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STRONG PAPERS, Norman to Strong, copies of correspondence with others and confidential memos (List created 6/2004) 1. Undated; "The Austrian Trade Balance," from Sir William Goode to M. Norman. 2. March 11, 1922; "Austrian Loans and Liens: The Present Position of Affairs," from Sir William Goode. 3. March 17, (1922?), copy of cablegram from Sir William Goode to Sir Basil Blackett. 4. March 22, 1922, copy of cablegram from Sir Basil to Sir William Goode. 5. March 22, 1922, copy of cablegram from Sir William Goode to Sir Basil Blackett. 6. March 11, 1922, "Austria's Future Loan," from Sir Willaim Goode (w/ attachements, "Austrian Import Customs Revenue", "Approximate Cost of the Customs Breanches Administration in 1921"). 7. March 16, 1922, S.R. Res. 160, Joint Resolution. 8. March 30, 1922, "Memorandum Regarding American Visit: Postponement of Liens" from Sir William Goode. 9. Undated, "International Conference" re: M. Poincare. No indication as to whom or from whom the memo was written. The following documents were removed from this set of documents (1116.3, Folder 4) and placed with letters to which they relate in 1116.3, Folder 2. As noted below, all were originally enclosures in letters from Norman to Strong: 1. 2. 3. 4. January 27 letter & enclosure to Norman from Victor Moll, Stockholm (enclosure to letter of February 6) February 7 letter from Norman to president of Banque Nationale Suisse (enclosure to letter of February 20) February 6th extract from letter to President Havenstein from Norman(enclosure to letter of March 6) March 2nd & March 3rd letters to/ from Sir William Goode (enclosure to letter of March 6) 5. 6. March 4 letter from Havenstein (enclosure to letter of March 9) March 3n1 letter from Paul M. Warburg(enclosure to letter of March 30) Strong Papers Key for years 1922, 1927, 1928: 06/15/04 ) = Document is in Papers but prior to now had not been photocopied and included in research binders [ ] = At earlier date, item was listed as present but no original or copy is now in Papers { } = Photocopy exists but original is missing ( With compliments from Sir William Goode. 9, e3tGee Gardens, Lon , W. 2. -,, be kept in mind that Austria has a particularly groat amount home market has taken a large part of the supplies. http://fraser.stlouisfed.org/ easily explained Federal Reserve Bank of St. Louis This is by the fact that the great masses of the goods require previous thports of raw materials. ilk ' But on the other hand, the above-mentioned invisible exports must be drawn into account too, and there is no doubt that some of the greatest Austrian industries could easily increase their exports by 50 and even 100 per cent. provided that the present lack of liquid capital and certain other hindrances can be overcome. It must also be considered that the first half of 1921 was a time when Austria first seamed to recover after two years of direct plight. At last the working clases could live on their wages and the value of the Austrian currency was still much higher than later in the year. Only in the second half of the year the Mark began to go down and finally collapsed which reacted on the Austrian currencies too and sent the Krona down from onehundredth to one-thousandth of its pre-war value. This, of course, caused new great privations to the people and it must also have strangled all imports not strictly necessary. The total effects of this tremendous fall in the currency do not appear in the above statistics which cover only the first nine months of the year. FROM SIR WILLIAM GOODE CONFIDFITTIAL AUSTRIAN LOANS AND LIENS The Present Position of Affairs. Austria received in February a loan of £2,250,000 from the British Government against the security of the Gobelin tapestries which had been specially released for such a purpose by the Reparation. Commission. Of this amount £250,000 was for the repayment of a British loan given five months previously. the loan is for two million sterling. In practice, therefore, It is for one year, renewable at the option of the lender for a further twelve months, with interest at the rate cf six per cent per annum. The British Government agrees that the Gobelins shall also be available as security pari passu for such other interim loans as Austria may obtain. (The Gobelins, if required, can be removed from Austria, but this is not likely