863.51 Relief Credits/79
Memorandum by the Economic Adviser (Young)
On March 17 and 19 I discussed the Austrian situation at considerable length with Under Secretary Mills. With reference to his suggestion that the procedure should be to conclude a debt settlement with Austria which would take care of the question of subordination of the lien, I pointed out, first, that this would entail some delay because of the time required for drafting and for getting the necessary approval of the Austrian Government, and that this delay might interfere with action at the present session of Congress. I further pointed out that Austria could not make a definitive agreement with the United States except in connection with a general agreement with all the debtors. Although there is reason to believe that agreement with the European relief creditors may be reached, at least in principle, on March 30, it is not certain that that will result. Furthermore, the drafting and obtaining of the necessary approval on the part of the European countries is likely to take some time. I took the above position after discussing the matter fully with Mr. Castle, Mr. Olds and the Secretary. Mr. Mills finally agreed to the drafting of a bill which would, in the first place, authorize subordination of the lien, and, second, would authorize the Secretary of the Treasury to conclude a debt funding agreement with Austria.
Mr. Mills and I conferred with Secretary Mellon, who approved that procedure. Mr. Mills was inclined to the opinion that the Department of State should take the leading part in urging the proposal upon Congress inasmuch as the particular methods of handling the matter had been urged by the Department. I took the position that the matter is predominantly financial and therefore a matter primarily for the Treasury. Mr. Mellon agreed that the Treasury would take a leading part. I stated that the Department of State would, of course, assist in any way it could.
The procedure agreed upon was approved by Secretary Kellogg.