Paris Peace Conf. 184.011102/249
Mr. Albert Halstead to the Secretary of State19
Subject: Reported modification of peace terms.
Sir: I have the honor to inform the Department that the Neue Freie Presse today prints a statement that all the Allied Missions are in favor of modification of the peace terms and expresses the view that this unanimity of opinion will offset the efforts of the new states created out of the old Austrian Empire to secure the most favorable terms possible for themselves.
I think I should say as a matter of record that the publication of this statement is in no sense due to any comments that have been made by anyone connected with this Mission. Inquiries lead to the probability that someone in the French Mission is responsible for the story. It does happen to represent the views of the various Missions, but it would seem to me that it was wholly improper at this time to encourage such publication, for any differences of view from those of the Peace Commission should certainly not be a matter of public discussion.
In the Neue Freie Presse of yesterday it was announced apparently on the same authority that the peace terms would be modified to the benefit of German Austria. In this connection I trust I may be permitted to say that a nation of 6,500,000 people left with insufficient manufacturing capacity to pay for its raw materials and for the food which it must import to cover consumption for 8 months of the year cannot possibly bear the burden which it is proposed to impose on them. It should be remembered that a deficit for the fiscal year of June 30, last, was over 4,000,000,000 crowns. This in itself is a debt that imposes an immense burden. Such a debt is naturally a manifestation of the gross incapacity of the Administration, but during the time that most of this deficit was incurred Austria Hungary was in a state of transition and it has had to support about 200,000 workless in Vienna alone, as well as the Volkswehr of 30,000 costing more than 400,000,000 crowns a year, a sum greater than the cost of the entire Austro-Hungarian army before the war.
In these circumstances terms which involve bankruptcy, which would seriously interfere with the securing of raw materials and would stifle industry must inevitably be followed by public disorders and probably a worse type of Bolshevism than that which now paralyzes and destroys what is left of Hungary.
[Page 555]The per capita obligation would be enormous. I am hoping to go into greater detail regarding this in a despatch which will go forward on Sunday.20
I have [etc.]