to be requested. The valuation of the Gobelins by Allied experts is roughly about four million sterling.) The loan, which is regarded as an interim advance against the credits that Austria expects to raise when her assets are freed, is to be repaid out cf the first lean that Austria receives "without conditions." The only other stipulation is that the loan be used in support of the Austrian Krone and in carrying out the Austrian Government's self-help programme, the specific expenditure to be approved by a representative of the British Treasury. The Czecho-Slovak Government have also arranged to provide Austria with a twenty year loan of 500 million Czech Kronen, the equivalent of £2,200,000. roughly - The details of this transaction are somewhat complex but, broadly speaking, it provides for the postpone- ment of a debt of 214,000,000 Czech Kronen which Austria will owe to Czecho- Ciovakia by the end of March as her accumulated unpaid share of the inter-State railway traffic clearing-house. The balance, 286,000,000 Czech Kronen, will not become available to Austria until 2 ipthe Czecho-Slovak Government concludes negotiations for its own loan in London - probably April - and will be ear-marked for purchases that Austria must in any case make in Czecho-Slovakia. The Czech loan was negotiated previous to the British loan and the terms pro- posed were that it should have all advantages granted to an interim loan from any other Government, with specific security for the first year's interest, and, in the event of no comprehensive international loan for Austria being forthcoming by January 31, 1923, that Austria's revenue from the inter-State railway traffic should then be ear-marked as security for the Czech loan. The British Government suggested to the Czech Government that they should waive the question of these special securities and make their loan against the same security as the British, i.e. the Gobelins. When I left London on March 4 negotiations between the British and the Czech authorities as to a common security for their respective loans had not teen concluded. The French Government have also introduced a Bill to advance to Austria 55,000,000 French francs, or, roughly £1,140,000. When I left England the Ftench Government were hopeful of getting this loan through within a month. No definite arrangements had been made as to security but it had been suggested that the loan should be made on the same lines as the British Government loan. The Italian Government have also notified the Austrian Government that they will be prepared to lend them 70,000,000 lire, or roughly, £840,000, to be available on June 4. Up to the time of my leaving England no details as to the terms of this loan had been communicated. The Austrian Government, in agreement with all their political Parties, have just decided that the British credit of two million sterling and such other Government interim credits as may be received shall form a fund to be used exclu§ive13; for the purchase of Imp ANNR% V7-1 A,COPY ('F CAPLFGPA'f SFNT BY rip 77ILLIAv GOODI" TO SIP BASIL BLAWTT, TrvAviall, LoNieN, MARCH rorgars feel metters not sufficiently advenced to justify them in committin themselves in arr may tut in Irinciple they are interested in situation and desirous of hanaling matter here if tLey can satisfy themselves that propose:1 loan would to safe not, only as to Its rrecise sec,fity but in connection with permanency of hole Austrian situation. In event of five million aterlini., loan bein: arranged to conform to ti,eee principles, ':organs 4cula be moat halpy to ierticip-te ith the British group, composition to be satisfactory to tern and ter.r.s, of course, to le suci. as would be eccertable to both markets. 1 ier i1 :t Foreoin, of Ct.21SP, on assumption that hive been postponed before art.!, such loans are Rrrangea. Also that entire lroceeas of loans aoula Le evailable for constructive iurposes to be agreed u1 on with the lenaers and that reoemltion of recent or forthcoming advances by Elitist, aria other C.overnmente be otherwise Iroviaed for. Also thet both Austria ana Leooue of Notions you'd agree to such oupervision and control as lenaers mny consider essential. 