763.72113 Mills Bill/11

The Austrian Minister ( Prochnik ) to the Secretary of State

No. 838/70

Your Excellency: According to a formal statement made public by the U. S. Treasury Department on March 30th, the enactment of legislation providing for prompt settlement of the awards under the German-American Mixed Claims Commission, and the restoration of the sequestered property of German nationals now in the hands of the Alien Property Custodian has been recommended by the said Department to Congress and a bill embodying this plan has been introduced in the House of Representatives by Representative Mills of New York.

Although the work of the said Commission has as yet not been concluded, the amount of the awards is estimated by the Treasury at between $180,000,000 and $190,000,000 (plus about $60,000,000 in interest) and the bill provides that interest earned on seized enemy (not merely German) property prior to March 4th, 1923, and deposited by the Alien Property Custodian in the U. S. Treasury (i. e. 30,000,000 Dollars) shall be retained and applied towards payment of the awards of the Mixed Claims Commission. Besides, the Treasury is to be authorized to borrow enough additional money to make all the payments under the proposed bill.

The bill further provides that all receipts by the United States from Germany on account of the Dawes annuities and in repayment of Army Costs27 shall be applied for the retirement of the debt thus created by the United States for the payments required by the bill.

Now, it appears to me that in stipulating to apply the 30 Million Dollars mentioned above (the earnings made by the Treasury out of money of the Alien Property Custodian on deposit with it prior to [Page 132] the Winslow act28) towards the payment of awards against Germany, the proposed bill inflicts grave injustice to Austrian nationals as there is hardly any doubt that this sum of 30 Million Dollars also includes interest derived from private property seized from Austrian nationals.

Of course, I am well aware that property rights in regard to interest accrued on seized enemy property prior to March 4th, 1923, i. e. the aforenamed 30 Million Dollars, have been transferred to the United States by the Winslow act and the original owners have been deprived of the means of legally claiming this money.

Moral considerations, however, which according to the United States Treasury’s own statement have led [it] to prepare the bill introduced by Representative Mills, also seem to have played their part in the stipulation to apply the money earned on seized property prior to the coming into force of the Winslow Act as part payment of the awards of the German-American Mixed Claims Commission and thus returning, if indirectly, seized German property in easing the burden placed on the German nation by the awards.

Yet, no provision seems to have been made to equally protect Austrian interest and to concede, as in the case of Germany, moral claims which Austrian nationals may have to the share in the 30 Million Dollars interest, derived from their rightful property.

May I, in addition, point out to Your Excellency certain features in the development of the subject in question, which cannot fail but deepen the depression effected on the Austrian public sentiment by the introduction of the Mills bill.

Before the enactment of the Winslow bill, there was some inclination in Congress to differentiate between Austrian and German property on the ground that, contrary to Germany, Austria had refrained from applying extraordinary war measures against American nationals, leaving them in free control of their property and business interest. This exceptional attitude maintained during the war by the Austrian Government, the comparatively small amount of seized Austrian property and the most desperate financial and economic situation of the said country had the effect that a special resolution authorizing immediate return of Austrian property was taken into consideration.

The Department of State at that time did not approve, however, a discrimination and accordingly advised Congress that legislative measures of a discriminating character may embarrass the Government [Page 133] of the United States and unfavorably act on German public opinion.29

The subsequent passage of the Winslow bill shattered the hopes of the Austrians that some preference might be shown them in recognition of the treatment accorded to American nationals during the war and they slowly had to be reconciled to the idea that there could be no return of their property prior to the release of assets held by the Alien Property Custodian in the name of German owners, as the problem concerning the enemy property must be dealt with simultaneously. But a continuous retention of Austrian after the release of German property was never seen within the scope of possibility and therefore the introduction of the Mills bill in its present shape dealt a heavy blow on the expectations of the Austrian people, who in their hard struggle for economic recovery are welcoming every encouraging offer by the outer world.

There are two reasons given in the statement of the Treasury Department for the failure of including Austrian property in the present bill, viz:

While a commission has been constituted in the case of Austria and claims are being received, the period of limitation for filing claims has not run, and no estimate can be made of the total amount of claims which will be presented or the probable amount of awards thereunder.
In addition, the Dawes plan provides for payments by Germany to the United States on account of the awards, but there is no like arrangement for payment by Austria.

