863.51 Relief Credits/24

The Department of State to the Austrian Legation

Memorandum

On January 19, 1928, the Austrian Minister was informally advised that it had been decided by the competent branches of the Government of the United States that further study was necessary in relation to the economic and financial questions presented by reason of the request of the Austrian Government that the United States Government recommend to Congress the enactment of legislation authorizing the deferment for thirty years of the lien of the United States Government on assets which it is desired to pledge as security for the contemplated new Austrian loan. The Minister was also informally advised that the Department of State would be glad to receive and consider any data bearing on these questions that might be available in addition to the data in the possession of the Government of the United States, the nature of which was then outlined to the Minister.

Careful and earnest study has been made of the data available in the files of the Governmental Departments concerned, and it has been found that there is a lack of adequate data bearing upon some of the principal aspects of the proposed loan.

The Committee of Guarantor States, in its letter of October 12, 1927, to the Austrian Minister of Finance,14 stated that it had been informed that it was the intention of the Austrian Government to apply to the proposed loan the principle recommended in 1924 by the Financial Committee of the League of Nations that revenue-producing undertakings such as the post, telegraphs and telephones, and the railways, should recoup to the Austrian Treasury the charges for interest and amortization on such part of the proceeds of the loan as may be allocated to such undertakings. Data available to this Government do not give adequate information as to the basis the Austrian Government has for believing that the proposed loan would lead to the recoupment of amounts paid for service of the loan.

With respect to the Austrian postal, telegraph and telephone administration, the Department finds in its files a statement that the estimated deficit in 1927 was 80,000,000 schillings. It is desired to know whether this figure is exact, and also what estimate has been made as to the effect of the loan in removing the deficit and creating net revenues sufficient to carry the interest and amortization of the part of the loan proceeds that would be applied to investment in those services.

With respect to the Austrian Federal Railways, the only available report is that for the year 1925, which was published in June, 1927. It is understood that the budget of the Austrian Government for 1928 [Page 870] provides for an appropriation of 26,400,000 schillings to cover the excess of current expenditure over current revenues of the Federal Railways. Of 414,000,000 schillings total capital investment in the Federal Railways which it is stated will be required from 1928 to 1932, it is indicated that 190,000,000 schillings are required for electrification. Reports such as that in the Vienna correspondence in the London Economist of December 24, 1927, refer to doubts as to the economic wisdom of electrification of the Federal Railways in view of the present coal situation. The Department of State would be glad to receive such data as are available bearing upon the desirability of electrification, taking particular account of the current experience as to electrification in Austria. Such pertinent data as are available are also desired as to the “urgently necessary station equipment and other capital outlay” to which the remaining 224,000,000 schillings investment in the Federal Railways would be devoted, and as to the productivity of such investment.

With respect to the contemplated investment under the heads “other railways and tobacco”, it is stated that “the demands are of the same kind as the actual requirements of the last few years”. The Department of State would be glad to receive further data regarding these requirements and also regarding the productivity of the investment.

Since no information is available regarding “other capital outlay” of the “central administration” and “monopolies and other concerns”, the Department of State would be glad to have further data regarding this proposed investment and its productivity.

Likewise, the Department of State would welcome the receipt of any other data which the Austrian Government may care to furnish regarding the desirability and the economic effects of the contemplated loan.