7Torgars are cabiinr their London house to see Governor as to co-operetino lxitis/1 houses. Car I assume that these assurances of rorgans' attitude not meet the case? before any loar could be floated on 7-2 et :.ere t:exe must Le extensive 7opaganaa to dispel existing imiression that Austria is a ruineu country. Iefore sailing on 25th I hope to mnie arrangements for startinL this propaganda immeaiately liens are postroned, toerefoxe I am larticularly anxious to receive eeri: answer to tY,ia cable rarT.. ToUla you kindly communicate fcrevoing, which Morgans Leve seen, to Governor and Yranckenstein. GOOIT AIT7 FOTEL 41000PY Cr OAELvGRAV RFCFIVFL 1: BLACKFTT, T14.7qSUPY, LONLON, Ala GNP,' 1;PCM SIP BAra GCN!PNOh OF 'MY 1PTK OF rNGLANL, WARCh leerr Ilea-sure ffom your cable that J.7). Tori.ar Comrary ere in rrinciTle aesiroua of handling an Austriar loan after rostronement of liens shall have tear duly arranged. P3 !e ere not committed in an:,. Vt; to ary Parties in Lort.or, me a ,FLest that. "essra. J.P. Morgan ' Co. should make their on arrarFerrants for such co-oreration as the3 'nay desire, cut while Ne trerefore, tae no action in tLia connection, :e have reason to believe that other emisuaries than yourse4f are interesting njyarently on behalf of Auatrinr Government in the cv,ekition of raisine.; e loan. must leave it to you to ,judge #hether assurances you have received from J.P. "organ. t. Co. sill satisfy requirefrerts of your rrincirals in Vienna, aLa as to the question of iroyaganda. Coly of .I0U1 cable ar!o of this leyly are beini: Riven rienckerstein. k:NYY C CORI UP' CALLFGPIM Cl.la LY STN. rILLIIW GCCE. TO $IF LAVIL LLACY,FTT, TRFASUP, LCNION, VARCL 22nd, 1922. ^harks fcr telegram. Lamont ara Araer5on, I hove ai-cuseed matte], Errive Paris midale of Airil ard :411 to Lica to continue converstionJ there anti later in London. advisinE; fustrien Government to await theii arlival. Cearic 25th. I am I sail Kina4 communicate to Governor and Franckenateir. CCCLY IF CONFIDENTIAL FROM SIR WILLIAM GOODE AUSTRIA'S On the assumption t Austrian assets will, in the discussions have been taking loan or loans to be raised on The majority of th London and Vienna appear to f not to exceed five million st and American issuing houses, other European groups. The r would be the security for int would be experienced in arran of the lenders, of the Custom supervision of Austria's fina vital to their interests, tho of the League of Nations woul The value of the Customs rece justify the issue of a larger well-informed authorities as and Mr. Keynes strongly urge five million sterling. It ha further issue might later be when, in the judgment of Trus say by four times, the additi option to Austria to redeem t (There are those who believe, Austrian lank and recently Fi Government, that 10 million st Austria on her feet.) 2 for the months January of this year, which was rather below the monthly average of 1921, $even million gold Kronen would result. Assuming that the revenue of January was maintained throughout the other eleven months of 1922, there would be an annual revenue roughly equivalent to $16,800.000. However, when the Customs are raised to a gold parity basis it will doubtless be necessary, in certain cases, such as fundamental industries, to reduce the tariff and also to make allowance for a decrease in general imports. Assuming that the gross receipts decreased by one half, which is improbable, there would still remain a revenue of $8,400,000, less administration expenses calculated at 6.1 per cent, to cover the service and sinking fund of a loan not exceeding, say, $24,000,000. Austrian Trade balance. The latest Trade figures available give the imports and exports for the first nine months of 1921 but by weight only. The Austrian Ministry of Trade, however, has made an approximate estimate of values on a basis of Ire -war prices in gold Kronen. From this it would appear that the imports for these nine months amounted to 1137 million gold Kronen (roughly $227,000,000), and exports to 726 million gold Kronen (roughly $145,000,000), the deficit being 411 million gold Kronen (roughly $82,000,000), or about 36 of the imports. Yguo Slavia could only cover one-third of her imports by exports in 192o and only about one-half in 1921, whereas Austria, under much less favourable conditions, has now been able to cover two-thirds of her imports by her visible exports. It should also be remembered that in these estimates one of the most important factors of Austria's existence, namely, her invisible trade, is not included. I shall be glad to