863.51 Relief Credits/25a: Telegram
The Secretary of State to the Minister in Switzerland (Wilson)
15. Please see Sir Arthur Salter16 as soon as you can; talk over, informally and discreetly, the situation described below; and then cable your report:
The Austrian Government has requested the deferment of relief credit liens by the United States in order to permit the raising of a $100,000,000 loan. Other creditors and the Separation Commission have already taken such action. Before taking steps, however, to recommend the necessary legislation, the Department felt that there should be undertaken an independent investigation of the economic and financial aspects of the proposed loan. In the opinion of experts who have studied the data submitted by the Austrian Government (which, it is understood, submitted the same also to other Governments) and other available data in Washington, a good case has not been made out by Austria, no matter what the merits of the proposition may be. A memorandum has been furnished the Austrian Minister with certain inquiries as to the loan’s productivity and its consonance with the principle recommended by the League’s Financial Committee in 1924 that undertakings producing revenue should recoup [Page 873] their share of interest and amortization on the loan proceeds which have been allocated to them. It is asked how it is estimated that surpluses will be converted from the present deficits of these undertakings.
The Department, in principle, wishes to give the most sympathetic attention to the Austrian request, especially as other creditors than the United States have acted, but unless at least a good prima facie case is made out for the loan there is obviously little chance of Congress acting favorably.
Any informal, confidential estimate of the situation would be welcomed for its guidance by the Department, which desires to know particularly whether the League’s Financial Committee has made any study of or arrived at any conclusion concerning the proposed loan and whether the Committee has any special reason for not interesting itself in this proposal as it did in the 1923 case.
The above is to be repeated to the Legation at Vienna for its confidential information; so also your reply when it is ready. Mail the texts to the Embassies at London and Paris. The Legation in Austria is being instructed to keep you informed.
- Director of the economic and financial section, Secretariat of the League of Nations.↩