863.51 Relief Credits/26
The Austrian Minister (Prochnik) to the Secretary of State
Excellency: On February second, a memorandum embracing a number of items in which further information regarding the use and productivity of the contemplated Austrian loan is sought by the Department of State, was handed to me by your Mr. Young.17 A copy thereof, as I understand, has in the meantime been cabled to Mr. Washburn for transmission to the Federal Chancellery, Department of Foreign Affairs.
I do not doubt that my Government will, in due course, be in a position to furnish Your Excellency with such data which will thoroughly, and in a satisfactory way, enlighten, as to the merits of the project in question.
It does not behove me nor am I competent to anticipate, by entering into the details of the problem, the answer of my Government to Your Excellency’s memorandum, the less so as some questions are involved which still require closer study. It may not have escaped Your Excellency’s attention, that the Austrian Parliament, for instance, just recently passed a resolution, providing for a thorough reexamination, by a special committee of uninterested experts, of the various reports submitted to the Government in [Page 874] regard to electrification of railroads, a measure, which to a certain extent created the wrong impression abroad that Austria had practically dropped said plan. I am able to state that this is not the case. On the contrary, the harnessing of my country’s abundant waterpower and its use for running railroads has by no means been abandoned, although the aforementioned investigation concerning the productiveness of electrification on certain lines ordered by Parliament, may or may not result in a temporary cessation of further activities, in a pause, during which the effects of the work “so far accomplished may be watched, and the experience thereby gained applied to the continuation of the electrification project.
In whatever findings these studies may result, the necessity and principal purpose of the new loan, a general overhauling, repairing and modernization of the country’s whole communication system during the next five years is so outstanding that it fairly overshadows all other considerations of minor consequence.
The most valuable asset of the very few left to Austria by the Peace Treaty is undoubtedly her geographical and consequently commercial position. Austria is compelled to make the utmost use thereof, if she intends to assure her future. There is no other way of accomplishing this task if not by keeping her railways, roads and other means of communication up to date. Who could dispute the fact that lagging in this respect would mean a gradual elimination of my country from the main system of European traffic, a slow but sure death.
The War left the Austrian railways, roads, telegraphs and telephones in a deplorable condition. Immediate even though insufficient repairs were urgently needed, requiring sums which to a small portion only could be spared from the proceeds of the League of Nations loan. The rest had to be born by appropriations provided for in the ordinary budget, i. e. by overburdening the present generation with a task which would yield its fruit to a more remote posterity. If the contemplated loan should fail, the Austrian people would face the following alternatives: or [either] to adhere to the present method and ruin business and the whole economic outlook by an excessive tax burden, or to drop the entire project for which the loan is sought and equally meet their doom.
There is an other point to be seriously considered from a general standpoint, i. e. that no constructive, systematic and economic plan could be adopted without having in advance secured the funds necessary for the execution of the whole.
The aforementioned facts alone seem to have sufficient weight in supporting an opinion generally shared by our creditor nations, that an investment loan is most essential to Austria’s reconstruction, regardless what the outcome of the investigations into the details connected [Page 875] therewith may be. I shall not attempt to solicit Your Excellency’s final decision concerning the advisability of an American participation in said loan, so long as you are not fully convinced that the same is not incompatible with the protection of prospective American investors and with the general policy laid down by your Government in regard to foreign loans and investments.
There are strong reasons for apprehension however that more than usual delay may be experienced (the more so as the investigations under way on both sides seem to assume the form of a painstaking scrutiny) and that Congress may close its session before termination of the inquiry, or, at least, enter into such an advanced period when pressure of other urgent business will exclude the passing of a bill dealing with deferment of lien. In that case Austrian reconstruction would come to a standstill before a mere technical obstacle, even if the results of the examinations under way may consequently prove satisfactory.
On behalf of my Government I, therefore, entreat Your Excellency to kindly cause a legislative measure authorizing deferment of lien to be urgently recommended to Congress and to postpone judgement as to the merits of the Austrian loan to a time when the question of American participation comes up for decision. In complying with this petition Your Excellency by no means could jeopardize American interests as an authorization by Congress does not necessarily entail an obligation on the part of the Secretary of the Treasury to actually defer the lien, if he should not see fit to do so and, as even after deferment of lien the Department of State, as we understand, is in a position to effectively dissuade American capital from participation.
Briefly recapitulating my arguments I beg to request Your Excellency to take the following points into a favorable consideration: 1.) The undisputed necessity of an investment loan for Austria; 2.) The intention of having this loan floated in Europe and not only in the United States; 3.) The fact that a failure on the part of the United States in joining all our other creditors in the deferment of lien would kill the entire loan project, not only here but also in Europe; 4.) The deferment of lien by the United States does not necessitate American participation; 5.) American participation could be decided upon after deferment of lien and after all data having a bearing on this decision will be available; 6.) The very short time left for bringing an appropriate legislative measure before Congress with some chance for enactment; 7.) The nature of the investigations under way which is apt to further shorten the available time limit.
Your Excellency would greatly oblige me by enabling me within the next [near] future to bring a favorable decision to the notice of my Government.
Accept [etc.]