Paris Peace Conf. 184.011102/539

Mr. Albert Halstead to the Secretary of State47

No. 128

Subject: The pressing need of Austria.

Sir: I have the honor to remind the Department that for the past four months this Mission has pointed out existing conditions in Austria [Page 579] and has outlined the probable course of events. These have proved there has been no exaggeration. Austria stands on the verge of utter destruction, and unless practical steps are taken, and at once, to assist it to rebuild itself the people will freeze and die from hunger in the streets this winter and every man’s hand will be against his neighbor in the effort to save himself. When that situation arises civilized nations will be eager to put their hands in their pockets to tide over the difficulty, but that will be prolonging the agony. While they are feeding the starving and half-broken population, each dole will make it less capable of self-support. The problem is not one of charity. It would be better for the people to die than to perpetuate the growing tendency amongst them to let someone else solve their problems. The situation has passed far beyond any of the feelings of bitterness that the war caused. The condition of Austria is that of a convict sentenced to a lingering death.

The reparation commission, which as yet has given no evidence of functioning for Austria, is, it would appear, charged with liquidating the assets of this portion of the old empire. It was determined, however, that certain of the assets should be used for the purchase of food, coal, and raw materials, though no proportion was fixed. A careful reading of the Treaty of Peace might lead to the assumption that it was intended for the reparation commission, if possible, to squeeze as much indemnity out of Austria as could be obtained and leave the six and one-half million people remaining with just enough to make a slow recovery possible. Even that is not being done, for the reparation commission has not begun to function. It is hoped that the language used will not be regarded as extreme, but intended to state the plain facts. The fact is, however, that the fate of Central Europe is at this moment at stake. Reports from Poland, and the Department is doubtless informed of conditions there, are not in the least encouraging. In Czecho-Slovakia the spirit of Bolshevism has certainly not decreased and the feeling of unrest which prevails is a real menace. The Slovaks are dissatisfied and the Bolshevik propaganda has penetrated deeply into the thoughts of those simple minded people. The Spartacists in Germany are more active and stronger than at any time since their overthrow in Berlin, Munich, and Hamburg. Hungary after being robbed by the Roumanians is disturbed, dissatisfied and discouraged. It is not so certain to them that the rule of the Bela Kun was much worse than that of the Friedrich regime. The outlook in Italy is particularly grave. With such unrest surrounding Austria, if the latter country is driven to disorder and to rioting in the desperation of hunger, the unrest is certain to spread over the borders as if it were a germ disease.

In the interest of Central Europe, therefore, without regard to any sentiments of justice or feelings of brotherly responsibility the people [Page 580] of Austria should be enabled to rebuild themselves. The Austrians naturally are a self-respecting, self-supporting people brought into distress by those who ruled them in the past. Their workmen are not excelled in skill or in artistic craftsmanship. Their mechanics are as well educated in technical matters as any in the world. Now they are without work. It is inevitable that thousands of them must migrate. Where? To the nearest industrial country with real capacity for industrial reconstruction—Germany. Austria is not allowed to join Germany for fear the addition might make Germany politically stronger but her workmen are going to be driven there to earn their livelihood to the benefit of Germany.

With raw materials, with coal, and food Austria can gradually rebuild, but she must be given time.

Raw materials, or money advanced, should be regarded as an investment upon which later returns could be obtained, the interest being paid in the form of further investment until confidence has been returned, the number of workless has been reduced, the productive capacity of the country has been increased, the money has thus become of greater value and interest can be paid abroad with less sacrifices. There are many valuable factories and many business opportunities offered in Austria which will ultimately yield more than double the original investment. It is most desirable that American investors should send representatives here with power to act but before investments can be made, or anything practicable can be done the reparation commission must begin to function, and that should be at once.

I have [etc.]

Albert Halstead
  1. Copy transmitted to the Commission by Mr. Halstead under covering letter No. 468, October 10; received October 15.