763.72113 Au 7/2

The Austrian Minister (Prochnik) to the Secretary of State

No. 2556/70

Excellency: With reference to previous correspondence concerning settlement of war claims and return of Austrian property I have the honor to forward to Your Excellency herewith enclosed for your kind information copy of a communication addressed to the Hon. Garrard B. Winston, Undersecretary, Department of the Treasury, under even date.

Accept [etc.]

Edgar Prochnik

The Austrian Minister (Prochnik) to the Under Secretary of the Treasury (Winston)

No. 2556/70

Dear Mr. Under Secretary: I take the liberty to revert to our conversation of last July concerning settlement of American war claims by the Austrian Government and return of Austrian property now held in trust with the Alien Property Custodian. I explained to you at that time how my Government is anxious to have these two problems separated from one another and to have eliminated the interdependency of cause and effect now existing between them, by offering Austrian Government bonds as a security for the payment of American war claims and by reaching in way of negotiations some agreement with the United States Government as to interest and maturity of the bonds.

Shortly after said discussion I received a letter from you requesting me to furnish you with a more specific description of the nature [Page 139] of the bonds my Government intends to issue. In a letter ddo. August 2nd, addressed to you, I expressed the hope that I shall be able to comply with your request in the near future. However, some unforeseen delays and complications interfered with a speedy dispatch of this matter and it is only now that I am in a position to lay before you a complete proposal, carefully planned by my Government in a special Cabinet Council.

I would greatly appreciate an appointment by you of a certain date and hour agreeable to you, when I may lay before you this proposal and discuss it with you in detail.

For your immediate information follows roughly outlined a sketch of the offer made by my Government.

The Austrian Government is ready to turn over to the United States Government, Austrian Government bonds to the extent of the Austrian property held by the Alien Property Custodian. These bonds would serve as a security for the American claims. In case these bonds should exceed the amount of American claims awarded by the Tripartite Claims Commission, the American Government will return to the Austrian Government the portion in surplus of the claims and vice versa, the Austrian Government will issue an adequate amount of additional bonds in case the American claims reach a figure in excess of the Austrian property held by the Alien Property Custodian.

These bonds will, as far as they are covered by American claims, be a charge upon the assets and revenues of the Republic of Austria in the meaning of article 197 of the Treaty of St. Germain,32a second only to the charge of the League of Nations Loan upon the proceeds from the customs and tobacco-monopoly and of the so-called reliefcredits. The interest will run from the date whenever a portion of the American claims has been ascertained and awarded. The bonds will pass from such date into the public-debts of Austria and form a part thereof. They will be provided with interest-coupons. They will be issued to bearer, in denominations of $10,000.00 each. In the wording of the text it will be clearly expressed that they are a portion of the amount due by the Government of the Republic of Austria in satisfaction of the awards rendered by the Tripartite Claims Commission.

The issue of such bonds would be in full agreement with the Austrian laws and the international obligations assumed by the Austrian Government. There is not doubt as to the fact, that the American claims awarded by the Tripartite Claims Commission come under the general lien expressed in articles 197 and 200 of the Treaty of St. [Page 140] Germain, ranging after the lien of the League of Nations loan (which, however, is restricted to specific sources of revenues) and after the general lien of the relief credits. The Austrian Government would not be in a position to furnish special security in addition to the afore-referred to general lien provided in articles 197 and 200 of the Peace Treaty, as such a special lien would require the consent of the other allied and associated powers and the reparations commission and open questions of a delicate and intricate nature, which could only be solved under the greatest difficulties if at all.

The bonds will mature at a term to be specified by agreement and beginning from the date when the full amount of American claims has been ascertained. The Austrian Government wishes, however, to reserve its right to redeem the bonds before expiration of the stipulated term of maturity.

Further details as to the text and form of the bonds, rate of interest, maturity a. s. f. we hope to settle by mutual agreement.

Mr. Undersecretary, I am aware of the fact that the calculated extent of Austrian obligations arising from the awards of the Tripartite Claims Commission will have a bearing on the decision of your Government, whether the offer of my Government should be accepted or not. This offer is made regardless of whatever Congress will decide in connection with Austrian property, although we hope that an agreement for the settlement of the American war claims will have a favorable influence upon the deliberations of Congress concerning return of property. Technically, however, we want to divorce these two questions.

Although the work of the Tripartite Claims Commission is not yet near its termination, it has, as I understand, progressed to a point, where the American Agency could give you a safe estimate as to the maximum amount the American claims may total, or at least of the amount which they surely will not exceed. The more the work of the Tripartite Claims Commission progresses the more it becomes evident that this maximum of indebtedness, even by applying a very safe margin, comes closer and closer to the figure I aways held out as the ultimate extent of our liabilities arising from war claims. With other words the Austrian obligation from war claims will be a very insignificant sum.

I shall not try to commit myself on the information you may gain from consulting the American Agency, I do want to emphasize, however, again and again the great importance which a favorable consideration by the American Government of our proposal will have on Austrian economics and I may entertain the hope that this fact will have some weight on your decision.

Expecting to hear from you, at your earliest convenience, I beg to renew [etc.]

Edgar Prochnik
  1. William M. Malloy (ed), Treaties, Conventions, etc., Between the United States of America and Other Powers, 1910–1923 (Washington, Government Printing Office, 1923), vol. iii, pp. 3149, 3216.