763.72113 Mills Bill/13

The Secretary of State to the Minister in Austria ( Washburn )

No. 438

Sir: The Austrian Minister called at the Department on March 15, 1926, to discuss the question of the return of Austrian property now held by the Alien Property Custodian. He began by referring to the numerous Bills which have, from time to time, been introduced in the Senate and in the House of Representatives looking to the return of alien property. He pointed out that although all previous Bills which had been introduced in Congress for the return of alien property made no discrimination among German, Austrian and [Page 129] Hungarian property, he had reason to believe that the so-called “Treasury Bill”, which the press reports is to be introduced this week, applies only to German property, on the theory that it is in a special position, on account of the Dawes Plan,22 which provides a means of reimbursement of the United States to the extent of Germany’s capacity to pay. The Austrian Minister said that it was his understanding that Austria had been omitted from the Treasury Bill because, first, the 20 year moratorium and, second, because the Austro-American Claims Commission23 had not yet concluded its labors, in fact, had hardly begun them.

Mr. Prochnik went on to say that he did not question the wisdom of the Treasury’s point of view, but wished to point out that he had been advised several times recently by his Government that, if no mention were made of Austrian property in the proposed legislation and if, so far as this legislation went, it could be assumed in Vienna that the Austrian property would be held indefinitely, a serious financial panic would occur. He said that personally he saw no reason why there should be a panic, but his advices from Vienna were insistent on this point. He did not ask that the Austrian property be returned out of hand, nor did his Government actually expect this; his Government and he merely hoped that it would be possible to include in the Bill a statement to the effect that when the Austrian Government had made arrangements suitable to this Government for the discharge of its financial obligations arising out of the war, that the Austrian property would be returned. He said that such a provision would avoid a panic in Vienna.

Mr. Prochnik said that he had frequently proposed to his Government the following plans:

That the whole of the Austrian debt to the United States, the relief credits as well as the awards of the Claims Commission, be immediately funded under a sixty-two year agreement. This, he said, would, of course, presumably require the consent of the League of Nations and similar funding agreements with the other nations which had participated in furnishing relief funds and had granted a moratorium.
If the above were found impracticable, that the awards of the Claims Commission be funded as soon as they were given and that a binding agreement be entered into immediately by the Austrian Government, looking to such funding and providing a funding scheme.

The Minister said that he had not received authorization from his Government to make either proposition to this Government and that [Page 130] he was in some embarrassment to know whether, if his Government agreed, the United States would be willing to discuss either of the above plans. He was afraid that the United States might say that it would not discuss the relief credits until the moratorium had expired and that he, Prochnik, would be in the embarrassing position of having proposed a plan to his Government which proved entirely unacceptable to the United States.

Mr. Prochnik’s views were brought to the attention of the Treasury Department, which has commented thereon in a letter dated March 17, 1926, a copy of which is transmitted herewith, for your information.24 You will especially note the statement made in the final sentence of Mr. Winston’s letter.

I am [etc.]

For the Secretary of State:
Robert E. Olds
  1. See Foreign Relations, 1924, vol. ii, pp. 1 ff.
  2. Established under the terms of the agreement of Nov. 26, 1924, between the United States, Austria, and Hungary; see ibid., vol. i, pp. 142 ff.
  3. Supra.