Memorandum by the Chief of the Division of Western European Affairs (Dunn)

The Austrian Minister2 called this morning and said that he wished to bring before the Department informally the sense of the conversation he had had with the Minister of Commerce of Austria just before leaving Vienna to come back to his post. He said the Minister of Commerce had sent for him and had stated that approximately 70 per cent of Austrian international trade now came within the framework of reciprocal trade and clearing arrangements; that of the balance of 30 per cent not under such control, 80 per cent consisted of trade with the United States and that as trade with the United States resulted in a large and unfavorable balance against Austria he felt some action should be taken with a view to reducing their imports from the United States into Austria and increasing Austrian exports to this country. The Minister stated that he explained that such action would be contrary to the trade program of the Secretary of State and furthermore that as there was no governmental control of international trade in this country, it would not be within the province of the American Government to direct the purchases of its nationals to any particular country.

The Minister said that he very shortly thereafter had a talk with Mr. Schiller, an economic expert in the Ministry of Commerce, and that Mr. Schiller had told him he would make a specific study of the Austrian-American trade situation and would talk to the Minister of Commerce about it and would in due time send the Minister specific instructions, giving such suggestions as he thought might be feasible of execution with respect to American-Austrian trade relations. Mr. Schiller stated that he understood the limitations of the American Government with regard to the trade of its own nationals and stated that he furthermore realized that it would be difficult to divert Austrian [Page 5] purchases of cotton and copper and some other raw materials from the United States to other countries, as the mills and machinery in Austria were so accustomed to the American raw material that it would be expensive and difficult to make use of material from other countries, and that, furthermore, it would be very difficult to substitute new credit arrangements for those which have been of such long standing in the trade between the two countries.

I assured the Minister that upon receiving the suggestions he expected to have from his Government we would make a very thorough canvass of the situation and would be glad to undertake any steps which might be feasible in order to improve the mutual situation of the two countries. It was not necessary to go into any extended explanation of our trade agreement program and our present commercial policies as the Minister had previously stated that he was entirely conversant with the program, was heartily in sympathy with it and only hoped that it would be possible eventually to have Austria come into the system so ably advocated by the Secretary.

James Clement Dunn
  1. Edgar L. G. Prochnik.