863.51 Relief Credits/167
Memorandum by the Economic Adviser (Young)
Dr. Schüller said that this was his first visit to the United States. He had come prepared to be at the call of the Austrian Minister as technical adviser in respect of the relief debt settlement but he would be glad if circumstances proved such that he was not called on. He proposes to visit Pittsburg, Chicago, Minneapolis, etc. but always subject to the call of the Legation and always gladly at the disposition of American officials who might call on him for information. He had come very quietly, had seen no one in New York and had escaped the notice of the ship reporters.
[Page 922]One purpose of his coming was to quiet political comment in Austria. The Austrian public does not understand the debt situation. They hear that reparations are a first charge on Austrian assets, that the relief debts of 1920 are also a first charge on Austrian assets, and that the reconstruction loan of 1923 is a first charge also and with priority over the other first charges. An Austrian province wishes to borrow and has no trouble in floating a loan. Vienna has no trouble in floating a loan on favorable terms. The Austrian Government has for two years been trying to float a loan and Dr. Schüller has been running around Europe in circles but no loan is forthcoming and the Austrian public is told that the American Congress must act on the matter. The public knows that Dr. Schüller has come to the United States and this fact will keep them quiet for a few weeks at least. The Austrian Government understands the American situation but the people do not. In Austria the Government would present a matter of this kind to the legislature in the morning and have its law by noon. The Government of course recognized that this could not be done in the United States and was very thankful for the attitude which the American Government had shown in the matter.
In discussion of the present status of the Enabling Act, Dr. Schüller said that he would be glad if his technical knowledge could be of service in the drafting of an agreement which might be of possible use now and which would at least be necessary sometime. He would also draft a simple and comprehensive statement of the whole matter for the use of officials considering the matter.
During the conversation it developed that Austria considers the agreement negotiated June 15 with the Governments of Denmark, France, Great Britain, Holland, Norway, Sweden and Switzerland64 to be now in force. Accordingly on January 1, 1929, it will make the payments provided for in the optional schedule of payments set forth in Annex 2 of the letter of the Austrian Minister at London to the International Relief Bonds Committee, dated June 15, 1928,64 At the same time it will make corresponding payments to the United States and to Italy as required by the following paragraph of the Relief Bonds of 1920:
“The Government of Austria agrees that no payment will be made upon or in respect of any of the obligations of said series issued by the Government of Austria before, at or after, maturity, whether for principal or for interest, unless a similar payment shall simultaneously be made upon all obligations of the said series issued by the Government of Austria in proportion to the respective obligations of said series.”
There was nothing in the Relief Bonds of 1920 which required that simultaneous settlements of the relief debt be made with the various [Page 923] creditor Governments. The obligation for equality of treatment was that quoted in the above-mentioned paragraph and Austria could meet the obligation by making simultaneous and similar payments to all the creditors. In the case of a Government which had not concluded a settlement with Austria, the payment would simply be a payment on account. He considered, however, that Austria is now in a position to make a definite settlement with the United States, including a clause reserving to the United States equality of treatment with any superior terms which might later be granted to Italy. It was of course possible that Austria might not obtain the subordination of the relief liens in favor of the proposed investment loan. The relief debt settlement was not offered in consideration of the subordination of the lien as Austria desired in any event to simplify its debt structure.