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The International Financial Conference held at Brussels in 1920, appointed special commissions of its members to make a detailed study and prepare
specific recommendations with regard to (a) public finance, (b) currency and
exchange, (c) international trade and commerce, and (d) international action
with special reference to credits. The recommendations of these commissions
were unanimously approved by the Conference, and in addition to being published
in full were smimarized in the proceedings of the Conference (Vol. I., pp. 7-11),
as follows:
General financial considerations

The first step is to bring public opinion in every country to realise
the essential facts of the situation, and particularly the need for re-establishing public finances on a sound basis as a preliminary to the execution of those social reforms which the world demands.
Nearly every Government is being pressed to incur fresh expenditure -largely on palliatives which aggravate the very evils against which they are

The country which accepts the policy of budget deficits is tread-

ing the slippery path which leads to general ruin; to escape from that path
no sacrifice is too great.

The statements presented to the Conference show that on an average some
20% of the national expenditure is still being devoted to the maintenance
of armaments and to preparations for war.

The Conference desires to affirm

with the utmost emphasis that the world cannot afford this expenditure.
Only by a frank policy of mutual co-operation can the nations hope to regain
their old prosperity, and to secure that result the whole resources of each
country must be devoted to strictly productive purposes.

The Conference

accordingly recommends most earnestly to the Council of the League of Nations


the desirability of conferring at once with the several Governments con-

nerned, with a view to securing a general and agreed reduction of the
crushing burden which, on their existing scale, armaments still impose
on the impoverished peoples of the world, sapping their resources and imperilling their recovery from the ravages of war.

The Conference hopes

that the Assembly of the League which is about to meet will take energetic
action to this end.

It is also d the greatest importance that every Government should abandon at the earliest practicable date all uneconomical and artificial measures which conceal from the people the true economic situation.
To enable Governments, however, to give effect to the principles of
sound finance all classes of the community must contribute their share.
Industry must be so organised as to encourage the maximum production on
the part both of capital and of labour, as by such production alone will
those improved conditions of life be obtained. which it is the aim of every
country to secure for its people.

All classes of the population, and par-

ticularly the wealthy, must be prepared willingly to accept the charges
necessary to remedy the present situation.

Above all, to fill up the gap

between the supply of, and the demand for, commodities, it is the duty of
every patriotic citizen to practise the strictest possible economy, and so
to contribute his maximum effort to the common weal.

Such private action

is the indispensable basis for the fiscal measures required to restore public finances.

The Conference moreover strongly endorses the declaration of the
Supreme Council of the 8th March last "that the States which have been

created or enlarged as the result of the war should at once re-establish
full and friendly co-operation and arrange for the unrestricted interchange



The effect of it teas been to intensify, in terms of the inflated cur-


rencies, the general rise in prices, so that a greater amount of such currency is needed to procure the accustomed supplies of goods and services.
Where this additional currency was procured by further "inflation" (i.e.
by printing more paper money or creating fresh credit) there arose what
Las been called a "vicious spiral" of constantly rising prices and wages,
and constantly increasing inflation with the resulting disorganization of
all business, dislocation of the exchange, a progressive increase in the
cost of living and consequent labour unrest,

It is highly desirable that the countries which have lapsed from an
effective gold standard should return thereto,

It is impossible to say how

or when all the older countries would be able to return to their former
measure of effective gold standard or how long it would take the newlyformed countries to establish such a standard.

But in the opinion of the

Conference it is useless to attempt to fix the ratio of existing fiduciary
currencies to their normal gold value.

Unless the condition of the country

concerned were sufficiently favourable to make the fixing of such a ratio
unnecessary, it could not be maintained.
The reversion to, or establishment of, an effective gold standard by
any means other than devaluation would in many cases demand enormous deflation, and it is certain that such deflation, if and when undertaken, must
be carried out gradually and with great caution.

Otherwise the disturbance

to trade and credit might prove disastrous.
The Conference does not recommend any attempt to stabilize the value of
gold, and gravely doubts whether any such attempt could succeed.

It believes

that neither an international currency nor an international unit of account

would serve any useful purpose or remove any of the difficulties from which


exchange suffers today,






system of "finishing credits", that is to say of credits under which a lien


favour of the exporter or a banker is maintained on the raw material in

all its different stages and upon the proceeds of the manufactured article.
The Council of the League is recommended to draw the attention of the
different Governments to this question and to summon an advisory body of
legal experts and business men to specify the legislative action needed to
attain the desired object in each of the countries concerned.
Miscellaneous proposals.

Apart from the above-mentioned proposals, the Conference believes that
the activities of the League might usefully be directed towards promoting
certain reforms, and collecting the relevant information required to facilitate credit Operatiohs.

In this connection the Conference considers it well

to draw attention to the advantages of making progress under each of the
following heads:

Unification of the laws relating to Bills of Exchange and Bills of

The reciprocal treatment of the Branches of foreign Banks in different

The publication of financial information in a clear comparative form;

The examination of claims by the holders of bonds the interest on which
is in arrear;

An international understanding on the subject of lost, stolen

or de-

stroyed securities;

The establishment of an international clearing


An international understanding which, while ensuring the due payment by
everyone of his full share of taxation, would avoid the imposition of double
taxation which is at present an obstacle to the placing of investments







E.F.J. 102.





Pe -e


Report of Fincroial Committee




Extrnot from Minutes of London Meeting with
Lustrian Pinancial Delegates, and
Declarction of Allied Powers 17/3/21.

Reply of Financial Committee to the .Supreme
Council with covering letter from the
President of the Council of the
League 4/4/21.




Decision of the Council of the League of
_Nations on the Provisional 7:.conomic &

Finencial Committee's Report on the
International Credits Scheme 14/12/20.






FI1T211TCL.L C01.2.T.ITT24.T3

:=0:),T ON TIE :E3T02.:. TI


:1113T l'LIA

Financial Co.lmittee have the honour to c7ive


their definitive re:cly to the recuest addressed to them

by the Supreme Council of the Allied Powers on the
17thI::arch lest. (see Annex I, i?ago 10).

A provisional reply was sent to the Supreme Council
by the Prc-sident of the Council of the League of Nations,
on the 4th April lest.

(see Lnncx II, page 16).

Bolero proceeding to their substantive rroposals and
the programme nut forward by the hustrien G&Vernment, it
will be convenient if the Committee recall tho substance of
this reply,

greJing to lend their services in the manner desired,

the Committee insisted that en essential preliminary to the
restoration of :lustrien Finances was the fulfilment of the

two following conditions which aro within the competence of
other authorities:-

(2) the sus:ension, for e period of

et least 20 tzenrs,

of the lions on Austrie.n assets in respect of reparation and

of relief credits; and

(b) the adotion by Lustrie herself of the most stringent
measures for the improvements of her internal financial situation.
4o4 The Committee also urged that immediate and effective
MCCSUICS should be taken for the removal of tr:de bcrrir:rs between
Lustric dnd the Succession States;






They desire to emphasise the -paramount importance for tho suecoss

of this programme of the cossetion of additional issues of notes,
and they are of opinion that, once assured cf foreign croaits, tho

Austrian Crovornment must forthwith, oven IDefol-c tho commotion of
nternal loan, take such

,to cheek the foci of
daily more

has of fared.

owing: customs

and from forests,

d in addildon

l be open to


justified in

oial prosperity

in all °ems, the

oses to taho in

ch it refers,

on by cir,,um-

sire to uosor7e


eport with the

y are satisfied

rise, by tho

rvations on







-12havo s hovm so much in tore gt. t""'r, Me-orrt,,,Landorr-Corrro ronoo

in the pr.osont plight of ilustria, showing that thoy undorstand
thL t it will not bo possiblo for ustris to ',set on to her
foot by herself,
Our srecial thanks aro also duo to the British ovornment
and the British Nation for the excellent recontion which
have received. in London.

Your tlxcellency, I can say, on

behalf of the failed Powers, that wo will do all in our pa7or
the matto::s
to socuro decisions as
which ore oi-)ened by tho resolutions to which we have come.
be avoided..
There will bo no d clay that
I have only to thank you, Dr. Idsyr, for the kindly way
in which you have spoken of Ely cou !try, and to expross

hor.o that the results of your visit horo and of the Conforoncos
which have been held may

be fruitful for Austria and the ye aoo

of the v:orld.
again, and I am fall
Dr. ivani:- I wish to thank you
of hope and trust that what you have said will cone truo.

2, Whitehall Cordons, B.. el.
March 17, l521.




E.F.S. 47





C I: L

Qi f i I TTE:

Lotter fral tho "Zrosidont of tho Council of


Lc,cgue of ITations.


R I S,

April 4, 1921.

During its 1::st mooting in Iondon, the ,IrJrocao Catncil

somo to z decision, which was forwaraed to tho ,.ustrin dolo-

gation on March 26th, with rogcrd to the rostortion of
Austric's credit.

In this docision the .,11promo Council ol-,::rosscd the
Committoo of the League of ii: tions

d: sire thzt the

should moot within the following fortnight, oxc;_lino the
financial situation of -ustria.1 and_ sock norms of romodying

Comittoo alt in 2:ris from ilcrch 28th to



.t tho conclusion of its Session, it adopted the text

of the roply}bwhich I havo tho honour of sending you hcrarlith.

the sem -Ulm, I am roquastins the ,ocrotrrict of
tho Ioague of 11:tions to be so good cs

to -)end conics of this

document to tho btatos :Dombors of tho Icaguo.
I h:fve tho honour to bo, ate.,



IrJsidont of the Council
of the toL-gue of nations.

The 7rasid.::!nt 3f the

Su- re:lo Council of the _Thos.




















e scheme for international commercial
of tl


Session of the



scope of this scheme, the principles

sation and the method contEmplated

the nature of the responsibility

-Jork of


International Commission

pointed out that the International

ot on behalf of, but under the control


it would have to be clearly

LeaTue did not undertake to give any

ative guarantee.

He observed that the

d guiding ideas, to be developed and
light of experience, and tlat,if these

- 21-

- 22

principles were approved, the scheme would not definitely
bind the Council.

After the preliminary work of the

"Organiser", whose appointment. the

Council was asked to

authariee, the irovisiena :Jeenomic and 2inancitl
would reamiear before the Ovancii,
probable, it

ce.;2d propeee


If success then seemed
Council the appointment


of the rateTEational Commiseienu

condition that the

could no

unreservedly accept the

International 3ommission should be composed

;olely of bankers and business men.

Ho feared that the method of administration proposed for

the guaranteesmight apper to certain
infringement of their rights.

States to imply au


States would consider

that their prestige was being injured by having to submit

the guarantees demanded to the administration of an
International Comelission.

Hereover, this system might render free international
credit more difficult for the

States which refused to accept

this su-9ervision.

replied thet the schema was pi,,rtieularly intended

for countries which were impoverished, and which needed the
moans for obtaining special credits;

and thati moreover, the

method of administration proposed for the guarantees would
in no way infringe the sovereignty of the States in Iuestion.

enquired whether the powers to be given to

the Organiser or to the Pinancial

Committee would enable a

definite transaction to be carried through, since it was most
imrortant that fne execution of the scheme should not be
delayed oJing to the necessity for first calling a meeting
of the Council.


It vi .s onplcined, however, that tho Committeo did not now zsk

for the f.11.00intaont of the ContrA. Commission, whioh alono would bo

guclifiod to

ssoss assots 1172d.Jr the soliome, but thct ii promising

noaotiztions weSro in trA.n the

.conomic and ::inancial Committee would

csk for the 'nomination of the Commission to bo

:t the no : :t Council

Moo tins.

Mr. BL POUR nskod whether, as c question of rrinciplo, the provision
of tho echo= could be cocol)tod which laid down (in ,)cragrzph 6 of
Limo= lib of the 2oport) thz.t the ziothod of the cdministrativo guarantocs

for international credits would be decided by "tho :lajority" of the

replied that the docision of the Council in this matter


would, logelly swaking,be similar to the docision which c (court might
tako with rogcrd to the administration of the property of c-ward, and
thct this docision could, thoroforo, be brought into lino with the decisions with rag-.rd to pr000duro, 'provided for in Lrticlo 5 of tho
POLITIC; observed th:-t tho work of tho "Organisorn in :Itoparing

for the aurlication of the schema Would covor c very wide field, and that
ho would hr.vo to be givon ofioctivo moans.

