863.51 Relief Credits/1
The Austrian Minister (Prochnik) to the Secretary of State
Excellency: The Federal Government of Austria after having with the proceeds of a loan, the so-called League of Nations Loan, successfully completed the reconstruction of its public household and finances, by stabilizing the country’s currency, balancing the budget and accomplishing other measures provided for in an exhaustive restoration plan, is now anxious to likewise restore with the aid of a second loan private economics and business to a state of normalcy. In fact, my Government realize that the latter is an essential requisite for assuring a lasting duration of the first success.
Before the first referred to loan could be issued it was necessary that all countries holding a first lien on Austria’s assets for relief credits defer this lien for a period of 20 years (the time fixed for the repayment of the said loan).
Also the United States of America, as Your Excellency are aware of, deferred with authorization of Congress (Lodge Resolution) their lien for twenty years, beginning from 1923.
As long as the relief credits are still outstanding against Austria, a similar action would be required to enable the issue of a second loan. With other words the Federal Government of Austria face the necessity of approaching the creditor nations again with a request for a further 10 year extension of the aforementioned period of deferment.
My Government, however, came to the conclusion that a settlement of the relief credits would be preferable to a further extension of [Page 459] the lien and is proposing to all creditor nations the following funding plan, which I am likewise authorized to submit to Your Excellency.
This plan in its original construction provides for a refund of the relief credits (capital and interest) within forty years (beginning 1928) on a rising scale (with lowest equal yearly instalments in the first five years and highest equal yearly instalments in the last 25 Years).
But certain technical difficulties necessitated a change in this original plan. An opinion rendered by experts considers payments on relief credits prior to 1943 as contrary to the wording and spirit of the agreement entered upon by the Austrian Government in connection with the League of Nations Loan.
To overcome this technical obstacle, the Federal Government of Austria propose, that a debt funding would be agreed upon along the aforementioned line, that actual payments, however, would not be made before 1943, and that from this time on the whole debt (capital and interest) should be paid in 25 equal yearly instalments, and that these instalments should also include an amount corresponding to the loss on interest which the creditors suffered by non-payment of agreed upon instalments due prior to 1943.
Your Excellency would greatly oblige me by notifying me at your earliest possible convenience whether in principle the Government of the United States would accept to enter negotiations for a settlement of relief credits along aforementioned lines.
Accept [etc.]