provide, if desired, an analysis of these trade figures which has just been drawn up for me by Dr. Friedrich Hertz, one of Austria's foremost http://fraser.stlouisfed.org/ economists. Federal Reserve Bank of St. Louis 5 Food Subsidies. Government food subsidies in Austria have been reduced to practically nil and will be totally abolished by the end of April. Food supplies, xhich hitherto have been responsible for about half of the Budget deficit, will from then on be provided through private enterprise. Krone Circulation. At the beginning of March of this year the total Kronen circulation amounted approximately to 260 milliards, or the equivalent at the then rate of exchange (6,200 Kronen to the dollar) of Quantitatively, this amount of currency at this about $42,000,000. external value is insufficient for a country with Austria's population and trade. A rise in the value of the Krone would, of course, remedy the quantitative deficiency, but as most authorities estimate the internal purchasing value of the Krone now to be in the neigh- bourhood of 5000 Kronen to the dollar, as opposed to an external value of 6,200, there is not much margin for an immediate rise in value. Sudden improvement beyond the internal purchasing value would create new economic difficulties and is generally agreed to be unwise. The general assumption is that the present British and Czech Government credits and other possible Government credits, in conjunction with the Austrian Government's endeavour to b&lance the Budget by increased taxation and internal loan, will automatically keep the Krone somewhere in the neighbourhood of 5000 to the dollar, that is to say, that the internal and external purchasing power will gradually be approximated. When the consequent readjustment in industrial and economic conditions, particularly as regards prices, has passed the critical stage and when the permanent foreign credits have been arranged, stabilisation can be effected by the agency of a new Bank of Issue. AUSTRIAN IMPORT CUSTOMS REVENUE 15 APPROXIMATE COST OF THE; CUSTOMS BRANCHES ADMINISTRATION IN 1921. Total for the yeaf of which Nov. and Dec. 1921 accounted for 1921 Kr. Expenditure on staff " material Kr. 445,000,000 190,000,000 52,000,000 30,000,000 507,000,000 220,000,000 APPROXIMATE COST OF THE CUSTOMS CEiTTRAL ADMINISTRATION IN 1921 Expenditure on staff " material 194,000,000 82,000,000 42,000,000 20,000,000 236,000,000 102,000,000 APPROXIMATE COST OF THE CUSTOMS ADMINISTRATION IN 1921 743,000,000 322,000,000 6 ! ANNEY A Coftrreau, Seaaion. P. BPS. 1(.:0 IN TFY liCUb (F NTATIVT.T. :lard. 16, 19f;,, Peferrea to the Committee on 14,&;:13 anu ,;eanki. JCIFT P-FOL!! "'TON the extension, for Authoriz ink jeric.: of not to exceeu twenty- five .eara, of the time for the ya:/ment of ti,e jrincliel and interest of the nett incurri,a L;y ALAsitliS for the j.urchabse of flour from the United State,i Grain Corroratior., aru for other ruryoaea. Yereas the economic structure of Aut:tris ia ajjlonchini, collajae anu great numtera of the leojle of Austriv ale, in conseTence, in imrrinent annvei ol stnrvation anu ttrettered 1.; alueaseJ ou-- of extreme jlivation arc: starvation; and 7-heren., t:ia Government ii.ea to coorerate in relievir Austria from tLr, iwnediate luraen cieated Ly her oututaaiinE dente: Therefrre be it 1 Pesolved ty the Senate aru llowse of Relresentativeu of the Unite- Statea ol Afnerico in Conil,lea,s tdauetiesa, That the Eecretr:; ci Treaaury iz; vutLoTizea to 4 extra, for P leriod not to exceed twent-five .esru, the 5 time of lonyment of the ilinci)111 ana interest of the debt =IP incurrea by AuLtria fox the purchase of flour from the United 110States Groin Coiloration, anu to release Austrian assets pledged for the layment of such loan, in isole or in part, 4 as may in the judbment rf the Secretary of the Tieusury be 5 neoesser; for thf, accomplishment of the purioses of this r.. resolution: 7 other creaitox nations, to witc E' France, Greet 4ritain, Greece, hollund, Italy, Nolway, Provide, however, T.Liat substantially ell the Czecnoslovakie, Lenmork, r.imania, F!:;eden, Vmiteerland, an Yut:oslavia, snail take 10 action ,:ith retard to ti,eir resiective u.kaims against Austria 11 similar to that herein set forth. 1P Treraury shall be outhoriseu to decide when this poviso has 17 beer substantially co 'lied with. The Secretary of the T'essed tLe Senate ttarai 9 (calendar div, ''arch 15), Attest: GYORGY A. SAN1s7PFr Secretary 1. M. RCSv, As3istant Secretary. 