711.632/72
The Minister in Austria (Stockton) to the Secretary of State
[Received August 18.]
Sir: I have the honor to refer to the Department’s telegram No. 27 of July 7th, 5 p.m., in reply to my telegram No. 28 of June 25th, 6 p.m., concerning the Treaty of Friendship, Commerce and Consular Rights between the United States and the Republic of Austria signed in Vienna on June 19th, 1928.…
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Upon my arrival in Vienna I found pending several apparent discriminations against American products:
- 1.
- The system of placing valuations upon American automobiles for customs purposes, already a dispute of long standing, was still unsettled.
- 2.
- An apparent discrimination against the Vacuum Oil Company’s product, Kettleman Hills crude oil, in an amendment to the proposed tariff bill, required action.
- 3.
- A recently signed Austro-German commercial treaty appeared to give special advantages to German machinery.
- 4.
- A treaty being negotiated with Hungary proposed to give preferential rates on Hungarian flour.
In studying the relation of the most favored nation clause to these matters, I was surprised to find that the commercial treaty between the United States and Austria was not in force. I then went through the negotiations leading up to the signing of the Treaty. I also searched the correspondence exchanged between the Department and the Legation regarding the Senate’s reservation, but could not find that the Legation had ever been instructed relative to the action it should formally take with regard to the Senate’s reservation which it was intimated in the Department’s above quoted telegram No. 3 of February 12th, 1929,10 would follow.
When I went to the Foreign Office on June 23rd last, to discuss the proposed preferential rates on Hungarian flour and other discriminations, I also took up with Dr. Schüller the status of the Treaty. He informed me that the Austrian Government had never ceased to regret that the Department had had the provision stricken from the approved draft of the Treaty which it is now desired to reinsert in the form of a reservation. I asked him what he thought was the possibility of the Austrian Parliament approving the Senate’s reservation [Page 854] without altering any other provision of the Treaty. He replied that if the Treaty were resubmitted to Parliament it would probably shorten its duration. Dr. Schüller added that the Austrian Government had yielded during the negotiations on many points out of deference to the wishes of the American Government, but that it had felt it necessary to insist upon limiting the life of the Treaty to six years from the exchange of ratifications. He also added that of course the Austrian Government had expected the ratifications to be exchanged in 1929, so that the Treaty could be denounced in 1935.
This Treaty contains the most favored nation clause which the nations of Central Europe are now clearly striving to eliminate from their treaties in favor of special agreements. As all of Austria’s commercial treaties can be denounced within or before 1935, Dr. Schüller intimated that the Austrian Parliament might not object to having the Treaty resubmitted to it so that it could shorten its period of duration. He explained that the Senate’s reservation is immaterial to the Austrian Government, but that he believed if the Treaty were referred back to the Austrian Parliament it might well take advantage of the opportunity to shorten the term of its validity. He observed that he had learned something about treaty making from this experience and that he would never again make the duration of a treaty depend upon the date of exchange of ratifications.
In accordance with the Department’s instructions of July 7th, above referred to, I called on Dr. Wildner at the Foreign Office to discuss the Austrian Government’s attitude toward the Senate reservation. Unfortunately Dr. Schüller, who plays the most important role in such matters, had left for Rome on July 2nd, to negotiate a treaty with the Italian Government, and will not return to Vienna until the latter part of August. I asked Dr. Wildner whether the Austrian Government would be willing to undertake to obtain ratification of the Senate reservation without Parliament’s shortening the term of the Treaty or making any other amendment. He was cautious in his reply, but explained in detail how the Austrian negotiators had first accepted the provision which the Senate now required as a reservation and had later agreed to strike it out at the request of the State Department. Dr. Wildner also informed me of the importance Austria had attached to the duration of the Treaty. He said that the Austrian Government had expected ratifications to be exchanged so that the Treaty would be terminable in 1935, the year in which the British treaty expires. He added that due to unsettled economic conditions the Austrian Government was not willing to commit itself for long periods. Dr. Wildner further stated that the new commercial treaty with Germany (not yet ratified) is for only two years and, confidentially, that the Austrian Foreign Office had to decline to negotiate [Page 855] a commercial treaty with Rumania because that country wanted one for three years. He was noncommittal about what action the Austrian Government might take regarding my inquiry, but stated that, embarrassing as it would have been to resubmit the Treaty to Parliament in February, 1929, it would be even more embarrassing now to ask Parliament to accept the Senate’s reservation without amending the term of the Treaty, as under the most favorable circumstances ratifications could hardly be exchanged before the first of next year, which would make the Treaty terminable in 1937, or nearly two years after the British treaty could be allowed to expire.
