863.51 M 82/3
Mr. R. C. Leffingwell well of J. P. Morgan & Co. to the Under Secretary of State
[Received December 31.]
Dear Mr. Secretary: I received your letter of December 23rd and we have cabled to our London partners to inform Baron Franckenstein, whose intention it was long since to ask the Department whether it wished to be represented in the discussions.
I have no doubt that the Department will receive first hand information from the Austrian Government in due course, but, in view of Assistant Secretary Castle’s letter of October 22nd,41 I am writing to post you briefly concerning developments since my letter of October 18th to Secretary Kellogg was written.
As I mentioned to you when you were in town, the European Relief Creditor States, though willing to subordinate their lien to that of the proposed new loan, are unwilling to postpone their claim until after the maturity thereof. The Austrian Government, on the other hand, is anxious to stop accumulation of interest on the relief claims, for the European Relief Creditors are taking bonds from the Austrian Government for such interest. As I understand it, the Relief Creditors’ Committee now have before them a proposal of the Austrian Government to pay for 25 years from 1943 onwards 40,000,000 schillings [Page 474] per annum, i. e., a total of 1,000,000,000 schillings; the Austrian Government reserving the right, however, at its option, to anticipate these payments in part by paying for five years from 1929 10,000,000 schillings per annum, during the next ten years 15,000,000 per annum, the sums so paid, with 8% compound interest until 1943, to be deducted from the total of 1,000,000,000 schillings. If prepayments as outlined above to the aggregate of 200,000,000 schillings were made prior to 1943, the Government would then have to pay only 26,250,000 a year for 25 years from 1943.
Very truly yours,
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