863.51 Relief Credits/96
The Secretary of State to the Honorable Willis C. Hawley49a
My Dear Mr. Hawley: In connection with consideration by the Ways and Means Committee of H. J. Resolution 247 concerning the Austrian debt, I desire to call attention to certain aspects of the situation which are of special concern from the stand point of our international relations.
The relief indebtedness of Austria was contracted for humanitarian reasons under authority of the Act of Congress approved March 30, 1920,50 which authorized the furnishing of flour on credit “to relieve populations in the countries of Europe or countries contiguous thereto suffering for the want of food”. Austria’s relief debt to the United States, in the principal amount of $24,055,708.92, is only about one-fifth of her total relief debt, the other four-fifths being owed to European Governments, namely, Denmark, France, Great Britain, Italy, The Netherlands, Norway, Sweden and Switzerland.
Inasmuch as Austria’s relief indebtedness aggregating about $120,000,000 plus interest thereon, will mature in 1943, and since the relief bonds enjoy a prior lien on Austria’s assets and revenues, Austria can [Page 905] not obtain the funds necessary for continuation of the program of economic recuperation except by agreement of the nine creditor governments. All of these Governments but the United States have agreed to defer their liens, not only in the belief that the procurement of new capital by Austria is necessary to permit Austria to continue her difficult but successful efforts for economic progress, but also with the thought that well-considered measures for strengthening Austria will facilitate the repayment of the relief debt. Austria, for her part, has offered to commence the payment of the relief indebtedness on the basis of a plan which has already been found acceptable to most of the creditor governments and which conforms to Austria’s capacity to pay. The proposed legislation provides that the terms and conditions of settlement of Austria’s indebtedness to the United States “shall not be less favorable than the terms and conditions granted by Austria to any of the other relief creditor governments,” to whom Austria owes 80% of the relief debt.
The reasons in favor of the United States cooperating in the plans being developed for dealing with the Austrian situation have been fully and forcefully stated to the Committee by the Acting Secretary of the Treasury, Mr. Mills. I shall not undertake to rehearse these arguments. I do, however, desire strongly to emphasize the importance, from the stand point of our international relations, of early and favorable action. The United States can not afford to be in the position of blocking this joint effort to deal with the difficulties of Austria. I am sure the Committee will appreciate that the failure of the Government of the United States to join in facilitating the program of Austrian reconstruction, besides tending to prejudice the ultimate capacity of Austria to repay our advances, would also place the United States before the world in a highly unfavorable light and would be embarrassing in the conduct of our foreign relations.
I therefore sincerely trust that it may be possible to take early and favorable action on H. J. Resolution 247.
I am [etc.]