K. _TOOL ropliod thc.t, under the terms of the scheme, this Organiser
would bo assistod by the :;oonomic and

Sootion of the Soorotariet

of the Locguo, which actod as fAcrotarict to the Provisional rinanciel
r.nd ,00nomic OOmmittoo.

Mr. LIYTON. Director of tho .aconomic Woction of the Seavatarist,
added thct' the onpondituro which tho appointment of this Organiser would
involve/ in the first instanao,bo mot by an advance( upon tho credits sly
randy allowed for in tho budget Ci the Ilez.guo, but thaViltimatoly if the

schono Succoodod tho cost of administ:ation would bo mot by a small

porcontage charge upon the funds Volt with.


asked that the powers-of the Organiser

X. LEON 3OU3.0-1.1,0IS

should be limited.
The terms of the

Scheme stiptlated that, after the

preparatory wo ric had be en com-fleted., and

justified.., the work of

..:ommissiort seemed

of an International

until the institution

preparatory end wiauld. become
the Organiser wo.c..1d case to be

He woull lucTe to open .negot5.ations for


brisif.nAiss whioh. could subseauently be undertaken


but however


by the Inter


would be a business man,

01'f:7.1171:Le er

g...1?,a.t tie confidence he enjoyed., it would be

imprud.ent to give him, even

temporarily, 'the responsibility

for the purpose
of ir:volving the Commission in negotiations

°I:en:J.11g credits,

He theregore proposed in this

per to undertake. obligutions, and.

preparatory period.

powers aaid. (.1.1-/n

the afxrinistrative

in paragraph. 3 of Article CT

of Annex 23 of the veh MO 2 should. be expressly
Pro'risional Economic and. Fincl.ncial Committee,
su.1.1n4t-ted t o

3,, which

reserved for the

pointed. out that tie taimu of the Report
Corlacil ciyastitt..1,ed.

merAly a preliminary

s a whole 9eould. not be definitely ap:c.Toved by

dered it art icle by art ic le .
the Council at ono e, unless they c, nsi

H.e asked that -lie Council should confine

appointment of LI°



the latter had made his

rd Financial
er airy, the r:colrisicnal Benno-xi c a

submit a

Committee would

3.1-Az.7-.: ode ;)onto


LEOT said; that the Clouncil were only


dealing with/y:01 imInaly &ohmic.
the moalont, the

only QUI': .9 "i;:LOY.1

appointrk.,:at of the OrLaatsa:z.

The final diaaustdon would
r&e.d.e his enquiry.

not tali plane until the

to authol-..ising the


thZ Civr_znai.1 to


decide was the






therefore recommend. that the Council should adopt

the following procedure with a view to plying practical effect
to the scheme as soon as possible.
(i) The Financial Section of the 2rovisional Economic and
Financial Committee should be at once authorise(' to secure the
services of a, competent business man of high
to act as
Organiser of Intern-,tiona,1 Credits contemplated in the scheme,
who shall have the authority to engage such assistance as the
Committee may approve.
If necessary, the Organiser mi7ht be in

receipt of a salary from the start.
(ii) The Organiser, in consultation with the Committee,
which shall be represaited for this purpose by the Chairman of
the Financial Sec tion, should
(a) prepare a constitution for the Intern:...tional Commission:
(b) work out the details of the scheme in all its bearings,
including the preparation, with legal advice where
necessary, of forms of bonds, pledges, etc.
(c) consider hor far the scheme can be worked in conjunction
with existing services in the various countries,
international or otherwise:
(d) make enouiries how far borrowing countries are likely to
avail themselves of tie scheme: and.
(e) advise on the executive organisation required, with an
estimate of the cost thereof, which, if the scheme
eventually becomes effective, should be covered out
of the ::.roceerls of re,,f,sonable charges for commission.


On completion of the work outlined in (2) above, if it
is not a4,parent - and until it is apparent - that the setting up of
an Executive Committee Organisation, with the attendant expenses,
would be justified by the then existing demand for creits under
the scheme, we suggest that:-




the Organiser Laculd be etapowered to carry out
temporarily, under the sape7rvision of the
Finance ,ez-',tion of

P-.:3ional Economic

the ;.:..hcrao


all:Lission as It my be necesr.ary to perform

of the Finance Section, with expert


as far as may be reouired, should also be

Oaccd at the disposal of tle Organiser, fur
temporary performance cf the duties
assignee to the Executive Organisation.

Nonmber 34.'Ah,



E. F. S. 95.

A. 58.


Societe des Nations
Commission Economique et Financiere provisoire.




League of Nations
Provisional Economic and Financial Committee







1. First memorandum of Delegation, 23'4/21
2. Second memorandum of Delegation, 25/4/21
3. Third memorandum of Delegation, 28/4/21
4. Press Communiqué of Austrian Government, 30'4 21
5. Austrian Government's reply, 9/5/21
6. Annex 1 to Austrian Government's reply
7. Annex 2 to Austrian Government's reply
8. Declarations of political parties
9. German original texts of official texts 4, 5, 6, 7 and 8









A l'issue de sa reunion a Paris, le Comite financier de la Societe des Nations
adressait au Conseil de la Societe des Nations une lettre, dont extrait suit :

« Si la situation de l'Autriche necessite assurement dans le plus bref Mai possible, la realisation d'emprunts et de credits exterieurs, aucun concours utile, soit par
remission d'un emprunt exterieur, soit par rapplication du systeme des creditsinternationaux de la Societe des Nations, ne saurait lui etre immediatement apporte, tant
que le Gouvernement Autrichien lui-meme ne sera pas dispose a prendre les mesures
les plus urgentes pour l'assainissement de sa situation financiere.
« Les mesures suivantes sont indispensables et doivent etre entreprises sans delai :
« i. Emission d'un emprunt interieur par souscription publique pour
couvrir, en tout ou partie, le deficit budgetaire actuel, et permettre ainsi de
limiter l'emission du papier-monnaie ;
« 2. Reduction aussi prompte que possible des depenses budgetaires, particulierement des depenses de subsides et de personnel;
« 3. Utilisation en Autriche, pour les operations d'emission et d'escompte,
de l'ancienne organisation de la Banque d'Autriche-Hongrie ;
« 4. Affectation au service des emprunts et des credits de gages accept& par
le Comite Financier.

« Parmi ces mesures, la realisation immediate d'un emprunt interieur est, de
l'avis du Comite, la condition prealable essentielle a remission d'un emprunt exterieur.
« Des maintenant, le Comite prend les mesures pour recueillir les informations
necessaires en vue d'une prompte action. »

Ces mesures consistaient dans l'emploi a Vienne d'une mission composee de
M. J. Avenol, Sir Drummond Drummond-Fraser, M. E. Gliickstadt.
Arrives a Vienne le 15 avril, les Delegues furent present& le lendemain au President federal et aux Membres du Gouvernement. Mais avant de prodder aux conferences officielles auxquelles ils etaient convies, ils exprimerent le desk de s'y preparer
et de recueillir d'abord, sur la situation economique et financiere, les informations qui
leur paraitraient necessaires.

Tel que le probleme avait ete pose par le Comite Financier, it s'agissait de

rechercher comment, par la creation urgente de ressources interieures, le Gouvernement Autrichien pouvait etre mis a meme, dans le plus court delai, de renoncer
recourir a remission du papier-monnaie, et de cesser ainsi d'être l'agent de la depreciation monetaire continue, et d'être lui-meme le principal obstacle a toute operation
de credit. Des le premier jour donc, ce fut la situation monetaire de l'Autriche qui

preoccupa le plus vivement la Delegation. Ce fut le point central autour duquel
s'ordonnerent les questions posees par elle pendant son enquete.

Quels etaient les resultats actuellement acquis de la depreciation ? Celle-ci

etait-elle egale a rinterieur du pays a celle exprimee par les changes ? Quelles etaient
les repercussions internes de la crise monetaire? Quelle etait, en cherchant a faire

abstraction de ces repercussions, la situation economique reelle du pays ? Justifiait-elle des credits exterieurs? Etait-il possible que la cause permanente de la depreciation, c'est-a-dire le deficit budgetaire, fut supprimee ? Quelles etaient les
possibilites politiques de faire disparaitre les raisons de ce deficit (subsides, fonctionnaires, etc.) ? Comment prodder a un assainissement monetaire? Fallait-il, en vue de
cet assainissement, constituer une nouvelle Banque d'emission ?
A ces questions, une trentaine de visiteurs, choisis parmi les personnalites les plus
eminentes de la finance, de l'industrie, du commerce, des differents partis politiques,
voulurent bien venir donner leurs reponses. Celles-ci calmes, sinceres, objectives, ont

permis a la Delegation de comprendre la situation de l'Autriche. Mais elles l'ont
conduite, en outre, a deux conclusions.
L'une etait que la maladie dont souffre l'Autriche ne pouvait etre trait& que
par une reforme monetaire, et que toutes conditions de cette reforme : changement
de politique budgetaire, emprunt exterieur, emprunt interieur, creation d'une Banque




At the termination of its Paris meeting, the Financial Committee of the League
of Nations sent a letter to the Council of the League, of which an extract is given

" Though the position of Austria is undoubtedly such as to necessitate the grant
of foreign loans and credits as speedily as possible, no practical assistance either in
the form of a foreign loan, or by means of the application of the system of inter-

national credits of the League of Nations can be afforded her until the Austrian
Government itself is prepared to adopt the most urgent measures required for the
purpose of restoring its financial position.
"The following measures are absolutely essential and should be adopted forthwith :

" 1. The issue of a domestic loan by public subscription, in order to cover,
either wholly or partially, the present budget deficit, and to enable the issue of
paper money to be curtailed ;
" 2. A reduction of national expenditure, particularly expenses connected with
subsidies and personnel, which reduction should be effected as speedily as possible;
" 3. Utilisation of the previously existing organisation of the Bank of Austria-

Hungary for the purpose of issue and discount operations in Austria.
" 4. The allocation of guarantees, approved by the Financial Committee, to
the service of loans and credits.
" Of these measures the prompt issue of a domestic loan is, in the opinion of
the Committee, an essential preliminary to the issue of a foreign loan.
" The Committee is taking immediate steps to collect the necessary information
with a view to prompt action. "

These steps involved the despatch of a Mission, consisting of M. j. Avenol,
Sir Drummond Drummond-Fraser and M. E. Gliickstadt, to Vienna.
The Delegates reached Vienna on April 15th, and on the following day were
presented to the Federal Pt esident and to the Members of the Government. Before,
however, beginning the official conferences to which they had been invited, the Delegates expressed a wish to make certain preparations, and to commence by the collection of such information with regard to the economic and financial situation as
appeared to them to be essential.

The task set the Delegation by the Financial Committee was to ascertain
how the Austrian Government, by means of the speedy creation of domestic resour-

ces, could be put in a position to abandon as quickly as possible the issue of
further paper money, and thus to cease to be the cause of the continual depreciation
of the currency and the chief obstacle in the path of any credit operations. From

the outset, therefore, the Delegation devoted its main attention to the monetary

position in Austria. This was the main problem to which all questions asked by the
Delegation in the course of its enquiry were subordinated.

