[Enclosure]
The Austrian Minister (Prochnik) to the Under Secretary of the Treasury
(Winston)
[Washington,] November 10,
1926.
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.]
