863.51 Relief Credits/50: Telegram

The Secretary of State to the Ambassador in France (Herrick)

[Paraphrase]

66. Reparation 46.

(1) To permit loan contemplated, recommendation is to be made to Congress that the Secretary of the Treasury be authorized to release Austrian assets. However, confidentially, it appears possible that the position may be taken by the bankers that they would not be warranted in issuing the loan unless status of reparation payments and relief debt for which Austria will be liable is first satisfactorily determined. They fear that the exactions from Austria might conceivably be so large as to threaten the credit of Austria. They have raised the question whether, in view of the terms of the 1923 reconstruction loan, payments should not be postponed at least until 1943; also [Page 888] whether reparation payments should not be postponed until after the maturity of the contemplated loan (1958), pointing out that the decision of the Reparation Commission of January last merely related to excepting certain revenues from the charge created by article 197 of the Treaty of St. Germain.

(2) As a relief creditor of Austria, the Government of the United States is also obviously interested in the situation as to Austrian reparations. As to fixing Austrian reparations, are there any developments subsequent to those outlined in section 6 of the memorandum referred to below and your letter of March 14, 1927?34 What are the present prospects?

(3) The proposals of Austria for funding her relief debt present a question as to the amount of the liability of Austria for army costs and other charges which rank ahead thereof according to the terms of the relief bond (for text of bond and other relevant information see memorandum transmitted with the Department’s instruction No. 2030 of September 16, 1926.)34

The latest available information as to the Austrian army costs is contained in part III of the monthly accounting annex for April 1925,34 page 3, which indicates that the claim of Italy was set off against the value of property ceded to Italy, presumably pursuant to paragraph two of the agreement of March 11, 1922,35 annex 1358b. Is the latter agreement considered to be in effect? Is there any indication as to the amount of the claim of France on Austria for army costs? Are data available for ascertaining the amount of Austria’s liability, if any, for other costs which, according to its terms, rank prior to the relief bond?

(4) Telegraph briefly and report by mail fully any information discreetly available on the foregoing matters, together with your comments. Mail cipher text of this telegram together with your reply to the Legation at Vienna and to the Embassy at London.

Kellogg
  1. Not printed.
  2. Not printed.
  3. Not printed.
  4. British and Foreign State Papers, vol. cxvi, pp. 612, 621.