What were the results of the depreciation up the present time? Was it equal
within the country to that shown by the rate of exchange? What were the domestic
consequences of the monetary crisis? What was the true economic condition of the
country setting aside as far as possible the effects of the crisis? Was it such as to
justify foreign credits? Would it be possible to eliminate the permanent cause of the
depreciation, that is to say the deficit in the budget? What were the practical possibilities of eliminating the causes of this deficit (subsidies, officials, etc.) ? How
should the readjustment of the monetary system be proceeded with? With this object
in view, should a new Bank of Issue be established?
Some thirty witnesses, selected from the most distinguished representatives of
finance, industry and trade, and from the various political parties, were kind enough
to come and give their views on these questions. Their calmness, sincerity and disinterestedness enabled the Delegation to get a grasp of Austria's position. The
Delegation was, however, led to draw two conclusions.
The first of these was that the disease from which Austria is suffering can only
be dealt with by a reform of the monetary system, and that all the conditions upon
which this reform is dependent-changes in financial policy, foreign loans, domestic


-4d'emission, organisation d'un controle, devaient constituer les parties solidaires d'un
seul programme, et qu'il serait absolument inefficace de se limiter ou de se resigner
a la realisation d'une ou de quelques-unes seulement. Ce point sera traits ulterieurement.
L'autre &tali qu'un prograinme de cette ampleur devait avoir un caractere de
salut public, qu'il devait etre considers comme une entreprise nationale, soustraite
aux contestations ou aux surencheres des partis. La Delegation, au moment ou elle
a repris ses conversations officielles avec le Gouvernement, avait exprime nettement
son opinion :
« Il est essentiel que le monde entier, vis-a-vis duquel le credit de l'Autriche doit

etre retabli, puisse avoir confiance qu'elle a la volonte de faire face a ses engagements. C'est en montrant qu'elle n'hesite pas a affronter les difficultes interieures
de son assainissement qu'elle donnera la meilleure preuve qu'elle merite le credit
dit a sa position et a ses ressources' ».
Tout en suggerant, dans ses conversations techniques avec le Ministre des Finances, le plan sur lequel les Membres de la mission s'etaient mis d'accord le i8 avril,
la Delegation indiquait la necessite, pour aboutir a l'equilibre des finances publiques,
de concentrer toutes les forces politiques.
Venue a Vienne dans un but de cooperation internationale avec le Gouvernement
.Autrichien, accueillie en arbitre impartial, la Delegation a ete heureuse de pouvoir
exercer l'influence que lui donnait la haute autorite morale de la Societe des Nations,
pour faciliter la realisation de cette ceuvre nationale. Dans un memorandum, en date

du 28 avril, public par la presse autrichienne, la Delegation, indiquant avec une
franchise et une nettete amicales les points a comprendre dans le programme de
reforme, precisait l'esprit dont celui-ci devait etre

« Comme le Comite Financier de la Societe des Nations ne peut et ne vent
avoir pour but de mettre l'Autriche sous une tutelle etrangere, toutes garanties

necessaires devront etre donnees que l'Autriche elle-meme fera preuve de la force
morale et de la decision voulues pour que l'action qui lui incombe soit accomplie
de maniere satisfaisante. Il sera par consequent necessaire que nous puissions declarer a la Societe des Nations que, non seulement le Gouvernement, mais egalement les
autres facteurs publics qui collaborent a la legislation du pays ou ont une influence preponderante en cette matiere se sont engages collectivement a realiser le
programme d'assainissement. Il sera en outre necessaire de pouvoir amener la propriete privee, ne serait-ce que dans une mesure limitee, a participer a certaines garanties et engagements solidaires, afin de permettre la reussite de l'ceuvre considerable
qu'est la consolidation de la monnaie, l'etablissement de l'economie nationale sur
une base Mire et le maintien de l'ordre social. Nous supposons que tous les interesses en reconnaissent la necessite et que de son cote, le Gouvernement fera tout ce
qui est en son pouvoir pour nous donner ces garanties. »
Cet appel a ete entendu. Le Gouvernement a arrete un programme aussi ample
qu'energique. Si les suggestions que la Delegation a eu l'honneur de soumettre tiennent une tres grande place dans ce programme, elle croit devoir faire nettement

ressortir que celui-ci est un acte de souverainete du Gouvernement autrichien.

Remis solennellement, en reponse a son memorandum, a la Delegation par le Chanceher federal et le Ministre des Finances qui l'ont sign& it constitue un engagegement
librement consenti par un Gouvernement souverain. Les differents partis politiques,

represent& au Parlement, dans un haut sentiment d'union nationale, se sont apres
deliberations, engages, par lettres remises a la Delegation, a donner leur appui au
programme du Gouvernement.

Suppression des subsides alimentaires, economies administratives, relevement
des tarifs de transport, nouveaux impots, imposition sur toutes les proprietes privees
d'une double hypotheque legale, l'une pour garantir la circulation fiduciaire, l'autre
pour assurer la rentree d'un emprunt force interieur, si celui-ci est reconnu necessaire, organisation d'un controle, telles sont les decisions, lourdes de sacrifices et de
genes interieures, qui ont ete prises, en quelques jours par l'unanimite du pays.
La valeur et l'efficacite techniques du programme du Gouvernement Autrichien
seront examinees plus loin. Mais la Delegation doit ici insister sur sa valeur morale.
Si l'element principal du credit d'un pays consiste dans sa volonte d'ordre et d'equilibre, assurement le Gouvernement Autrichien, des maintenant , a fait une longue etape
vers la restauration du credit de l'Autriche. Il demande au Comite Financier d'etre
son temoin, de controler et d'aider ses efforts dans l'execution des decisions qu'il
a prises. Nous ne pouvons douter que cette execution doive etre effective et aboutisse
a des resultats efficaces.
La Delegation demande instamment que ces constatations soient immediatement prises en serieuse consideration.
Memorandum du 23 avril.




Si sa situation vouait l'Autriche au desequilibre economique, it serait vain
de tenter une restauration financiere. Cette question prealable n'a pas manqué de
preoccuper la Delegation. Apres les enqu8tes et les etudes auxquelles elle s'est livree,
celle-ci est convaincue que l'Autriche, lorsque son activite economique se sera ajustee
a son territoire politique, aura devant elle des chances tres favorables de developpement. Vienne meme, pour qui l'on a parfois redoute les risques d'une situation anor-

male, apportera un precieux appoint au nouvel Etat autrichien ; cessant d'être la
capitale politique d'un grand empire, elle demeurera une metropole commerciale
et financiere. Des maintenant, malgre tous les obstacles, elle a visiblement repris le
role qui derive de sa situation geographique, avec les moyens que lui ont conserve
ses traditions et son organisation.
La crise inevitable d'adaptation que devait traverser l'Autriche a ete singulierement aggravee par les circonstances politiques interieures. Ce pays a echappe aux
epreuves d'un bouleversement social, mais la gestion de ses finances publiques a
gravement souffert. Et ce sont les effets de cette deterioration qui sont le mal dont
l'Autriche subit actuellement la douloureuse epreuve. On en connait les causes. Il
serait vain de tenter seulement de supprimer leur action funeste et d'attendre patiemment et passivement une lente convalescence. Ce que la Delegation a constate avec
evidence, c'est que les effets de la crise monetaire ont une action trop profonde sur
l'economie generale du pays, pour que l'on puisse se contenter de preparer leur disparition graduelle.

Depuis la fin de la guerre, a cote d'autres deceptions et difficultes, le peuple
autrichien a vu la valeur de sa monnaie s'amincir chaque jour, sous la pression ineluctable des emissions nouvelles. D'octobre 1919, la valeur de 100 couronnes
autrichiennes est tomb& graduellement de francs suisses 6.02 a 0.95. Le mouvement
inverse de hausse, qui en une courte periode, a amene la multiplication par 50 - 6o 75 de tous les prix interieurs a produit un ebranlement considerable ; au fur et a.
mesure de cet encherissement, l'equilibre des situations acquises s'est rompu.
Tous ceux dont l'avoir consistait en creances exprimees en monnaie ont ete
ruines ; rentiers, pensionnaires, bref les classes moyennes ont ete broyees et sont dans
une tres grande misere. Ceux qui, a un titre quelconque, possedaient ou fabriquaient
des marchandises ont realise des benefices, nominaux tout au moins, considerables.
Chacun a donc cherche a prendre assurance contre cette baisse incessante de la
couronne. La vie economique actuelle de l'Autriche est dominee par cette preoccu-

pation. Salaries, agents de l'Etat, pour contrebalancer la hausse des prix, exercent
presque quotidiennement leur pression collective et leurs menaces de greves. Mais
quel que soft le succes obtenu dans cette lutte quotidienne d'adaption a la valeur
decroissante de la monnaie, personne ne songe a courir le risque de faire des reserves
ou des economies en couronnes. Celles-ci seraient reduites en peu de temps a une

fraction de leur valeur primitive. !Vieux vaut la satisfaction du plaisir immediat.
L'incitation a la depense est done considerable.
Ce que l'on ne depense pas en consommation improductive, on cherche
l'employer dans le plus court Mai possible, en valeurs reelles, immeubles, marchandises, bijoux, antiquites, valeurs industrielles, etc. Mais cette tendance naturelle de
preservation se transforme en fievre speculative. Dans les benefices apparents qui
resultent de la hausse des prix, la part qui correspond au travail effectif, perd avec
son identite, son importance. On a l'illusion de gagner par la simple detention des
marchandises ou de titres representatifs. Les capitaux sont donc detournes des entreprises productives vers les emplois speculatifs. Dans les classes ou se concentrent les

benefices de ces speculations, le luxe devient de plus en plus grand, tandis que
s'enfoncent dans la misere les anciennes classes moyennes, depositaires des traditions et de la culture sociales.
Quant aux reserves liquides, elles n'existent guere que sous forme de devises
etrangeres. Il semble, d'apres plusieurs evaluations concordantes donnees a la Dele-

gation, que le montant des devises ainsi conservees a Vienne puisse atteindre le
chiffre d'un milliard de francs suisses. Il en resulte donc qu'une partie notable des
creances autrichiennes de changes au lieu d'être utilisees en compensation pour les
paiements exterieurs sont thesaurisees et immobilisees.
L'Autriche se vide ainsi de disponibilites liquides. Dans ce pays ou la circulation
fiduciaire s'est augment& de 12 milliards en 1920, oil les prix ont hausse de 75%, les

depots des banques sont restes a peu pres stationnaires. Au 31 decembre 1919, ils
s'elevaient a, Cour. 2790 millions, au 31 decembre 1920, a Cour. 3249 millions. Cette
augmentation apparente de Kr. 457 millions n'est que le masque d'une grave diminution. Il n'en peut etre autrement. Avec la confiance dans la stabilite de la monnaie,
a disparu la confiance en tout engagement a terme. Tout pret ou depot est une ope-

ration ruineuse. II n'est actuellement pas possible de faire aucune operation d'emprunt en Autriche.

If her situation doomed Austria to economic disaster it would be useless to
attempt a financial restoration. This preliminary question did not fail to occupy
the attention of the Delegation.
As the result of the enquiries and investigations which it has made, the Delegation is convinced that Austria, when her economic activity has adapted itself to
her political territory, will have the prospect of very considerable opportunities
for development. Even Vienna, in regard to which there have been grave fears,
on account of her abnormal situation, will become a valuable adjunct to the new
Austrian State ; she will cease to be the political capital of a great empire, and will
become a commercial and .financial metropolis. Even new, in spite of all obstacles,
she has visibly recovered the position which she derives from her geographical situation with the means which have been preserved for her by her traditions and her

The crisis, caused by this adaptation, through which Austria had to pass,

has been particularly aggravated by internal political circumstances. The country
has escaped the trials of a social upheaval, but her public finances have suffered
severely, and the effects of this deterioration constitute the evil from which Austria
is now suffering. The causes of it are well known. It would be useless to attempt
merely to remove their fatal effects and to wait patiently and passively for a slow
recovery. The view of the Delegation, based on the evidence which it has collected,
is that the effects of the financial crisis on the general economy of the country are os

profound that is not sufficient merely to make preparations for their gradual
disappearance. Besides other deceptions and difficulties, the Austrian people,
after the end of the war, experienced a daily depreciation in their currency,

under the unavoidable pressure of fresh issues of paper money. From October,
1919, the value of ioo Austrian kronen fell gradually from 6.02 to 0.95 Swiss francs.
The opposite upward tendency, which within a short period, increased internal
prices 50, 6o and 75 times, disturbed the position very considerably; it became
more and more unstable in proportion to these increases. All those whose
assets were expressed in terms of currency were ruined; persons with fixed incomes,
pensioners, in short, the middle classes, have been utterly crushed, and are now
in extreme poverty. Those who possessed or manufactured any kind of goods
secured nominally at least considerable profits. Everyone therefore has attempted
to make provision against this continual fall in the krone. The present economic
life of Austria is dominated by this anxiety. Wage earners and State employees,
in order to counter-act the rise in prices, exercised collective pressure and threatened
to strike almost daily. But whatever success is obtained in this daily struggle to
adapt conditions of life to the increasing fall in the currency, no one ever ventures
to effect savings or economies in kronen. The latter would in a short time be reduced to a fraction of their original value. It is thought better to satisfy the pleasures of the moment. There is, therefore, a considerable inducement to spend.