As strong as these two reasons may appear in a purely technical light, they seem to lose their force of conviction under the following deliberations:

It is true that American claims against Austria have as yet not been awarded and that their total amount could therefore not be determined at the present state of affairs. It is equally true that in the case of Germany the term for filing claims has expired while it has just begun for Austria. But on the other hand the organization of the Tripartite Claims Commission experienced such an unusual delay that most of the claims against Austria had been presented at the Department of State before the beginning of its functions, which is born out by the fact that only comparatively few additional claims have been filed since the commission has been constituted. From the number, extent and nature of the claims filed and from the precedence, established in the German-American procedure, some conclusion could be arrived at. It may be stated with reasonable safety that the final extent of [Page 134] Austrian liabilities arising from the aforementioned sources will be so insignificant as compared with the large sums involved in the seized property that it hardly can have any influence or bearing on the financial plans and transactions to be adopted by the Treasury after enactment of the Mills bill. In fact, the Austrian liabilities will in all probability comprise a total which may be safely termed a “negligible quantity” in the round sums submitted to Congress by the Treasury Department, smaller even than the amount of the still unawarded German claims, which has not been considered large enough to warrant a postponement of the return of German property.

As to the second reason I beg to recall Your Excellency’s attention to the first part of my note which deals with the 30 Million Dollars of earnings from deposits made by the Alien property Custodian with the Treasury. I am confident that a careful computation of the earnings derived from Austrian property will reveal an amount which in the future will cover a large, if not the larger portion of the total of claims to be awarded in due course to American nationals by the Tripartite Claims Commission.

There is every reason to believe that this amount will more favorably compare with the final total of Austrian liabilities than the remainder of the 30 Million Dollars together with the Dawes annuities do compare with the total of German liabilities. As to the residue of the awards not covered by these earnings derived from seized Austrian property, I can assure Your Excellency the willingness of the Austrian Government to negotiate for a fair and suitable adjustment.

Reverting to the Dawes annuities I may venture the remark that from the statement issued by the Treasury Department, the impression might perhaps be gained that Germany, contrary to Austria, had made special provisions for the retirement of the money to be advanced by the United States for the payment of the awards, while in fact this obligation was assumed with no regard to the Commission’s future awards against Germany. Moreover, the Dawes annuities do not represent a payment already effected but a promise for future redemption. (The afore indicated readiness of the Austrian Government to negotiate for a suitable adjustment may be recalled in this connection.) This very liberal concession made by the United States in favor of Germany emboldens me to appeal for an attitude of like generosity towards Austria.

In summing up my arguments, I pray Your Excellency to kindly weigh the following facts:

There is Austrian private property in trust with the Alien Property Custodian, which is of such a small amount that it can have no bearing whatsoever on the financial interests of the American people. This property, however, as small as it may be, means everything at present to the Austrian owners, as it would materially help them in their [Page 135] efforts to revive private business in Austria, now the most essential requisite for the country’s rehabilitation, if not all the progress obtained during the last three years in the successful reconstruction of the public household and stabilization of the currency shall be lost again. Furthermore, this property is held for technical reasons, to insure the payment of American claims, which in all probability will be only a portion of the small amount retained by the Alien Property Custodian and which to a large extent is already covered, when (as proposed in the German case) the earnings from deposits of Austrian property will equally be credited to the payment of Austrian liabilities. Your Excellency, I am sure, will reach the conclusion that there is a justified reason to waive in this particular instance technical considerations and to seek a way which may include the return of Austrian property in this present bill.

The Austrian Government would highly appreciate an indorsement by Your Excellency of the Austrian standpoint in this matter, and I am hopeful that with such an indorsement Congress will hardly deny to the Austrian nationals the relief sought in the immediate release of Austrian property, provided it favorably acts on the principle of the Mills bill.

Accept [etc.]

Edgar Prochnik
  1. See Finance Ministers’ Agreement of Jan. 14, 1925, Foreign Relation, 1925, vol. ii, pp. 145 ff.
  2. H. R. 14222, introduced by Samuel E. Winslow, a Representative from Massachusetts; see 42 Stat. (pt. 1) 1511, “An Act To Amend the Trading With the Enemy Act.”
  3. Presumably the Minister is referring to the letter of the Secretary of State, Oct. 26, 1922, to Mr. Winslow, printed in Congressional Record, vol. 64, p. 5311.