416r,, FIT. -iLLIr- GOUT. IfFeCRANLUV MATTING A"1-T:CAN VISIT. 0111.111111/11001111111.11111.1 Postponement of Liens. Lodge Peeolution. The Lodge Teaolutior, aa eacsed Le tee Senate (for Lext see Arnex Al author/Rif.) the Fecretare of the Treasury tc extend for a reriod not to exceed 25 ;gears the time of Ieyment of the Trincieal and interest of the Austrian aett of tee! ,055,70E.92 Trovidine he aettsfies himaelf that "subetantially ell* teoae other creditor nations mentioned in the F:eaolution hnve "substantially" taeen action similar to that outlined in tne Lodge Resolution. The Resolution ooee not enive interest. The interest acceuee. The resolution includes no unuertaking to poutione a losaible claim by the United State* for re,aration. I discueaeu this roint both at the State Leyartment and at the Treasury end ceee to the conclusion that it hic no eractical or. other imeortance eu, if the existing triorities are retained, no eaymonte on, account of reparation car Le merle to an country until the 0 ,ears eoeteonement of relief loena has exeiree. Procedure. Lepertmental views in -auhin,ton as to 'what erocedure should le tp*f.,.. fter the Lodge resolution had beer Tassee both by the Senate end the House, were indefinite. The Treasury seeeee aomeehmt inclined to think that the United Stetee could not move until Austria bad give an aesurance that ell the other Powers had substantially arreed uro unconaitional rostponement for 20.-eears. oirtea out, evert these aseurancea must-first be Oven to the e, clone are entitled release Austriee seats. that in el ny ,tior. Co meiaeion After con traatione *-4te eariouo officiPreaee in the state repartment, all of vhom `te eindliest arxiete- tc eeeedite matters, I advlsed Vr. Prochnie, the Charge d lAffaireo at raehincton, to write to the Secretary of State as seen ee the Lodge Resolutior Lad taeaea the Louse and reluest Austrian .r els early action ty the Secretary of the Treaeury. I ale' advisee iklchnik to submit a list of those Powers that had elreee ri.. aereee to poatione and to communicate the conditions of such 1;oat1 onement, namely, the Lonaon eereement of Uarch 17, 171,1, Letneen the Governments of Great Lritain, 'Fleece, Itel:, snd Jelar. Priority of relief over reiareticn release by Americo. - This agreement Treeervee the a condition ixecedent to any I further sueeeeteu to :r.. Prochnik. to in lude in hie note a releest that the United Staten Government inform the PeTaration Commission of ouch action 1143 it iroeoeed to tape and also that the Austrien Government be informed au to cry exchange or alteration of bong a es might ellear necessary- to the United Statee Treasury. The Unite() States Treasury seem irciined to teink the "bw Felief bonds muet be changed. If that vies is correct, all countries holding "L" Austrian Lends .till aluo to entitled to exchange them. A resolution L the Reearation Commission recerdine the consent ef n11 the Powers rflreeented on that touy ird of ticee neutrals eno 1-reviously anointed the Commission as their Trustee for relief loans, mould seem to be all that is necessary 'to roeteonement and release, exlvet in the case of the United Statee. Au the:, are onle unofficially relre- sented on the Commiesicn and as they also :elve a Treaty of Peace ireotly concluded with Austria, it sill erotably LP necessary for the United :Mates to exchange nit:, 'e Austrian Government selarete aeeurences as to poetronement, in eodition to unofficial larticiration in release of assets by the Peearction Commission. before I left Washineton, the British Char d'Affeireu and te. tuatrian Charge d'Affeiree had, at ee suggestion, telegraied to tee 3 Active Government,; aekine for the leteet definite information o' sech atieuran au hr- Leer officially received from the va-ious countries regarding d'Affeiree very kind illenquiries to Vr. Pr lad beer imeosaitle ement of Austrian Tiers. The British Charge seunioute the result of his Taint in Taehineton that it attitude of soma of the Statements repeatedly punished, Governments towards poatponeent. ilarently on the authority of LeaLue of ilationa officials, had been found to be consistently untrue. At the time T left Washington, the State rerartment alrevred to be doubtful as to th.e ultimo to consent of Yugo Slavic and Roumania