What is not spent in unproductive consumption is invested as soon as possible
in real securities and estate, goods, jewels, antiquities, industrial securities, etc.
But this natural tendency towards thrift is becoming a speculative fever.
In the apparent profits which result from the rise in prices, that portion which
represents actual labour loses its importance and becomes negligible. The illusion
is fostered that profits may be made by simply hoarding goods or representative
securities. Capital is thus diverted from productive enterprise to speculative uses.
Luxury is growing greater and greater amongst the classes which have profited
most by this kind of speculation, whilst the old middle classes, which are the guardians

of tradition and social culture, are sinking deeper into misery.

As regards reserves of ready money, they hardly exist, save in the form of foreign
currency. Several estimates supplied to the Delegation appear to agree in calculating the total amount of foreign currency thus held in Vienna at one milliard Swiss
francs. The result is that a considerable part of Austrian credits on the exchange
markets, instead of being employed as compensation for payments abroad, are
hoarded and remain unprofitable.
Austria is thus being emptied of realisable assets. Whereas the fiduciary cir-

culation in that country increased by 12 milliards in 1920 and prices rose by 75%,
banking deposits have remained more or less stationary. On December 31st, 1919,
they amounted to 2,790 million kronen; on December 31st, 1920, to 3,249 million.
This apparent increase of 457 million kronen represents in reality a serious diminution. It cannot be otherwise. Confidence in any kind of long-term investment.
disappeared at the same time as confidence in the stability of the currency. Any
loan or deposit represents a ruinous operation. It is not at present possible to undertake any loan operation in Austria.


-6C'est la l'impasse redoutable dans laquelle se trouve l'Etat, victime de sa propre
politique financiere. Ayant voulu lutter contre la cherte de la vie, dont it etait luimeme le principal auteur, it s'est efforce d'accorder des compensations contre la
hausse. Le prix des denrees alimentaires vendues par le Gouvernement, les tarifs
postaux, les tarifs de transport ont ainsi echappe, dans une large mesure, a l'influence
de la depreciation monetaire. Mais ces compensations, dont tous profitaient, ceux qui
beneficiaient de la hausse des prix comme ceux qui en souffraient, etaient, bien entendu, insuffisantes pour proteger les propres agents de l'Etat. Le Gouvernement a dir
leur accorder des augmentations considerables de traitements et de salaires. Au deficit
qui provient de cette double cause, s'ajoute celui qui resulte de la depreciation meme

de la monnaie. Chaque mois, en vue de faire face aux paiements exterieurs, le

Ministre des Finances est contraint, pour un meme montant de monnaies etrangeres,
de vendre des sommes rapidement croissantes de couronnes.
Sous une telle action d'un deficit progressif illimite, la situation monetaire empirant chaque jour peut conduire a une crise irreparable.
Mais la politique financiere de l'Etat ayant sterilise le credit, tan les disponibilites, le Gouvernement s'en trouve chaque jour plus etroitement prisonnier. Ayant
abuse de remission du papier-monnaie, ce n'est plus que la seule ressource dont it
puisse encore user, jusqu'au moment oil sous l'action croissante d'un deficit progressif, la faible valeur de cette derniere ressource se soit entierement dissipee.
S'il importe donc, tandis qu'il en est encore temps, de dresser une cloison etanche
entre les debris du systeme monetaire et la gestion des finances publiques, cette oeuvre
ne peut etre accomplie sans la renaissance de la confiance. Seule, cette renaissance
permettra de mobiliser les ressources necessaires pour preparer la reforme budgetaire.
Mais cette confiance est si &rani& par l'instabilite monetaire que c'est a celle-ci qu'il

faut porter remede, pour que les ressorts du credit puissent jouer avec la vigueur
suffisante pour la restauration financiere de l'Autriche.


Le Comite financier avait vu tres clairement que, pendant la periode

necessaire a la realisation de requilibre budgetaire, le Gouvernement Autrichien
devait, pour pouvoir cesser ses emissions de papier-monnaie, disposer de ressources
suffisantes. Il avait donc recommande remission d'un emprunt interieur.
La Delegation est d'avis que cette operation qui est la condition indispensable
pour preserver la circulation monetaire ne peut etre, pour les raisons exposees cidessus, tent& isolement.
Des les premiers jours de sa mission, elle a acquis la conviction que les diverses
conditions necessaires pour aboutir a l'assainissement financier de l'Autriche formaient un tout, dont toutes les parties etaient solidaires et ne pouvaient etre executees separement ou successivement. Elle a cherche a orienter le plan de reformes
de telle sorte qu'il aboutisse a la restauration immediate d'un systeme monetaire
sain, susceptible d'introduire le maximum de securite et de certitude dans les transactions.
Le Gouvernement Autrichien a accepte cette maniere de voir et le programme
de reformes interieures qu'il a remis a la Delegation doit former 0 un tout avec l'aide
exterieure qu'il demande, de telle sorte que chacune des mesures adoptees depende

de la realisation de toutes les autres i.

Dans ce programme le Gouvernement Autrichien prevoit la realisation de requilibre budgetaire par des economies, des impots nouveaux, la realisation de ressources transitoires par un emprunt interieur, la creation de garanties destinees a gager
ces operations de credit et l'organisation d'un contrOle. Mais toutes ces mesures

s'ordonnent autour d'un point central qui est la reforme monetaire et la creation
d'une Banque d'emission. Par la reforme monetaire, on ramene la stabilite et la
confiance; par la creation de la Banque d'emission, on constitue une organisation
puissante, principal agent financier de l'Etat, depositaire des garanties offertes par
le Gouvernement Autrichien. C'est la confiance retablie par la stabilite monetaire
qui donnera au Gouvernement rautorite necessaire pour supprimer les subsides,
pour relever les tarifs de transports, creer de nouveaux impots ; c'est la Banque d'emission, et les garanties dont elle disposera, qui luiperrnettront d'emettre des ewprunts ;
par son Mdependance et son autonomie, la Banque sera armee pour resister a toute

nouvelle ingerence de l'Etat et pour resister a toute demande d'emission de papiermonnaie. A cote d'elle, utilisant ses moyens d'action, une Commission de contrelle
suivra l'execution de ce programme d'assainissement ; mais celui-ci demeurerait
sterile, si l'Autriche n'obtenait pas les credits exterieurs qui doivent le completer et
le vivifier.

-6Such, then, is the critical position in which the State is placed, as the result of its
,,wn financial policy. Having endeavoured to struggle against the cost of living, of
which it was itself the main cause, it was bound to grant compensations against the
rise in prices. The cost of foodstuffs sold by the Government, the postal rates and
transport charges thus escaped to a large extent from the influence of the depreciation
of the currency. But these compensations, of which all took advantage, both those
who benefited by the rise in prices and those who suffered, were of course insufficient
to protect the servants of the State themselves. The Government was obliged to
grant them considerable increases in salaries and wages. To the deficit arising from

this double cause must be added that which results from the actual depreciation of
the currency. Every month, in order to meet the claims of foreign creditors, the
Ministry of Finance is compelled to sell a rapidly increasing amount of kronen, in
order to obtain an identical amount of foreign currency.
Under the influence of a steadily increasing and unlimited deficit, the monetary
situation grows worse every day and may finally lead to irremediable disaster.
But the State's financial policy having sterilised credits and dried up the sources
of its supply, the Government finds itself every day more severely handicapped. It
has misused its power of insuing paper money, and this is now the only resource left
to it, until the time when, under the ever-growing unfluence of a progressive deficit,
such slight value as is possessed by this final resource entirely disappears.
Although it is, therefore, important to impose a protective harrier between the
debris of the monetary system and the administration of public finances, while
there is yet time, this work cannot be accomplished without the revival of confidence.

This revival alone will render it possible to mobilise the resources necessary for
preparing the reform of the budget. But confidence is so shaken by the instability
of the currency that it is the latter which must be remedied, in order that sufficient
scope may be given to credit operations to effect the financial restoration of Austria.


The Financia, Committee had seen very clearly that, during the period

necessary for the attaining of a budgetary equilibrium, the Austrian Government
must be possessed of sufficient resources in order to stop this issue of paper money.
It had therefore recommended the issue of an internal loan.
The Delegation considers that this proceeding, which is necessary for maintaining the currency circulation, cannot, for the reasons stated above, be undertaken

From the very beginning of its visit, the Delegation was convinced that the
various conditions which are necessary for the financial restoration of Austria form a
single whole, the various parts of which are intimately connected, and cannot be put
into execution separately or successively. It endeavoured to direct the plan of reform in such a way as to obtain the immediate re-establishment of a sound currency
system, capable of affording a maximum of security and certainty in business transactions.
The Austrian Government accepted this point of view, and the programme of
internal reforms which it submitted to the Delegation must form " a united whole
in conjunction with the assistance required from abroad, in such .a way that each of
the measures adopted depends upon the carrying out of all the others. "

In this programme the Austrian Government provides for the realisation of the
budgetary equilibrium by economies, new taxation, the temporary obtaining of funds
by an internal loan, the establishment of securities to guarantee these credit operations, and the organisation of a system of control. But all these measures revolve
round a central point, namely, currency reform and the creation of a Bank of Issue. By
means of currency reform, stability and confidence are re-introduced; by the creation of
the Bank of Issue a powerful organisation is set up as the principal financial agent of the

State, and the depository of the guarantees offered by the Austrian Government.
It is the re-establishment of confidence through currency stability which will give
the Government the necessary authority to abolish subsidies, to raise transport rates,
and to impose fresh taxation ; it is the Bank of Issue and the guarantees which it will
hold that will enable it to issue loans; through its independence and its autonomy,
the Bank will be strong enough to resist any further interference on the part of the
State and to oppose any demand for an issue of paper money. Side by side with
it; and employing the same means of activity, a Control Commission will continue to

carry out this programme of restoration ; but this programme would be vain if
Austria were not to obtain the foreign credits which must complete it and keep it


a) Banque d'emission et reforme monetaire.

Cette Banque, fondee au capital de no millions de francs, dont moitie inscrite a l'exterieur.
Cette Banque jouira d'un privilege de 25 ans; la moitie des Membres du Conseil

d'administration devront etre Autrichiens.
C'est a cette organisation puissante, independante, jouissant d'un credit propre, que sera remise la gestion de la nouvelle monnaie. La Delegation a estime, en
effet, qu'il serait insuffisant de fixer une limite a la depreciation de la monnaie
actuelle et de laisser a la hausse le champ libre. Le risque en serait redoutable pour
l'industrie autrichienne. Celle-ci, par l'amelioration graduelle de la devise autrichienne et par la baisse persistante des prix qui en resulterait serait soumise a une
pression constante. Serait-elle en mesure d'obtenir une reduction parallele des salaires ? Ce resultat ne saurait etre atteint sans agitations sociales. Or, le relevement
economique de l'Autriche exige a la fois lessor d'un developpement industriel et
l'union de tous dans le travail.
Dans la situation actuelle de l'Autriche, la realisation d'un emprunt exterieur
exige autant de precautions que l'administration d'un remede energique a un malade. La reaction pourrait etre mortelle. II n'existe actuellement aux fluctuations
du change que des limites psychologiques. Rien ne serait plus a redouter que la
fievre d'une hausse speculative, apres une position generale de baisse. L'Autriche a
surtout besoin de stabilite, de confiance, de certitude ; capitaux et activites doivent
abandonner les operations purement speculatives et retourner. aux entreprises productives. La Delegation est donc d'avis que la stabilisation de la devise autrichienne
doit se faire irrevocablement, en une fois et dans le plus court delai possible.

