863.51 Relief Credits/514: Telegram
The Chargé in Germany (Gilbert) to the Secretary of State
[Received January 4—12:32 p.m.]
“In reply to your communication No. 247 of November 25, 1938,4 I have the honor to explain below the German Government’s interpretation of the question of the Austrian dollar loans.
“Irrespective of its legal interpretation that no obligation exists for it to assume the foreign debts of the former Austrian Federal Government, the German Government has concluded agreements with the Governments of almost all interested countries with regard to an indemnification for the creditors of Austrian loans. In all these agreements the Austrian relief debts have been left out of consideration because of their specific nature.
“The German Government has also repeatedly expressed its willingness to bring about an arrangement with the Government of the United States regarding a reasonable indemnification of American holders of Austrian loan bonds. It did not have, nor has it now, the intention to discriminate against American creditors as compared with other foreign creditors. But it has pointed out that due to the passivity of German trade with the United States, an arrangement of the kind concluded with the Governments of all other interested countries naturally cannot be arrived at with the United States; for such an arrangement is based on the premise that the foreign exchange necessary for the payments can be raised out of the excess of German trade. An arrangement in favor of American holders would have to take into account the prevailing passivity of the German trade balance with the United States and presuppose cooperation on the [Page 560] part of America, making possible an adjustment of the rates of the loan service to altered conditions—an adjustment, by the way, with which all the other countries with which negotiations have been carried on have agreed.
“The German Government is willing to enter into negotiations with the Government of the United States on this basis.
“With regard to the offer you cite of an indemnity on the part of the German Government published in the Deutscher Reichsanzeiger of October 25, 1938, your assumption that it applies equally to nonforeign and foreign holders of Austrian bonds is correct. For that reason American holders too can avail themselves of this offer.”