and to te in some ferilexity se to vhether the Italian and Creek agreee'ents 3ere unconditional. TrusteeshiT. I aulsea, Loth at the State Lerartment and at the Treasl-ry, --that the wishes of the United States eere likely to le recardin., for the suspended lien interest and tte new joint or other. Trusteeel,ii loans. I a mat) told that no oiinion whatover question was raised in mare lractical form. was exiressed in DepartTenta Le exrressed until .the definite oajeetion circles to a Tiustee being noinated by the League of Nations, it was fainted out that it was quite impossible at the Toment tc any Aliether or no to such a rrorosal. It was sul,-).ested by a Eenatoi -rho is in close touch .vita the Advninistration anu an the United States would be ak,reeatle severa ctners that 1:.e pos6iLilit:x of difference in views 86 to Trusteeshii mii_h1 Le oiviatea if the Trustee .?:ere a tinted in consultation with the 11..._.not 1- the Lea - ue of Nations. It ;E!.3 em hasises that1 in ari. evert, Austria's assets at the end of 20 ,ears would at,a11- revert to the Re aiation Cotpmision League of Nations would nd that a Trustee nominated t- the ae facto, only be 711..stee on i.ahalf Of the ,FerTrption Corrimier...4.Ir2-;refLILLczconsicleratia It was, of course, recognised that the Unites States, equld, . if it so desired, apioint its o-n Trustee for its on suspenaed interest, for instance, the American Ministel in Vienna, Jut it 49t. Lererall felt that a Tultirlicetion of Trustees would to unfortunate, Tartieularly if new loans were to ie partly subscribed by the Amertcart p4bli yrorosr'l to flont such loans in the United S ates aryrovel of the erashirgton AdTinistretion. . tie ovtllete The ji 'TT" LOAU ;Ban's Attitude. Discussions reoirding the new loan are epitomized by my cablegrams of ''arch 17th Frna ':u.roh 22nd (Annexes 1r and C). no aoutt in organ's mind as their ability to tr7 There is eel half of a five million sterlin6 loan for Austria in the United Etates if they think it wise to do so. It was new and actuall startling to them that Austria was in r position to make an alleal to the public except ad misericorcitm. Morgans, if ',hey pursue the project, mill desire to satisfy themselves by investigation on the slot as to Austria's ability eventually to become self-supporting. ':'organs dia not feel that matters were sufficiertl far advanced to uiscuss details as to the term. or interest and sirking fund of the loan. Au re6ards the TrusteesAI, Anderson, of :.r.organs, offhand emiressed the view that tl',e appointment t the League of Nations of a Trustee who would also be the nominee of tie lenders would to socertable. But the point was met on into clo3ely. ?Sr. Lamont was of the opinion that nothing; more ccula Ye done until he arrived in Paris on ATril agreed. Fumours that the Austrian Government sere conduct other negotiations in London, of which I Lau nr.t been notified, made it imrosaible for me to take any other course. If t:pse rumours are confirmed "Vorgans, quite Iroperly, ail l have nothing mo7e to do with any Austrian loan. IngE.1-aliaLLEaL" both in New York and unconnecte ashint,ton I was advlsed by ola friends .with and ever oosed to organs that it was of the k,reates importarce to secure rorgan's influence for Austria's first attemit to establish cxe it in kreiica. derelict. There Austria is rearded as a horeless Practically, the on1;,' news that aylears in American: newspoper atout Austria refers to American relief Norf. or to tine Of the country. .oleles3 conditi The retort of the ',Inance Committee, or the strength of which the V.enate unanimously aliroveu the Lodge Fesolution, as 5 leased on a. Flea to avert starvation in Austria ahici.. was icacribed as 11161r& .riolet then ever. 7o correct such impressions sr fficiertly to raise e loan, the biggest financial guns must obviously- to brought int( action. As k% cc-oerating, force I /lave arranged *vita friends influence yublieity - for nd to Austria's aelf-telF her financial rouse in . Loover's tmerican relief f tue fact tnat A7erican ;,ear. 