La partie la plus delicate de l'operation ne sera pas de trouver la definition

legale du nouvel etalon monetaire, mais de fixer sa base de conversion avec la couronne. Cette base devra resulter de la determination du pouvoir d'achat interieur de
la couronne, plus eleve que sa cote exterieure. C'est autour de ce pouvoir d'achat
que s'equilibrent les transactions.
La Delegation s'est preoccupee particulierement de cette determination. Mais
elle estime qu'en raison des modifications qui pourront survenir d'ici la fondation
de la Banque d'emission, c'est a ce moment la qu'une decision pourra etre utilement

La Banque d'emission devra assumer la charge de maintenir la parite or de la
nouvelle monnaie. La Delegation, en effet, n'estime ni possible, ni necessaire l'obligation legale du remboursement en or. Mais it sera indispensable que la nouvelle
Banque puisse.disposer toujours de la quantite de devises etrangeres suffisantes pour
pouvoir faire face a toute demande formulee a l'exterieur. Elle devra donc constituer
un fonds de conversion, au moyen de son capital et a l'aide de divers apports que
pourra eventuellement lui faire le Gouvernement. Bien entendu, la veritable base

de requilibre des paiements exterieurs, c'est la reprise du jeu normal des credits
et le developpement economique du pays. Le fonds de conversion de la Banque ne
peut avoir qu'un role regulateur.

La creation de la Banque, la Delegation en est persuadee, facilitera grandement
la realisation des emprunts et credits exterieurs, necessaires a l'Autriche; mais it
serait vain de l'entreprendre, si ces emprunts et credits ne la mettaient pas a meme
d'assurer sa mission de stabilisation du change et de la monnaie. C'est en vue de
cette mission qu'elle est armee si puissamment.
En effet, tant pour servir de couverture a la circulation interieure que pour etre
utilisees comme gage des emprunts exterieurs, elle aura la disposition des garanties
suivantes: douanes, monopole des tabacs, forets; en outre, toutes les proprietes
immobilieres de l'Autriche seront grevees 'a son profit d'une hypotheque legale
de 4 % (ayant priorite sur toutes autres, inscrites ou a inscrire) ; les credits d'assainissement seront administres par elle. Tous les services de tresorerie y seront centralises, les actifs or et devises etrangeres du Gouvernement y seront deposes.
Depositaire des garanties, elle jouera un role preponderant dans remission des

emprunts exterieurs. Responsable du maintien de la parite or de la monnaie, elle
dirigera avec la plus grande prudence les paiements exterieurs du Gouvernement
dont les avoirs strangers seront concentres entre ses mains. Centralisant toutes les
recettes et depenses de l'Etat, elle sera a meme de publier des situations periodiques
qui permettront de suivre le progres du programme d'assainissement. Elle sera
donc un puissant auxiliaire de la Commission de controle.
b) Embrunt interieur.

Le premier effet de cette reforme sera, en excluant la possibilite de nouvelles
variations de la monnaie, de faire reparaitre des disponibilites en Autriche et de permettre la realisation d'un emprunt exterieur. Les ressources a fournir par cet emprunt
sont indispensables pour faire face aux besoins financiers actuels du Gouvernement




-- 8 et suppleer aux emissions de papier-monnaie, auxquelles celui-ci doit renoncer.
II est vraisemblable que cet emprunt se fera dans de bonnes conditions et qu'il ne
sera pas necessaire de recourir a la contrainte pour engager les capitalistes autrin'aura
chiens a y souscrire; mais en vue de donner des maintenant l'assurance
pas besoin de recourir a l'emission de billets, le Gouvernement se declare pret
garantir la realisation de ressources interieures par tine seconde hypotheque legale
de 2 % sur toutes les proprietes foncieres privees.
c) Equilibre budgetaire.
Il est evident que la portee de ces mesures serait fragile si des mesures n'etaient
pas prises pour supprimer le deficit budgetaire.
Ce resultat ne peut etre immediatement attcint ; on estime qu'une periode minimum de deux ans est necessaire pour qu'il soit acquis. Si done ces efforts a long
terme ne peuvent entrainer par eux-memes une amelioration prochaine de la situa-

tion de l'Autriche, it serait dangereux d'oublier qu'ils constituent la part la plus
importante du plan de reformes, que le sort de toutes les autres parties est subordonne a la realisation de celle-la.
Le résumé de l'enquete de la Delegation condense les informations qu'elle a

recueillies sur ce point et la reponse du Gouvernement Autrichien renferme un programme detaille resultant de ses discussions avec la Delegation. On ne fera ici qu'esquisser les donnees generales du probleme et les traits principaux de sa solution.
La cause principale de l'insolvabilite actuelle du Gouvernement reside dans les
&Tenses auxquelles it doit se livrer pour l'achat de produits alimentaires a l'etranger et pour l'octroi de subsides destines a la reduction des prix a l'interieur (3o milliards de couronnes en 1920-1921); c'est a la fois la cause et le r6sultat de l'inflation.

La Delegation convient de la necessite de credits a l'etranger dans ce but, mais
condition que le Gouvernement commence immediatement une politique d'abandon
graduel de son controle et de suppression des subventions, qui devraient avoir
completement disparu a la fin de l'anne'e 1922, et dans l'espoir qu'a cette date
l'Autriche sera en mesure de payer elle-meme toutes importations necessaires,
pourvu que le programme de reformes financieres soit fidelement execute.
A tous autres egards, it faut que l'Autriche arrive a equilibrer son budget par
ses efforts et ses ressources propres. Les depenses peuvent etre considerablement
diminuees par une reduction graduelle mais continue, du nombre des fonctionnaires
et employes (en meme temps que par une reforme generale des services administratifs) par la cessation immediate de l'habitude de consentir des emprunts et des
avances sur les fonds d'Etat (et le remboursement immediat des emprunts et avances
actuellement consentis) et par une rigoureuse economic dans tous les chapitres. Les
recettes peuvent etre augmentees davantage encore. Non pas en relevant les impOts
directs (etant donne leur niveau eleve actuel, une reduction de ces impots pourrait

en effet rapporter davantage a l'Etat et c'est la une question qui devrait etre etudiee en merne temps que celle d'une revision de la repartition des impots et d'une
administration plus stricte), mais en augmentant les recettes des entreprises d'Etat
(pour les monopoles en relevant les prix de vente, pour les chemins de fer, postes
et telegraphes, en augmentant considerablement les tarifs, qui Wont jamais subi
la repercussion de relevement general des prix) et en augmentant les impots indirects. Les droits de douane devraient etre calcules en prenant comme base l'or et
d'autres impots indirects devraient etre etablis, les impOts existants devant etre
releves. La Delegation estime que ces reformes produiraient d'excellents resultats;
elle croit egalement que le peuple autrichien acceptera le sacrifice qu'elles impliquent s'il a l'espoir d'obtenir de l'aide.

d) Organisation du controle.
Le controle de l'emploi des credits exterieurs des revenus affect& en garantie
et de la realisation du programme d'assainissement tout entier est con fie a une Com-

mission mixte, compose de trois Delegues du Comite Financier de la Societe des
Nations et de trois Membres nommes par l'Autriche, le Ministre des Finances ou
son Representant, un Delegue designe par l'Assemblee Nationale, un representant
de la Propriete immobiliere hypothequee au profit de la Banque d'emission.
se reunira a Vienne scion les besoins. En cas de conflit, le Comite Financier de
la Societe des Nations decidera en dernier ressort. Un representant permanent
residera aupres du Gouvernement Autrichien ; it devra surveiller les decisions de
la Commission de controle et en rendre compte a cette derniere.

Le programme du Gouvernement autrichien demeurerait sterile s'il n'etait
complete par les credits exterieurs que la Delegation reconnait indispensables pour

-8for replacing the issue of paper money which the Government is to abandon. It
is probable that this loan effected on very good terms, and that it will not be
necessary to have recourse to compulsion to induce Austrian capitalists to subscribe.
But with a view to giving the immediate assurance that it will not have need to return
to the issue of notes, the Government declares itself ready to guarantee the realisation of internal resources by a second legal mortgage of 2 % on all private real estate.
(c) Budgetary Equilibrium.
It is evident that the effect of these measures would be but slight if steps were
not taken to abolish the defiict in the Budget.

This result cannot be obtained at once ; it is estimated that a minimum period
of two years is required for the purpose. If, however, these long-term efforts are

unable in themselves to bring about a speedy improvement in the situation of

Austria, it would be dangerous to lose sight of the fact that they form the most important part of the plan of reform, and that on the realisation of this part depends
that of all the rest.
The summary of the Delegates' enquiry condenses the information which it
collected on this point, and the reply of the Austrian Government includes a detailed
programme resulting from its discussions with the Delegation. Only the general
outline of this problem and the principal features of its solution will be sketched here.
The chief cause of the present insolvency of the Government lies in the expenses

which it must incur in the purchase of foodstuffs from abroad, and in order to
grant subsidies to reduce internal prices (3o milliard kronen in 192o-21) ; this is both
the cause and the result of inflation. The Delegation agrees as to the necessity for
foreign credits for this purpose, but on condition that the Government immediately

enters upon a policy of gradually abandoning this control, and of abolishing

subsidies, which should completely disappear by the end of 1922; in the hope that,
by this date, Austria will be in a position herself to pay for all necessary imports,
provided the programme of financial reforms is faithfully carried out.
In all other respects Austria must succeed in balancing her budget through her
own efforts and resources. Expenses may be considerably decreased by a gradual
but continuous reduction of the number of officials and employees (and at the same
time by a general reform of the administrative services) by immediately abandoning the practice of granting loans and advances on State funds (and the immediate

repayment of loans and advances already granted), and by strict economy in all
directions. Revenues may be still further increased, not by levying direct taxes (in
view of their present high level, a reduction of these taxes might even bring in more
to the State ; this is a question which would have to be considered at the same time
as a revision of the incidence of taxation, and a more strict administration) but by
increasing the revenues from State enterprises (in the case of monopolies by increasing selling prices; in the case of railways, post and telegraphs, by considerably increasing rates, which have never been affected by the general increase in prices)
and by i easin .ndirect taxation. Customs duties should be calculated on a gold
basis, and of er indirect taxes should be established, while the existing taxes should be
increased. The Delegation considers that these reforms would produce excellent
results; it is also of opinion that the Austrian people will accept the sacrifices thereby
involved if there is a hope of obtaining help.

(d) Organisation of Control.

The control of foreign credits, of revenues allotted as guarantees, and of the
execution of the programme of restoration as a whole, will be entrusted to a mixed
Commission, consisting of three Delegates of the Financial Committee of the League
of Nations, and of three members appointed by Austria, the Minister of Finance or his
representative, one Delegate appointed by the National Assembly and one representative of real estate mortgaged for the benefit of the Bank of Issue. This Commission
will meet at Vienna as required. In case of dispute, the decision of the Financial
Committee of the League of Nations will be final.
One permanent representative
will remain with the Austrian Government ; he will supervise, the carrying out of
the decisions of the Commission of Control, and render a report to that body.

