863.51/969: Telegram

The Chargé in Great Britain (Atherton) to the Secretary of State


191. This afternoon Mr. Mellon and I called on the Prime Minister and Mr. Henderson, the Secretary of State for Foreign Affairs. Mr. MacDonald said that the independent action taken yesterday by the Bank of England had staved off a complete collapse of Austrian economic life. The Bank of England granted a temporary loan of four and a half million pounds sterling for a limited number of days. The British Minister in Austria had informed London that the French banks, presumably acting under the orders of the French Government, had refused financial aid to Austria except on two conditions, the first of which was to receive immediate publicity. These conditions were:

Austria would consent to submit her whole financial condition to examination by the League of Nations. She would agree to accept whatever proposals were made by the League Council.
(The following condition was to be made public at the discretion of the French Government and at any time that it might choose.) In a carefully worded agreement, which did not name Germany specifically, Austria agreed to refrain from entering into any bilateral arrangement in the nature of the projected Austro-German Customs Union.

… Henderson pointed out that no Austrian Government could agree to these terms and expect to remain in office for a moment after they became public.

It was implied that a telegram from the British Foreign Office to the British Minister in Vienna clearly indicated the British opinion of the French attitude and that the Quai d’Orsay has received the information through the British Ambassador in France.

Near the conclusion of our conversation a telegram was handed to Henderson. It stated that the exchange situation in Vienna had somewhat improved as a result of public knowledge of the loan from the Bank of England. Withdrawals today were only three-quarters of a million as compared, according to my information, with seven million on Monday. The telegram also added that chances now seem brighter for the formation of a responsible Austrian Government. Mr. Mellon will see Montagu Norman tomorrow, as he is out of town until tonight. Tomorrow afternoon Mr. Mellon has an appointment with the Prime Minister.

[Page 24]

Mr. Mellon asks that Mr. Mills be given such of the information in this telegram as may be of interest to him.

Mr. MacDonald said he had no comment on the German situation.