863.51 Relief Credits/149
Memorandum by the Economic Adviser (Young)
The Austrian Minister called this morning to discuss the question of the steps to be taken in further reference to the loan and debt settlement. [Page 913] He said that he had just received a letter from Dr. Schüller, stating that the Austrian Government confidently expects an early adjustment of the difficulties with Italy which lead to the blocking by the latter of the loan proposal. The Austrian Chancellor had, with great reluctance, deemed it advisable to make a statement to the effect that the questions arising in the Italian Tyrol are regarded by Austria as wholly of Italian domestic concern. The Italian representative, who had just returned to Vienna, had stated that Mussolini would change his attitude on the Austrian loan. Mr. Prochnik gathered that a settlement of the Austrian debt to Italy on the lines of the settlement made with the other European creditors is likely within a very few weeks.
The Minister stated that the Austrian Government had assured the European creditors other than Italy that it would make no settlement with Italy on terms more favorable to the latter than the terms embodied in the settlement made with the other creditors.
The Minister then raised the question of further procedure in the United States. He wondered whether it would not be better to drop the Bill introduced at the last session of Congress and submit the definitive terms of a debt settlement. He stated that the Austrian Government would be prepared to sign with the United States a debt agreement embodying terms analogous to those already agreed upon with the European creditors (except Italy) with a clause added to the effect that, in the event of granting more favorable terms to any other creditors, similar terms would be granted to the United States. I stated that I would discuss with the Treasury and others the question involved as to the tactics to be followed, and talk with him further.
I told the Minister that, having in mind the likelihood of a definite proposal by Austria as to settlement of the debt, it would be desirable that the Austrian Government submit full data in support of any proposal it might make. I recalled my previous requests for such data, and that the data had not been supplied. I further stated that other Governments in proposing debt settlements had furnished very full data. The Minister said that he had written for data, but that his Government had apparently not understood exactly what we wanted. He asked whether I would send him quite informally a statement on the subject. I undertook to consider the matter.