863.51 Relief Credits/413: Telegram
The Secretary of State to the Ambassador in Germany (Wilson)
88. Your 281, May 31, 6 p.m., 282, May 31, 7 p.m., and 284, June 1, 10 p.m.63 The Department is informed by the Foreign Bondholders Protective Council that the June 1, 1938 monthly service installment on the Austrian Government International Loan 1930 has not been paid. Although no reply has been received to your note of April 664 notifying the German Government that the Government of the United States will look to the German Government for the discharge of the relief indebtedness of the Government of Austria to the Government of the United States, and pointing out that the lien of this relief indebtedness upon the assets and revenues of Austria has been subordinated by the United States to the lien of the Austrian Government International Loan 1930 upon the same assets and revenues, the Department has learned from your reports that the German Government has taken the position that having regard to former precedents of international law and to the principles applied therein, the German Government is not under a legal obligation to take over the external debts of the Austrian Federal Government.
The Government of the United States does not wish to omit, on the occasion of the failure of the German Government to make the contractual monthly payment due June 1 on the Austrian Loan of 1930, in spite of the express charge which it enjoys on the assets and revenues of Austria taken over by the German Government, to state [Page 492] its dissent from the indicated position of the German Government as to its legal responsibilities in the premises, and to express the hope that Germany may yet undertake the payments incumbent on it both under international law and under equity.
It is believed that the weight of authority clearly supports the general doctrine of international law founded upon obvious principles of justice that in case of absorption of a state, the substituted sovereignty assumes the debts and obligations of the absorbed state, and takes the burdens with the benefits. A few exceptions to this general proposition have sometimes been asserted, but these exceptions appear to find no application to the circumstances of the instant case. Both the 1930 loan and the relief loans were made in time of peace, for constructive works and the relief of human suffering. There appears no reason why American creditors of Austria should be placed in any worse position by reason of the absorption of Austria by Germany than they would have been in had such absorption not taken place. The United States Government therefore, while recognizing that the German Government is at present engaged in negotiations with numerous governments covering this and related questions, regrets that the service of the loan, affecting many American holders, should have been interrupted, reasserts its own position, and requests that as early reply as possible may be made by the German Government.
Please address a communication in the foregoing sense to the German Government.65