'his will visualise nything else, that itute county; . rs other than itiorgana, s of Kuhn, Loeb k Company, ew )ork, althoueh resulting ar to preclude fre from question of an Austrian mpany was slightly different. een aiscussed with their e unseretanding that they nty Trust Company sill, organs in the I evert of t :e deral Reserve Lank, to ahem gana (Annexes L and T.) trd ived and tient, expressed Austrian loan. A.s re arda that there should to ti 1) t hate for an American banker in the Trusteeship in the event of the Trusteesbit not being delendent on or involved Ath the League of :iationsf Or 2) If the 77.1:ateeship were in the hands of the T-eague of rations, that the Americer bankers interested Shoul i hive t voice in the approval of the ap.ointment. As reards the iroloses Austrian lank of Issue, Governor Ytrong. was of t: ,e oiinion t;.at t efore the loan under discussion was arranged, a scheme of control for such a Lark, :Aving reasonable autonomy should be egreea between the Austrian icvernment and the lenders. :.vred the view that the lank. of Fie Tesue sheuld only be established as end tfer, toe concerned were agreed, but laic: 3tress u!on the desirrillity of the rlans for it being arranges; in advehce, lartics.iarly with f. view to divorce the Government, an far es Icesitle, from the issue of crrencyJ Governor Strong tido asgi,estes the uesirability of an understanaing at sr eerly stage tet-aeen the lenders of the ne:t lour and the Lritisn, Czecn, or other Covernmtnts who might hve made interim advances to Austria, M4 to the jaiciities of ti.eir repIective loans. his view was that if Austria, et a later uate, issued loans to pa3, off existing interim Government credits, such loans should be either wholly GovernTent or wholly private loans and that in any event the arrangements for the repayment of these interim Governmert advances should Le clearly defined -refore an Americar housn issued an Auatrien loan. Governor Strori, I think, oonziaered my Austrian 0-olossl as an example of the iractjcal -ay in which to er.liet the co-operetion of United States in re-establiehing economic equilibrium in Furore. Or these lines American cankers mere 4L1 to willing to &e t, tOt he pointed out that if American co-oierttion were really desired, it ,vas moYe likely to be olt&ined if American iarkers -!rere erprcached simultaneously instead of LIfIer committment hod definitel.) beer rrade with aome issuing house in 7uroke. (m) March :Xi 19:2. rILLIAv GOODS A INTZZATIGYAL CONFEREI;C:.:. M. Foincare's idea is apparently to propose an arbitrary reduction of the reparation liability cn condition t'_-at (a) the French share of reparation is increased by the recog- nition of a priority for material damages. (b) interallied debts are written down or written off, (c) material security is given by Germany an close allied control established over German finances. ';ossip credits 1.!i- with being prepared for 1 reduction to 40 milliards gold narks provided Great Britain will forgo her share of reparation altogether and cancel the inter-allied debts ovIng to her. The objections to this policy are (a) The arbitrary fixation of the Gernan liability at any figure which -61-e French would be willing to accept would not now advance a settler..ent. Germany would default in respect of the reduced obligation at a very early date and Great Britain would be then committed to coercive action with as little prospect as ever of such action producing financial results of any value. (b) We should have sacrificed our share of whatever it may prove possible to extract from Gerrany and abandoned our claims in respect of inter-allied debts for ro advantage whatever. (c) We should -aste a good deal of time in vrangl'ng with Germany over securities which if we obtained then would prove useless and obtaining controls which would not work in practice and for the financial urproductIveness of which the Allies themselves would be responsible. Until the mark has been stabilised, budget equilibrium established and German internal credit restored, it is no good trying to fix a reparation total, Until we 1-now how much can be recovered from Germany it would be premature to declde how it is to be divided. Until Until we know how much France will recover it is impossible to say what concessions are required in regard to interallied debts. It is suggested that either the Reparation Commission or the Allied Governments should appoint a Corly7'.ttee of Bankers to formulate a plan for stabilizing the mark indicating clearly the concessions on the part of Germany's reparation creditors which are necessary to its success, and that tho proposed conference sl,ould not be held until this report has been received and considered.