863.51 Relief Credits/166
The Minister in Austria (Washburn) to the Secretary of State
[Received November 10.]
Sir: I have the honor to report that upon the first day of my return from the United States, on Thursday last, the 18th instant, I had a long conversation with Dr. Schüller at his earnest request. The Foreign Office informed me on that day also that the Chancellor was anxious to see me at the earliest possible moment. He made a special appointment for me on Saturday. The loan and the action of Congress upon the favorably reported House Joint Resolution 247 (70th Congress, 1st Session) were the main topics of conversation upon both occasions.
Dr. Schüller will go to the United States—as the Department will have already gathered from the Legation’s despatch No. 1987 of the 17th instant.60 It will be recalled that the wisdom or unwisdom of sending an Austrian commission or representative to the United States in the near future was alluded to recently in conversations which I had at the Department with the Secretary, Assistant Secretary Castle and Dr. Young. Minister Prochnik participated in an interview at the Department with the Economic Adviser and myself where the same subject was broached.61 The reasons for sending Dr. Schüller, as given by the Chancellor and himself, may be thus summarized:
1. The political factor. The Chancellor, and especially Finance Minister Dr. Kienböck (as I reported last spring), are anxious to have the record show that every possible eventuality was anticipated. In the event of mishap—a contingency which is regarded as remote—they want to avoid the reproach, whether from political associates or adversaries, that something was left undone which if done might have crowned the loan efforts with success. Schüller has conducted all [Page 916] the negotiations with the Austrian Committee of the League, with the Relief Credit Committee and with the Reparation Commission. He has been to London, Paris and Geneva. He talked with Mussolini in Rome many months ago. Why should he not go to Washington?
2. It is recognized that some emergency may develop unexpectedly. Schüller will have a plein pouvoir and will be empowered to deal with any situation which may arise. Congress or a Committee of Congress may desire certain information. Prochnik may not have it at his finger tips. Schüller will and he will be, for several weeks any way, within reach—in the background always and making all communications through his Legation, unless the wish should be expressed to see or talk with him personally. If a formula should be desired to satisfy the United States in the event that Italy should ultimately get a more favorable relief debt settlement than the other relief creditor States, Schüller, with his pleins pouvoirs, can give it. The possibility that Italy will or can get more favorable terms is, however, scouted. The 1929 budget will carry a 10,000,000 schillings item, as I understand, to provide for the first of the forty annual installments for the liquidation of all the relief debts, providing the assent of all the relief creditor States be first attained. As is well known, it remains for the United States and Italy to act.
Schüller will be in a position to explain all these and other relevant matters to the Department, if desired. I recall, for example, that some natural curiosity was expressed at the Department about the conditions surrounding the issue of the Austrian renewal bonds of January 1st, 1925. These bonds consolidated, with the principal due, the unpaid interests which had accrued up to this date, but reduced the rate of interest from 6 to 5½ per cent. These renewal bonds were issued as the result of negotiations with the Relief Credit Committee, of which the United States is not a member. The European creditor powers, so Schüller says, were not, as a result of this action, put in a more favorable position than the United States. The renewal bonds, even with the consolidation of principal and interest, are, because of the interest reduction, slightly less desirable than the original 6 per cent bonds which have never been exchanged by the United States.
3. Schüller has never been in the United States. He has long wanted to go there and the Government, as Seipel intimated, has for some time been quite willing to avail itself of an opportunity to send him there. “As its leading economic expert, it is thought that an American visit might be a useful asset for him in the future. He plans to visit New York, Chicago and other places. He will not hang around Washington any more than may be necessary, but he will always be within reach. He will not go to the United States with a brass band and will discourage any dinner or other exploitation. He [Page 917] will remain, unless I am greatly mistaken, very much in the background. This is quite in accord with his own personal preference, for he is a modest man and senses himself the danger of any undesirable publicity. I have always found him to be a man of superior tact and he does not, I may say in passing, lack finesse.
I can quite understand Minister Prochnik’s motive in recommending originally that Schüller be sent. The Minister did not conceal from me his desire to have someone to share the responsibility with him nor his desire to have an alibi if anything should go wrong. Schüller’s oral report will help the Austrian Government to understand some aspects of American conditions more clearly than would be possible through written despatches.
4. There is the possibility, and indeed the hope, that Schüller may, before his return, conduct some negotiations with the Morgan firm. Schüller tells me that there has been no interchange of communications with this firm for many months. He says quite plausibly that there has been no reason to negotiate, and had the Austrian Government taken any steps in this direction it would probably have been met with the reply that such a proposal was premature. If Congress should act favorably while Schüller is in the United States he would be useful in discussing the details of the securities to be pledged. The Reparation Commission and the underwriting bankers, whoever they may be, must meet on common ground here. A formula must be found which both will accept. It is Schüller’s idea that with some slight modifications perhaps, the formula which was adopted in 1922 will again serve in 1929. In other words, the new loan will be on about the same terms as the old one—with this difference, that there will be in 1929 no guarantor powers as there were in 1922.
I have [etc.]