The programme of the Austrian Government would prove fruitless if it were not
completed by the foreign credits which the Delegation recognises to be indispensable


la restauration de l'Autriche. D'apres les evaluations douanieres, le deficit de la
balance commerciale atteint environ 5o millions de dollars par an, somme a peu pres
egale au montant des paiements exterieurs du Gouvernement. Mais le deficit de la

balance commerciale ne constitue qu'une des donnees du probleme.
D'une part, la quote-part de la dette de l'ancienne Monarchie incombant
l'Autriche n'est pas encore determinee. Il est a souhaiter qutelle le soit rapidement.
Le service des interets de cette quote-part constituera pour l'Autriche une charge
qu'on ne peut actuellement evaluer.
D'autre part, il faudrait pouvoir tenir compte des ressources provenant des commissions et courtages viennois, des depenses des strangers, des revenus des valeurs
mobilieres etrangeres. Actuellement une portion importante de ces ressources est,
nous l'avons vu, soustraite par la thesaurisation, au reglement des dettes exterieures.
AussitOt la stabilisation decidee, ces reserves apparaitront sur le march& car leur
plus longue immobilisation ne pourrait qu'etre onereuse. Au moment donc ou des
credits exterieurs permettront la reforme monetaire, leur action sera fortifiee par
des apports de devises venant de l'interieur meme de l'Autriche.
L'Autriche, dotee d'une monnaie saine et stable, le role financier de Vienne
s'accroitra, soit par le developpement des comptes necessites par l'importance des
reglements internationaux effectues a Vienne, soit par les depots de capitaux en
quote de placement, les balances etrangeres afflueront et agiront automatiquement
comme des credits. De multiples operations se noueront, ventes en Autriche a terme,
participations, placements en Autriche, emissions a l'exterieur, bref le jeu complexe
des innombrables transactions qui nivellent les differences, a condition qu'un mecanisme regulateur assez puissant conserve l'equilibre.

Ce sont ces credits varies, multiples, qui permettront a la Banque d'emission
de maintenir la parite or de la nouvelle monnaie; mais elle ne peut entreprendre ce
role que si une premiere operation l'a mise en possession de ressources suffisantes
pour creer son fonds de conversion et placer en outre a sa disposition, une couverture
suffisante pour les achats de vivres effectues par l'Etat. Il est d'ailleurs essentiel,
pour la realisation du plan d'equilibre budgetaire, que l'Etat, comme on l'a vu plus
haut, soit provisoirement decharge, par un emprunt, de la charge qui lui incombe
actuellement pour ses achats.
Il est difficile de fixer des maintenant le montant de l'operation que la Delegation estime necessaire. Il depend evidemment des possibilites des marches financiers,
mais it serait autrement desirable que la premiere tranche flit fixee a un chiffre qui,
pendant une periode de six mois ou un an, permette la realisation de ce programme.

Apres cette premiere tranche, pourront en venir successivement plusieurs
autres, mais il est evident que si le plan reussit, au fur eta mesure de sa realisation,
ces tranches deviendront moins importantes et plus espacees.

La creation de la Banque d'emission en meme temps que l'obtention de la premiere tranche des credits exterieurs (suffisante pour permettre a l'Autriche de faire
face a ses besoins pendant six mois par exemple) devra etre la premiere mesure par

!aquae debutera le plan de reforme. Nous sommes convaincus que le Comite

financier de la Societe des Nations contribuera, s'il approuve ce plan, a hater, par
tous les moyens en son pouvoir, sa mise a execution. Le Comite exercera egalement, sans aucun doute, toute son influence pour assurer la realisation des conditions
qu'il a declarees indispensables a sa collaboration dans cette tache (Nous nous permettons de citer ci-dessous les extraits relevant du rapport du Comite du II avril).

« II. Le Comite financier doit tout d'abord declarer qu'un certain nombre

de conditions probables lui sont apparues comme devant etre realisees avant qu'on
puisse entreprendre le relevement du credit autrichien.
« a) 11 est heureux de constater que les Gouvernements allies, en vue de participer au relevement de l'Afitriche, ont decide de renoncer, pour une periode h determiner, aux privileges qu'ils tiennent, soit du Traits de Saint-Germain, soit des obligations souscrites pour les credits de secours, precedemment accordes a l'Autriche
a condition que les autres Gouvernements interesses acceptent de prendre les mesures en ce qui concerne leurs propres creances.
«Cette decision est, en effet, la premiere condition a remplir pour le relevement du

credit autrichien et le Comite financier exprime le vceu que les Gouvernements

non representes a la Conference de Londres veuillent bien prendre une decision analogue dans le plus court Mai.
« En outre, it doit faire connaitre aux Gouvernements interesses quelle est, en
vue du relevement du credit de l'Autriche, son opinion sur la duree et les modalites

de la suspension de leurs droits (qui a ete consentie en principe) et dont il ne

peut evidemment pas se desinteresser. Pour les rendre effectifs, it importe que des


for the restoration of Austria. According to the Customs estimates, the deficit of
the trade balance amounts to about 5o million dollars per annum, a sum which is
approximately equal to the amount of foreign payments by the Government. But
the deficit from the trade balance constitutes only one aspect of the problem.
In the first place, the Austrian share of the debt of the former monarchy has
not yet been fixed. It is desirable that this should be done immediately. The
payment of interest on this share will form for Austria a burden which cannot at
present be estimated.
Again account must be taken of sums arising from commissions and percentages in the Vienna market, sums spent by foreigners, revenues from
foreign movable securities. At present, owing to hoarding, a large portion of these
resources is, as has been seen, not available for the settlement of foreign debt. As
soon as stabilisation has been decided upon, these reserves will appear on the market,
as it would be burdensome to hold them up any longer. As soon, therefore, as foreign

credits allow the currency to be reformed, their action will be strengthened by the
additional supplies of currency coming from within Austria itself.
When Austria is provided with a sound and stable currency, the financial importance of Vienna will increase, both through the development of the accounts
involved by the large international payments effected in Vienna, and also by the
deposit of capital in search of investment; foreign balances will increase, and will
act automatically as credit. Numerous operations will develope, sales in Austria on
account, participations, investments in Austria, foreign issues - in short, all those

innumerable transactions which will bring differences to a level, provided that .equilibrium is maintained by a sufficiently powerful controlling machinery.
These varied and numerous credits will allow the Bank of Issue to maintain the
gold parity of the new currency. But it cannot perform this part unless a preliminary-operation has placed it in possession of sufficient resources to establish its
conversion fund, and also to provide it with sufficient covering for purchases of food
supplies made by the State. As has already been seen, it is, moreover, essential for

the realisatio n of this scheme of budgetary equilibrium that the State should be

provisionally relieved, by means of a loan, from the burden imposed upon it at present
owing to its purchases.

It is difficult at once to fix the extent of the operation which the Delegation
It obviously depends on the possibilities of financial markets,
but, apart from this, it would be desirable that the first section should be fixed at a
considers necessary.

figure which for a period of six months or a year would permit this programme to be
carried out.
After this first section, several others may follow in succession, but it is obvious
that if the plan succeeds, these sections will diminish and will take place at longer
intervals in proportion as it is carried into effect.


The founding of the Bank of Issue, and therewith the obtaining of the first

instalment of foreign credits (enough, say, to cover Austria's needs for six months)
will be the starting-point of the whole plan of reform. That the Financial Committee
of the League of Nations will assist by every means in its power to hasten the putting into execution of this plan, if it meets with its approval, we are convinced.
The Committee will also, doubtless, exert its influence to secure the fulfilment
of the conditions which it declared essential to its undertaking of this task.

The Delegation ventures to quote the relevant portions of the Committee's
report of April 11th last.
" II. The Financial Committee must first state that a certain number of preliminary conditions have appeared to it to be necessary before the restoration of
Austria's credit can be undertaken.
" (a) It notes with satisfaction that the Allied Governments, in order to assist in
the restoration of Austria, have decided to forgo, for a period to be decided later,
such liens as they derive, either from the Treaty of St. Germain or from the obligations entered into in respect of relief credits previously granted to Austria, provided that the other Governments concerned agree to take similar action with regard
to the debts due to them.
" A decision of this nature is undoubtedly a primary condition of the restoration
of Austrian credit. The Financial Committee expresses the desire that the Governments not represented at the London Conference will take a similar decision as soon
as possible.
" Further, the Financial Committee considers it its duty to communicate to the
Governments concerned its opinion in regard to the duration of suspension (which
has been agreed to in principle), and to the conditions to be attached thereto, which,

from the point of view of the re-establishment of Austrian credit, have an evident


credits soient etablis sur une duree suffisamment longue. Le Comite financier
estime que la periode de suspension ne saurait etre inferieure a 20 ans.

« De plus, les emprunts et credits de toute nature contractes avec l'approbation
prealable du Comite financier (au cours des cinq premieres annees) devraient jouir,
pour leur service, pendant une periode allant jusqu'a leur complet amortissement,
meme si cette periode devait etre superieure a 20 ans, d'un droit de priorite absolu par
rapport aux droits et privileges mis en suspens.

« b) Le Comite financier est convaincu que la reprise de la vie economique
en Autriche depend, dans une large mesure, du libre exercice de son commerce exterieur, dont les Etats successeurs ne manqueront pas eux-memes de tirer benefice.
espere donc que des mesures efficaces seront prises incessamment par les Gouvernements de ces Etats et de l'Autriche pour supprimer les obstacles et les prohi-

bitions. Il compte que la Conference de Porto-Rosa, sur l'importance de laquelle
ont deja insiste les Gouvernements allies aboutira a de promptes et satisfaisantes
conclusions. Il ne doit pas non plus manquer de signaler l'interet d'un prompt
re glement de la repartition des dettes de l'ancienne monarchie austro-hongroise.
«I1 exprime enfin le voeu qu'a l'issue de liquidation de la Banque d'AutricheHongrie, l'Autriche puisse etre mise en possession d'une part equitable de l'actif, qui
facilitera la reorganisation de sa banque d'emission. »

Le fait que nous avons insiste tout particulierement sur l'importance essentielle
de la reforme monetaire pour la restauration de l'existence economique de l'Autriche
n'implique pas que nous n'estimions pas a sa juste valeur l'importance des causes
purement economiques. La suppression des nombreux obstacles qui existent actuellement au commerce entre l'Autriche et ses voisins constituerait un autre facteur
de developpement de la prosperite autrichienne et, a un degre egal, de la prosperite

de ces voisins, nous esperons que le Comite financier de la Societe des Nations
prendra toutes les mesures en son pouvoir pour airier a etablir cette liberte du commerce.

Le programme financier, s'il a l'approbation du Comite depend donc de la
creation de la Banque d'emission. En attendant, on ne doit pas laisser empirer la
situation de l'Autriche; l'aide qui lui a ete dorm& jusqu'ici, pour l'achat de produits
alimentaires, a constitue un des facteurs les plus importants qui ont rendu possible
son existence, et it faut que cette aide exterieure lui soit continuee, jusqu'au moment
ou la reforme pourra entrer en application. Cette periode intermediaire est une periode
critique et la reaction psychologique de l'Autriche en face d'une aide financiere ex-

terieure, aura des consequences importantes et immediates. La depression et les
difficultes financieres tree reelles, qui se produiraient si des avances temporaires
n'etaient pas faites a l'Autriche, contribueraient egalement pour une part considerable a developper les forces de dislocation contre lesquelles le nouveau regime aura

a lutter. De l'avis de la Delegation, it est certain egalement que l'octroi de ces
avances comme mesure temporaire qui permettra la reforme monetaire, aura pour
resultat immediat de faire renaitre la confiance en Autriche et les consequences financieres en seront des plus heureuses. La Delegation estime qu'il est juste que les avances

accordees a ce titre jouissent de tous les droits et meme d'un droit de priorite sur
toutes les garanties qui seront constituees des que le projet entrera en application.

- I0 bearing on the Commitee's work. It is important that, in order to render them
effective, credits should be established for a sufficiently long term. In the opinion
of the Committee, the period of suspension should, therefore, be not less than ,20 years.

" Moreover, until their repayment is completed, any loans or credits of any
nature contracted with the previous approval of the Financial Committee during
the first five years should enjoy for the whole of this term, even if longer than 20
years, a right of absolute priority over all rights and liens suspended.
" (b) The Financial Committee is convinced that the restoration of the economic
life of Austria is dependent in a large measure upon Austria's ability to trade freely
with other countries, and that such trade would be greatly beneficial to all the Succession States. It urges, therefore, that immediate and effective measures should
be taken by the Government of these States and of Austria to remove the barriers
to trade between them. It confidently expects that the Conference of Porto Rosa.
the importance of which has already been emphasised by the Allied Governments,
will lead to prompt and satisfactory results. The Finance Committee would also
emphasise the importance of a speedy settlement of the problems of the division
of the debts of the former Austro-Hungarian Monarchy.
" It appears also to the Financial Committee most desirable that, as a result of

of the liquidation of the Bank of Austria-Hungary, Austria should be placed in
possession of an equitable proportion of the Bank assets, sufficient to facilitate the
re-organisation of its Bank of Issue. "

The emphasis which has been laid on the basic importance of currency

reform for the revival of Austrian economy, does not imply that the importance
of more purely economic causes is underrated. The removal of the numerous impedimenta to trade between Austria and her neighbours would be an additional
force for developing Austrian prosperity and, no less, the prosperity of those neighbours. The Delegation trusts that the Financial Committee of the League of Nations will neglect no step in its power to promote this freedom of trade.