In my conference with Dr. Schüller I gathered as much from his manner as from his expressions, which were unusually candid, that Austria was already somewhat embarrassed at the prospect of being tied by a most favored nation treaty which could hardly expire before 1937, even if it were possible to make arrangements to exchange ratifications in the near future.
If the Austrian Government had been requested in February, 1929, to urge immediately upon Parliament the acceptance of the Senate’s reservation, I believe that Parliament’s ratification without further reservation could have been obtained, since the exchange of ratifications could have followed almost immediately and the date upon which the Treaty was terminable would have been at most only a few months after the date at which the British treaty becomes terminable. The Austrian Parliament will not reconvene until September and even if it should immediately approve the Senate reservation and the exchange of ratifications followed at once, the Treaty would be hardly terminable before the end of 1936. The Schober Government11 has no party vigorously behind it and even if it expressed its willingness to attempt to obtain the consent of Parliament to the Senate reservation, it might not be able to guarantee that it could succeed.
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The present status of the Treaty is certainly unsatisfactory both to Austria and the United States.
The Department has the choice of the following alternatives:
- 1.
- To resubmit the Treaty to the Austrian Government, requesting it to obtain Parliament’s ratification of the Senate reservation;
- 2.
- To resubmit the Treaty to the Senate, urging it to withdraw its reservation.
In view of the Austrian Government’s reluctance to have any of its commercial treaties continue in force after 1935 and in view of its evident coolness towards the most favored nation clause, I am of the opinion that it may be dangerous to resubmit the Treaty to the [Page 856] Austrian Parliament without some guarantee against further amendment, unless our Government regards the Senate’s reservation as more important than ratification.
I shall continue my discussion of the Treaty with Dr. Schüller as soon as he returns to Vienna. There is one argument which may influence the Austrian Government. It is anxious to have the Treaty expire at the earliest possible date. I can say that the Department would be glad to resubmit the Treaty to the Senate when it convenes in December and to urge it to withdraw the reservation, but that the Senate might not be able to take up the matter immediately and the Department might not be able to obtain the required action before next year, which would still further postpone the date of exchange of ratifications. I can add that, if the Austrian Government can give me a positive guarantee that Parliament will ratify the Senate reservation without shortening the term of the Treaty or making any other amendment, as soon as the reservation is ratified the exchange of ratifications can follow promptly. If it cannot give me such a guarantee, I can state that the Department will resubmit the Treaty to the Senate in December and urge the withdrawal of the reservation. However, as the Senate convenes much later than the Austrian Parliament, I can point out that the Treaty will become terminable much sooner if Parliament will approve the reservation without other amendment than if we wait for the Senate to withdraw its reservation when it convenes. I believe that this argument would have been effective if it had been advanced in February, 1929, even though the Austrian Government may have felt “annoyed” or “embarrassed” at having to resubmit the Treaty to Parliament. I trust that it is not now too late for it to bring about the desired result.
If I am unable to obtain a positive guarantee from the Austrian Government that it can obtain the acceptance of the Senate’s reservation by the Austrian Parliament without change of term or other amendment, I shall cable the Department for further instructions.
Respectfully yours,