863.51 Relief Credits/73
Memorandum by the Economic Adviser (Young)
Mr. Mills21 telephoned to state that on March 3 he had had a long talk in New York with Mr. Leffingwell of J. P. Morgan and Company concerning the Austrian loan. As to the merits of the proposition, Mr. Leffingwell expressed the opinion that in general it is a very good thing for Austria to receive continued assistance from foreign capital, and that the situation should work itself out. Mr. Leffingwell, however, doubted whether the loan would be a sound proposition if it rested only upon the credit and prospects of the Austrian railways. With the credit of the Austrian Government, however, he felt it would be all right. Mr. Leffingwell gave Mr. Mills for his confidential information data furnished by Morgan’s representative in Vienna.
Mr. Leffingwell further stated that he understood that the European relief creditors had conditioned their agreement to subordinate the lien upon Austria’s agreeing to a definite settlement of the relief credits. Mr. Leffingwell feared that the relief creditors may be demanding too much from Austria. He stated that Morgan and Company were not disposed to go ahead with the business unless this matter were suitably arranged.
Mr. Leffingwell further stated that the Reparation Commission had only agreed to subordinate the reparation debt and not to postpone it. He was afraid that reparation payments might in the future be required from Austria in a manner that might prejudice the position [Page 882] of the loan now proposed. He stated that Morgan and Company were not inclined to go ahead with the proposed loan unless the reparation debt were postponed as well as subordinated.
I told Mr. Mills that we would at once seek further information on the subject.
- Ogden L. Mills, Under Secretary of the Treasury.↩