The financial programme, therefore, if approved by the Committee, waits only
upon the formation of the Bank of Issue. In the interval, the position of Austria
must not be allowed to grow worse. The support hitherto accorded for the purchase
of foodstuffs has been the mainstay of Austrian existence, and until the new reform can

be entered upon, support must continue to be provided from abroad. This interval
is critical, and the psychological reactions of Austria to foreign financial aid will
be of great and immediate consequence. The depression and the very real financial
difficulties which would result if temporary advances are not forthcoming, would
considerably strengthen the disintegrating forces against which the new regime will
have to contend.
And it is, in the view of the Delegation, equally true that the provision of such advances, as a temporary measure to enable a currency reform to be
introduced, would be at once followed by a revival of confidence in Austria, with
favourable financial results. The Delegation considers it proper that advances made
under this provision should enjoy all rights of priority, and rank first in their claim on
all the guarantees which will be called into being as soon as the scheme is set on foot.


- I0 bearing on the Commitee's work. It is important that, in order to render them
effective, credits should be established for a sufficiently long term.
of the Committee, the period of suspension should, therefore, be not less than ,20 years.

" Moreover, until their repayment is completed, any loans or credits of any
nature contracted with the previous approval of the Financial Committee during
the first five years should enjoy for the whole of this term, even if longer than zo
years, a right of absolute priority over all rights and liens suspended.
" (b) The Financial Committee is convinced that the restoration of the economic
life of Austria is dependent in a large measure upon Austria's ability to trade freely
with other countries, and that such trade would be greatly beneficial to all the Succession States. It urges, therefore, that immediate and effective measures should
be taken by the Government of these States and of Austria to remove the barriers
to trade between them. It confidently expects that the Conference of Porto Rosa,
the importance of which has already been emphasised by the Allied Governments,
will lead to prompt and satisfactory results. The Finance Committee would also
emphasise the importance of a speedy settlement of the problems of the division
of the debts of the former Austro-Hungarian Monarchy.
" It appears also to the Financial Committee most desirable that, as a result of

of the liquidation of the Bank of Austria-Hungary, Austria should be placed in
possession of an equitable proportion of the Bank assets, sufficient to facilitate the
re-organisation of its Bank of Issue. "

The emphasis which has been laid on the basic importance of currency

reform for the revival of Austrian economy, does not imply that the importance
of more purely economic causes is underrated. The removal of the numerous impedimenta to trade between Austria and her neighbours would be an additional
force for developing Austrian prosperity and, no less, the prosperity of those neighbours. The Delegation trusts that the Financial Committee of the League of Nations will neglect no step in its power to promote this freedom of trade.

The financial programme, therefore, if approved by the Committee, waits only
upon the formation of the Bank of Issue. In the interval, the position of Austria
must not be allowed to grow worse. The support hitherto accorded for the purchase
of foodstuffs has been the mainstay of Austrian existence, and until the new reform can

be entered upon, support must continue to be provided from abroad. This interval
is critical, and the psychological reactions of Austria to foreign financial aid will
be of great and immediate consequence. The depression and the very real financial
difficulties which would result if temporary advances are not forthcoming, would
considerably strengthen the disintegrating forces against which the new regime will
have to contend. And it is, in the view of the Delegation, equally true that the provision of such advances, as a temporary measure to enable a currency reform to be
introduced, would be at once followed by a revival of confidence in Austria, with
favourable financial results. The Delegation considers it proper that advances made
under this provision should enjoy all rights of priority, and rank first in their claim on
all the guarantees which will be called into being as soon as the scheme is set on foot.

In the opinion





Official text r



The Delegation arrived in Vienna on April 15th, and at once began to obtain
information from various sources, as described in Annex 2 of the Report. As soon as
the Delegation felt able to draw up the main lines of a plan of financial reform, they,
accepted the invitation of the Government to take part in a Conference. At this
Conference, held at the Ministry of Foreign Affairs on April 23rd, 1921, the Federal
Chancellor being in the Chair, the President of the Delegation read and presented the
following memorandum :
Since our last meeting, as you know, we have had interviews with several of the
most eminent persons of this country. Their opinions, based on experience, have
finally made clear to us the Austrian situation, which we already knew through the

numerous reports which have been written up to the present regarding the state of
your country.
It is certainly not our intention to seek for the materials for a new report. We
desire to establish, in collaboration with you, the necessary schemes for the restoration of Austrian credit, and thus to allow the flotation of a loan, and the securing of
credit abroad. We are even more convinced - if that were possible - than at the
moment of our arrival, that this foreign help is urgently necessary. It is an essential condition for the financial restoration of Austria. But it could not be realised

it were not closely united with your firm determination to proceed to the

indispensable measures of reform and internal restoration.
By this we do not mean that the whole of these measures must be carried out as a
preliminary step. But we consider that the relief of Austrian credit and the restoration of the internal situation should be made the subject of a single plan, all parts
of which should be united.
We were struck with the entirely abnormal economic and financial state which
is the result of the circumstances through which your country has passed. But we
must tell you with friendly frankness that, if the necessity for placing the economic
situation of Austria once more on a normal basis is not faced at once, by courageously ignoring internal difficulties, which without doubt are inevitable, it would be
impossible for the credit of Austria to be sufficient for her to obtain foreign aid ; and,
as we have already said, this aid is itself indispensable for the re-establishment of
a normal state of affairs in Austria.
It is essential that the whole world, with which Austria's credit is to be restored,
should be assured that Austria is willing to face her obligations. It is by showing
that she does not hesitate to face the internal difficulties of her restoration that she
will best prove that she deserves the credit due to her position and to her resources.

If the Government is prepared to accept our suggestions in this matter, we are
ready to discuss, with such persons as it may appoint, a scheme which will meet
these necessities.

It was agreed that negotiations be opened with the Minister of Finance at the

earliest possible date.
The above declaration was published in the Austrian Press by the Austrian Government on April 24th.


- 12 -

Texte officiel 2.


La Conference avec le Ministre des Finances et ses conseillers techniques a eu lieu
le 25 avril.
Au debut de la reunion, le President de la Delegation a remis, apres en avoir fait
lecture, le memorandum suivant au Ministre des Finances.

Ainsi que nous l'avons mentionne au cours de notre entrevue de samedi avec
le Chancelier et les Ministres des Finances et du Ravitaillement, notre opinion est
que l'Autriche ne pourra eviter une debacle economique et financiere que si elle
reussit a realiser les conditions pour obtenir les credits strangers qui lui sont necessaires. Un pareil credit est tout d'abord indispensable pour l'importation considerable de produits alimentaires achetes pour subvenir aux besoins du pays, mais la
question etant telle que nous la comprenons, it ne sera toutefois pas suffisant, pour
fortifier la situation economique et financiere de l'Autriche, de se homer a assurer
cette importation pour l'avenir immediat. Pour arriver au dit but, on devra en outre

chercher a fortifier la base meme sur laquelle repose la situation monetaire de
l'Autriche, ce qui ne peut etre obtenu que si la valeur de la couronne autrichienne est
faut provisoirement considerer comme plus logique, de renvoyer a plus tard
la question de savoir si on peut, en somme, proceder des maintenant, avec chance de
succes, a tine pareille stabilisation, et de choisir les moyens d'atteindre ce but, mais
it sera certainement preferable, pour le succes des pourparlers qui doivent avoir lieu,

de faire ressortir des maintenant que, de notre cote, nous desirons qu'ils se poursuivent avec l'espoir de pouvoir trouver un moyen pratique. C'est toutefois, a notre
avis, une condition essentielle pour l'obtention des credits strangers necessaires, que
de pouvoir compter qu'en ce qui concerne l'Autriche, toutes les forces se concentreront dans le desk d'arriver, avec une tenacite et une fermete persistantes, a l'equilibre des finances publiques, et aussi pour faire disparaitre en meme temps les obstacles au developpement de la vie commerciale qui existent aujourd'hui inutilement
en Autriche. En effet, si nous n'obtenons pas d'avance une garantie necessaire a ce
suiet, on ne peut pas s'attendre a ce que l'etranger veuille mettre en toute confiance
a la disposition de l'Autriche les moyens necessaires a son relevement financier.
Il sera par consequent necescaire, pour pouvoir etablir un programme en vue de la

realisation d'un credit stranger pour l'Autriche, permettant de stabiliser la valeur
de Li couronne autrichienne, de pouvoir en meme temps presenter un plan complet,
et suffisantment detaille, de reorganisation de l'econornie nationale, de mane que
devra etre donee une garantie suffisante de son execution pratique suivant, d'une
facon absolue, une ligne determinee. »

Le Ministre des Finances a declare, en reponse, que le Gouvernement etait pat d
commencer immediatement les negotiations.

Cette declaration a ite publide, par le Gouvernement Autrichien, dans la presse
autrichienne, le 26 avril.

- 12 -

Official text 2.

Minister of Finance and his advisers took place on Monday,

nference the President of the Delegation read and handed to
ollowing memorandum :

e course of our interview on Saturday with the Chancellor
ce and Supply, Austria cannot, in our opinion, avoid an

llapse unless she succeeds in satisfying the conditions
ign credits which are necessary to her. Such credit is,
order to allow of the import, on a considerable scale, of
o supply the needs of the country; but as we understand
and financial situation of Austria cannot be sufficiently
suring these imports as regards the' immediate future.

ust further seek to strengthen the basis itself on which the
ria rests, and this cannot be done unless the value of the

uld seem more logical to postpone until later the question
e, with any chance of success, to proceed at once to carry
o choose the means of arriving at this end; but it would
the success of the negotiations which are to take place,

e, on our part, desire that these negotiations should be
riving at a practical method. It is, however, in our opin for the obtaining of the necessary foreign credits, that
y on Austria's concentrating all her forces in a firm and
quilibrium in her public finances; this is also necessary
tacles to the development of commercial life which at

Austria. Indeed, if we do not obtain beforehand the necesct, it cannot be expected that foreign countries will confiof Austria the necessary means for her financial restor-

establish a programme with a view to the securing of

allowing, the value of the Austrian krone to be stabilised,
it a complete and sufficiently detailed plan for the reorgaonomy; a sufficient guarantee must also be furnished for
his plan, in accordance with a programme definitely laid

e, in reply, expressed the readiness of the Government to
ublished in the Austrian Press by the Austrian Government


- 13 -

Official text 3.

The negotiations with the Ministry of Finance began on Monday, April 25th, and
continued on the days following. The views of the Delegation were found to be in harmony with those of the Minister, and a general agreement was soon reached on the main
points : foreign credits,guarantees for credits, the necessity for internal loans, the stabilisation of the crown and the founding of a new private Bank of Issue, with some foreign
capital. The discussion of the budget led to the results that the Government must be left
to decide upon the measures required, but that the Government and the various political
parties must first come to an agreement, to ensure that such measures would be carried
into effect.

