863.51 Relief Credits/27: Telegram
The Minister in Sicitzerland (Wilson) to the Secretary of State
[Received 5:09 p.m.]
10. Referring to your 15, February 4, 3 p.m. Sir Arthur Salter being in London, I consulted Felkin, acting head of the League’s financial section.
(1) This explains why the financial committee does not interest itself in the present loan: Acting on Austria’s petition to the League Council, the committee in 1923 set up the machinery handling the original reconstruction loan and, in accord with the League’s policy, does not take any further direct interest in the proceedings unless there is (a) another Austrian Government appeal to the Council, or (b) such action by the Austrian Government as might jeopardize seriously the country’s entire financial structure.
(2) A confidential estimate of the situation: I am told by Felkin that the Austrian negotiator, Dr. Schtiller, discussed the proposed loan informally and in advance with Sir Arthur Salter, who favors it. But, owing to the reasons explained above, the committee has not studied it exhaustively and has no official information about it. Their only data came from Austrian sources and undoubtedly are in the Department’s possession.
Felkin also pointed out the Austrian Government’s desire for approximately 900,000,000 schillings to invest in permanent revenueproducing enterprises. About 200,000,000 schillings of this sum would be supplied by Austria from its budget surplus, while about 20 percent of the remaining 700,000,000 schillings would be internally raised. Felkin said Austria needs to foresee a considerable time ahead what it must have, since the procedure to obtain priority for new loans is exceedingly cumbersome. So they have tried to see ahead for five years as to their needs. The reconstruction loan provides for 26,000,000 sterling, while this loan’s ear-marked revenue exceeds its service by about five times. Felkin is not informed as to whether Austria wishes to offer a further lien on assets already ear-marked for the reconstruction loan as security for the new loan or to set aside for this purpose other assets. A good indication that the proposal is not unsound, he points out, is the fact that the Austrian petition has been assented to by the committee of control, the trustees committee on loan, the Reparation Commission, and the relief credit committee of European states.
[Page 877](3) Felkin cannot express an opinion, since the League secretariat has not made exhaustive studies, as to whether all the investments proposed are actually productive in character.
The above has been repeated to the Legation in Austria.