863.51 Relief Credits/69: Telegram
The Secretary of State to the Minister in Austria (Washburn)
21. The President today forwarded to Congress formal message recommending that the Secretary of the Treasury be authorized to subordinate lien subject to similar action by other Governments and Reparation Commission, and that he further be authorized, with the approval of the President, to conclude debt settlement on terms and conditions as favorable as Austria may grant to any other relief creditor Government. Appropriate legislation is being introduced in Congress.
You may inform Chancellor of the foregoing, bearing in mind third and fourth sentences of Department’s 18, March 14, 7 p.m.
For your further information, Department points out that authorization merely to subordinate lien might not be sufficient to permit loan flotation in view of the fact that principal and interest of relief bonds will fall due 1943, and since bankers may feel loan could not be floated until provision for relief debts had been made. Accordingly, it was deemed advisable to request authority also to settle relief debt. You of course understand that proposed legislation would not condition subordination on settlement of debt.