaties.” U.S. Secretary of State George C. Marshall and the U.S. High Commissioner in Austria General Mark Clark represented the U.S. in Moscow, however, progress on the Austrian treaty was slow and Marshall returned to Washington deeply disappointed, fearing that Stalin was prepared to allow Europe to slip into economic chaos for the communists to profit from it.

Growing dissension with the Soviets and fear of economic collapse in Europe were thus the context in which Marshall delivered his historic speech in the commencement at Harvard University on June 5, 1947, promising to rebuild Europe - if the Europeans would cooperate and come up with a plan. Kleinwächter was in the middle between the State Department and the Austrian Foreign Office, keeping Vienna informed about Washington’s intentions. In the initial conference in Paris in late June 1947, Gruber told his representatives “to tread softly.” Unlike its neighbors to the East, Austria was therefore able to participate in the “European Recovery Program” (ERP) – which became known as the “Marshall Plan”.

In order to achieve this, Gruber – and by extension the Austrian legation in Washington – had argued that Austria was a “special case” and needed a maximum of American aid to survive: Given the four-power occupation of Austria, the Soviet presence in the land as well as Soviet rapacity in seizing reparations “out of current production” from the so-called “German assets” they controlled, Austria needed more aid than other countries. This “special case” pleading bore fruit. Austria received “interim aid” from Congress when UNRRA-aid ran out and Marshall-aid had not yet started. In April 1948, Congress finally passed the Marshall Plan. The U.S would transfer almost $14 billion to 16 participating Western European countries over four years (1948-1952). Austria received almost one billion dollars in ERP-aid. Every American paid $80 to make the Marshall Plan possible – every Austrian received almost $132 in ERP funds, the third highest per capita distribution amongst all ERP-recipients.

Ludwig Kleinwaechter regularly reported the progress on the deliberations for the ERP and subsequently negotiated on a daily basis with the State Department to secure massive aid for Austria. He also successfully pleaded with Vienna to send more personnel to Washington to build up an Austrian “ERP office” to serve as liaison with the European Cooperation Administration (ECA), the newly established government agency that distributed the ERP funds. Attached as economic counselors to his legation, Kleinwaechter coordinated the specialists in this ERP office over the next four years in their daily battles with the ECA. It is quite likely that Austria might not have been the beneficiary of so much Marshall Fund aid, were it not for the extraordinary diplomatic skills of Kleinwaechter. 

In the same vein, another of Kleinwaechter’s many achievements was the signing of the initial Austrian-American Fulbright Exchange Agreement together with Secretary of State Dean Acheson and with the program’s founder Senator William J. Fulbright (D-AR) attending the ceremony on June 6, 1950. This program has exchanged hundreds of Austrian and American students since.

Kleinwaechter’s position was finally elevated to that of ambassador in December 1951.  Retiring shortly after, Kleinwaechter died in 1973 at the age of 91. Kleinwaechter represented “Austria” through all the constitutional changes in the 20th century -- from the Habsburg Monarchy through the unstable First Republic to the steady Second Republic, which’s early beginnings he helped stabilize with his crucial service in Washington.

He deserves to be remembered as a chief postwar Austrian diplomat whose contributions not only secured Austria’s postwar economic survival, but also its independence with his contributions to the negotiations of the State Treaty. Kleinwaechter was a diplomat extraordinaire and should be appreciated for his decisive role and tremendous legacy for the rebuilding of the country.

Guenter Bischof (PhD Harvard ’89) is the Marshall Plan Professor of History and the Director of Center Austria at the University of New Orleans. The book he coauthored with Hans Petschar The Marshall Plan – Since 1947: Saving Europe, Rebuilding Austria will appear on June 12, 2017, with Brandstätter Verlag in Vienna in both German and English.




Photo Captions:
(1) Ludwig Kleinwaechter, Austria's Minister to the U.S., en route to the White House to present his credentials to President Harry S. Truman, December 4, 1946. (c) ÖNB
(2) Signing of the inaugural Austrian-American Fulbright Agreement on June 6, 1950 in Washington, D.C. (Left to right) U.S. Secretary of State Dean Acheson, Senator Fulbright, Austrian Plenipotentiary Ludwig Kleinwaechter. (c) Fulbright Austria