Paris Peace Conf. 184.01102/52
Captain Frederick Dellschaft to Professor A. C. Coolidge2
Economic Notes
The following points, illuminating the question of a union of German Austria with Germany as opposed to a Danube Federation, were brought out in a conversation with Hofrat Dr. von Tayenthal, Secretary of the Handels and Gewerbe Kammer, Vienna, January 29, 1919:
Union with Germany.
The history of textile industry in Bohemia affords an illustration of the interests at stake in the readjustment of economic conditions in the territory of the old empire. Originally the small trader had employed the cottage weavers for making the stuff he required. From this relation subsequently sprang the local industries. As these increased, the owner of the factory had to borrow from the Jew, who gradually became owner; the latter is now being replaced by the banks who have to a large extent assumed control over the industry. The banks again through a chain of local agents and dealers control the sale of the product of the factories to the peasants. It should be remembered also that the factories are not specialized to the extent that they are in the U. S. A., England or Germany. Consequently, the banking element is anxious about the future of its trade in case the former protective tariff is removed and is therefore inclined to oppose a union with Germany. This anxiety is hardly justified insofar as the use of the banks as a mechanism of commerce is concerned. The trade with the peasants, through the small dealer, is of so special a nature, that the special knowledge of conditions and credits possessed by the banks and the large dealers is absolutely essential for success.
In the iron industry, the mill owners are somewhat inclined to fear German competition as they have heavy freight charges to pay on ore and coal.
The mass of the people, however, needs the stimulus of enterprise to meet modern conditions. The natural character of the German-Austrian is rather inclined to take life easy, although, among the intellectuals, many engineers, chemists, economists, etc. have gained distinction and found employment in Germany and elsewhere.
Water-Power.
It is estimated that only about 5% of the available water-power in Austria has been developed. Foreign capital would find a lucrative [Page 246] field for investment in this direction, although at present the sovereignty of the state in the matter of water-power, and the extent to which it will control the distribution, is not clear.
The railways were prevented from electrification by the policy of the War Office. This policy now being no longer effective, it is intended to proceed with electrification as rapidly as conditions permit. About 200,000 H. P. will be required.
Demobilization of Material.
The question of liberating army supplies and material for public use is proceeding very slowly. Of the stocks available in German Austria, one-fifth each has been apportioned to that State and Czechoslovakia. The other three-fifths are being held for later distribution (involving somewhat over one billion kronen in value) pending settlement with the Yugo-Slavs and Hungary, who on account of their geographical position were able to seize very considerable quantities left at the time the armistice was declared. Up to the present, neither the Yugo-Slavs nor the Hungarians have raised the question of a distribution of war material.
- Transmitted to the Commission by Professor Coolidge under covering letter No. 55, January 31.↩