863.51 Relief Credits/62: Telegram
The Ambassador in France (Herrick) to the Secretary of State
[Received March 14—1:25 a.m.]
64. Reparation 81. Reference Department’s No. 66, Reparation No. 46, March 9, 7 p.m.
(1) Your paragraph (2). In regard to the fixing of Austria’s reparation liabilities nothing further has developed. Over a year [Page 892] ago the British and French submitted to the Italians the proposal outlined in my letter of March 14, 1927,37 but the Italians have not as yet given any indication as to their possible attitude. It seems possible that Italy may prefer, before agreeing to any piecemeal settlement, to await settlement of the entire reparation problem (including German reparations).
(2) Department’s paragraph (3) concerning Austria’s liability for costs ranking prior to the relief bonds:
- (a)
- Regarding Italian army costs: The Commission has never approved the monthly accounting annex of April, 1925.37 The army costs of Italy have never in fact been set off against the value of property ceded. The relevant provisions of the March 11, 1922, agreement as set out in article 11 and the annex to the agreement38 appear never to have entered into effect. The issue of C bonds provided by article 11 is a condition precedent to any settlement on account of ceded property. Of course this provision has not been fulfilled. Furthermore, the final paragraph of the annex provides that the pertinent articles thereof shall not become effective until the liberation debt of Czechoslovakia and Poland have been discharged by them. Of course this has not been done. The army cost claim of Italy therefore remains unsettled. A member of the Italian delegation told me in confidence that Italy has never contemplated demanding formally this claim in priority to the relief bonds but will demand priority for it of course over reparation payments when the question of fixing the reparation liabilities of Austria is discussed.
- (b)
- Regarding the French army costs, the amount has never been notified to the Reparation Commission. I understand, however, that it is relatively unimportant. I may be able to obtain from the French delegation exact figures and if I am able to obtain them they will be forwarded to the Department.
- (c)
- The Serbian army costs have been reported to the Commission at approximately the figure indicated in the accounting annex of April, 1925. The accounting section has converted this amount in dinars to 146,043,769.40 gold crowns. The Commission has never approved these costs. Moreover, Serbia is in debt to the reparation pool on account of excess receipts and is also a debtor on account of Austrian ceded property and liberation costs and will probably, therefore, never obtain the payment of her army costs except through some arrangement providing for setoffs.
- (d)
- As concerns expenses of restitution, the Department is already posted (see my letter of February 13, 1928,39 and previous reports). In general no further payments on this score can be made by Austria [Page 893] without obtaining the consent of the governments holding relief bonds.
- (e)
- The share of Austria in the expenses of the Reparation Commission is comparatively insignificant. Her share amounted in the third annuity year to about 169,000 gold crowns.
- (f)
- Regarding deliveries in kind for which priority is conceded according to the text of the relief bonds, it would seem that, by the exceptions to the priority as defined in the text of the bonds, particularly by the reference to deliveries under annex two, paragraph 19, part 8 of the Treaty of Versailles,40 any demand for effective deliveries have been shut out.
In short, I should feel as a practical matter that there are probably no effective liabilities of any importance of Austria for costs ranking ahead of the relief bonds.
(3) In general, it is my impression that the powers guaranteeing the reconstruction loan of Austria are not likely to stultify their efforts toward the rehabilitation of Austria by exacting from Austria unduly burdensome reparation payments or other payments under the treaty. As regards Great Britain, this is particularly true. The influence of Great Britain seems to have effectively deterred any attempt to press Austria and Hungary for an [apparent omission] reparation settlement and will doubtless continue to prove effective.
(4) Full report being sent by mail.
London and Vienna have been mailed cipher texts.