This view was explained, inter alia, in the following memorandum, dated April

At the end of our last interview with the representatives of the Government,
we were promised, in accordance with our expressed desire, that a plan 'should
be drawn up to establish a balance between the State receipts and expenditure,
and also to indicate the method to be followed and the period of time required.
Further, it will be necessary, in order to provide for the transitional period up to the
moment of the final establishment of equilibrium, to utilise other resources than
the issue of paper money. This condition is essential in order to avoid any fresh
depreciation in the value of the krone. We consider, indeed, that the regularisation
and restoration of the currency is the most important task in the re-establishment
of Austria. This alone can prevent the constant increase in prices, and this
alone can allow a real stabilisation of the cost of living to be arrived at. But it can
only be effected if it is not checked by a relapse into Budget deficits.
As we have also pointed out on several occasions, the success of our efforts is
entirely dependent upon our being in a position to declare to the Financial Committee of the League of Nations that the realisation of the measures proposed in agreement with the Austrian Government - in so far as they are to be applied and carried
out by that Government - is absolutely assured from all points of view, and that it
will be carried out unhesitatingly and with all the energy required. It is obvious
that these measures will call for certain very considerable sacrifices on the part of
the Austrian population. But we are convinced that without these sacrifices the
result desired by all - the restoration of Austria and of the State - cannot be attained, and also that it will not be possible to obtain foreign help, so long as foreign
countries are not convinced that Austria herself will use every effort to justify this
help, and to effect her complete re-establishment. As the Financial Committee of
the League of Nations cannot, and does not, desire that Austria should remain in
foreign tutelage, all the necessary guarantees must be given that Austria herself
will give proof of that moral strength and that decision which are required, in order
to accomplish effectively and satisfactorily those duties which are incumbent upon
her. We must therefore be able to declare to the League of Nations that not only
the Government but also those other organisations of a public nature which play a
part in the legislation of the country, or which have a preponderating influence

therein, have collectively undertaken to carry out the programme of res-

toration. It will further be necessary to induce owners of private property, even
if only to a limited extent, to unite in giving certain guarantees and undertakings,
in order to make possible the success of the great work of consolidating the currency, of establishing national economy on a sure basis, and of maintaining social
order. We assume that all the interested parties recognise the need for this, and
that the Government on its part will do all in its power to give us the guarantees in
Before even receiving the proposals of the Government and publishing the result

of our enquiries, we should like to deal with certain points which appear to us es-

sential. We have heard the views of a certain number of the most eminent personalities
in Austrian economic circles, and taking as a basis the information with which they
supplied us, and that which we have collected from other sources, we consider that
it will he necessary to make the following demands: A very large part of the present State deficit is due to subsidies supplied by the



-- '4 -

pour approvisionner la population en certains produits alimentaires. Cette
partie des depenses de l'Etat doit disparaitre aussi vite que possible, afin que la
reduction des prix obtenue par les subsides de l'Etat, ne joue qu'en faveur d'un

petit nombre, c'est-h-dire des pauvres et des indigents. La force productive de l'agriculture autrichienne a considerablement augmente depuis la guerre, l'approvision-

nement en vivres n'est, en general, plus critique, les entraves aux communications internationales disparaissent peu a peu ; it serait donc expedient de revenir au plus vite au regime normal d'approvisionnement en produits alimen-

taires. La liberte entiere du commerce des produits alimentaires n'est pas, a notre
avis, indispensable et le Gouvernement peut, pour des raisons speciales, conserver
en mains certaines branches de ce commerce. Cette derniere procedure peut, sous
bien des rapports, paraitre encore souhaitable dans l'avenir. Mais meme dans le cas
ou le Gouvernement voudrait maintenir un monopole ou tout autre systeme d'Etat,
soit qu'il veuille provisoirement assurer le ravitaillement le moins cher, soit qu'il
desire etablir certaines taxes sur la consommation, il sera absolument necessaire
d'adopter le principe que dans tous les cas les produits de respece ne pourront etre
vendus au-dessous du prix de revient. L'assurance devra etre egalement donnee
qu'un pareil monopole commercial, s'il paraissait souhaitable, devra etre finance
par d'autres ressources que par remission de nouveaux billets. II va sans dire qu'il
n'est ni possible ni realisable de porter subitement le prix des vivres fournis a present

par l'Etat, a leur veritable prix de revient. Il sera toutefois necessaire de prendre
rapidement des mesures energiques en vue d'atteindre ce but.
Le solde du deficit actuel de l'Etat devra etre couvert par de nouvelles taxes
ou par des economies. Nous attendons a ce sujet du Gouvernement un plan detaille
qui doit nous indiquer les differentes mesures a prendre, repoque de leur realisation et leur rendement. Tout &ranger arrivant a Vienne, a' fres rapidement l'impression que les marchandises et les services sur lesquels l'Etat exerce un controle,
sont offerts en Autriche a des prix qui ne tiennent pas compte de la depreciation de
la monnaie, tandis que cet ajustement existe dans toutes les autres branches de
ractivite economique. Nos enquetes nous ont confirme dans cette impression. Ainsi
les chemins de fer, les postes, les telegraphes, les produits comme le tabac, la biere,
le vin, etc., ne contribuent pas actuellement aux recettes de l'Etat dans la meme
proportion qu'avant la guerre. Les nouvelles taxes a imposer a la population, dans
le cas ou les depenses ne pourraient etre reduites ni couvertes d'une autre facon,
comptent parmi les sacrifices qui doivent etre exiges. Nous n'avons pas l'intention
d'entrer dans le detail du systeme des imperts et de retablissement des depenses,
desirant, autant que possible, laisser le champ libre, sous ce rapport, au Gouvernement Autrichien. Mais ce que nous devons exiger, c'est que les mesures proposees
soient vraiment effectives et realisables et que l'augmentation des recettes occasionne
le moins possible de nouveaux frais et qu'elle ne donne pas lieu a la creation de nouvelles fonctions et a l'augmentation du personnel.

Une trop grande partie des depenses de l'Etat est due au maintien de grands
cadres de fonctionnaires et d'employes de l'Etat. Nous sommes loin d'exiger une
reduction generale des traitements et des salaires et le renvoi immediat des fonctionnaires en surnombre, ce qui rendrait la misere encore plus aigue. Mais il est necessaire de renoncer dorenavant a la creation de nouvelles charges et fonctions et
ceci non seulement en ce qui concerne les fonctions publiques proprement dites,
tant de l'Etat que des provinces et des communes, mais aussi les organisations
et institutions dans lesquelles l'Etat est interesse et qui, de ce fait, sont une charge
indirecte pour les finances publiques. Nous comptons aussi que des mesures effectives seront prises pour que des fonctionnaires et autres employes devenus inutiles
dans certaines branches de l'administration, puissent etre verses dans une autre
branche ou ils pourront rendre des services. De plus, il faudra employer tous les
moyens possibles pour engager les fonctionnaires publics a entrer dans les entreprises privees et pour leur faciliter le choix d'une nouvelle occupation qui ne sera
pas une charge pour l'Etat. L'engagement de nouveaux fonctionnaires devra etre
e'vite, autant que possible, et il est preferable, sous tons les rapports, de se borner
a utiliser les cadres actuels de fonctionnaires. L'essentiel est toutefois de mettre
fin aux augmentations continuelles de traitements. Ces augmentations ne seront
possibles que si on reussit a creer immediatement de nouvelles sources effectives de
revenus, mais dans ce cas merne, on ne doit pas perdre de vue le fait que ces nouveaux

revenus devront etre employes de preference a liberer le pays de ses dettes et
garantir sa monnaie, plutot qu'a couvrir les frais de maintien d'un cadre de fonctionnaires beaucoup trop considerable pour les dimensions de l'Autriche.
Le budget de l'Etat est actuellement obere dans une large mesure par des
prets, avances, participations et subventions que l'Etat a accord& et accorde encore
pour des motifs les plus divers a des entreprises nouvelles, organisations de consommation et de commerce, societes cooperatives et autres institutions privees. Ce
systeme doit etre aboli, et les besoins d'argent de ces organisations devront etre
couverts par des moyens economiques normaux. Les sommes encore dues a l'Etat,
a valoir sur les subventions accordees de la sorte, doivent etre enoncees et remboursees le plus rapidement possible.


- 14 State to provide the population with certain food products. This part of the expenditure of the State must be abolished as quickly as possible, in order that the reduction

in prices afforded by State subsidies should only be granted in favour of a small
number, that is to say, the poor and needy. The productive strength of Austrian

agriculture has considerably increased since the War. The food supply, generally,is
no longer in a critical state, the hindrances to international communication are gradually disappearing. It would therefore be expedient to return as quickly as
possible to the normal regime of supplies as regards food products. In our opinion,
entire freedom of commerce in foodstuffs is indispensable; the Government may, for
special reasons, keep in hand certain branches of this trade. This last procedure may,
in many respects, appear desirable even in the future. But even should the Government desire to maintain a monopoly or any other State system, whether from a desire
to make temporary provision for supplies at as cheap a rate as possible, or from a
wish to institute certain taxes on commerce, it will be absolutely necessary to adopt
the principle that, in every case, individual products cannot be sold below cost price.
A guarantee must also be given that such a commercial monopoly, if it appear desir-

able, shall be financed by resources other than the issue of fresh paper money.
It is obvious that it is neither possible nor practicable to bring the cost of foodstuffs

supplied at present by the State to their real cost prices. But energetic steps will
have to be taken rapidly with a view to attaining this end.
The present State deficit must be covered by fresh taxes or by economies. On
this subject we are expecting from the Government a detailed plan, indicating the
various steps to be taken, the moment of their accomplishment, and the amount of
their yield. Any foreigner arriving at Vienna rapidly forms the impression that the
goods and services over which the State exercises control are offered in Austria at
prices which do not take into consideration the depreciation of the currency, whereas

such an adjustment of prices exists in all branches of economic activity. Our
enquiries have con firmed us in this impression.

Thus, for example, railways, posts,

telegraphs, products such as tobacco, beer, wine, etc., do not at present contribute
to the revenue of the State in the same proportion as before the war. Among the
sacrifices which must be demanded are fresh taxes to be imposed on the population,
if expenditure cannot be reduced or covered in any other way. We have no intention of entering into the details of the system of taxes and the equivalent expenditure,
as we desire as far as possible to leave this field free for the Austrian Government.

But what we do ask is that the measures proposed should be really effective and
capable of realisation, and that the increase in revenue should entail, as little as
possible, fresh expenditure, and that it should not give rise to the creation of fresh
offices and an increase in staff.

Too large a part of the expenditure of the State is devoted to the maintenance of

large numbers of State officials and employees. We are far from demanding a
general reduction in salaries and wages, or the immediate dismissal of superfluous
officials in a manner which would render distress still more acute. But it is neces-

sary to abandon, forthwith, the practice of creating new duties and appointments, and
this not only as regards public appointments, properly so-called - both State, provincial and communal - but also as regards organisations and institutions in which
the State is interested, and which are consequently an indirect burden upon public
finance. We also hope that effective measures will be taken to provide for the transfer
of officials and other employees, who are no longer needed in certain branches of the
administration, to another branch where they may he of service. It will, moreover,
be necessary to use every possible means to encourage public officials to enter pri-

vate employment, and to assist them to select a new occupation which will not
involve a burden on the State. The appointment of new officials must be avoided
as far as possible, and it is preferable in all circumstances that employment should
be given exclusively to existing officials. The essential point, in any case, is to put
an end to continual increases in salaries. These increases will only be possible if
effective sources of fresh revenue are successfully obtained without delay, but even
in this case the fact must not be lost sight of that fresh sources of revenue should
rather be employed in freeing the country from its debts and guaranteeing currency,
than in meeting the cost of the maintenance of the class of officials, which is far too
large for the size of Austria.

The State Budget is at present considerably burdened by loans, advances, participations and subventions, granted, and still being granted, by the State for very
various reasons, to new undertakings, trade and consumer's organisations, co-operative societies and other private institutions: This system must be abolished, and
the finances required by these organisations must be obtained by normal economic
means. .Sums still due to the State in respect of subventions thus granted must be
declared and repaid as speedily as possible.




15 --

Dans sa premiere declaration, le Comite financier de la Societe des Nations
a indique qu'un moyen de relever l'Autriche est de mettre rapidement fin aux entraves aux communications qui genent aujourd'hui les echanges avec les pays
voisins de l'Autriche. Nous avons pu nous rendre compte de l'importance de cette
partie du programme. Nous en avons ete d'autant plus frappes qu'il existe de nombreuses reglementations, de nature fres differentes, edictees par des provinces, des
districts et meme des communes, qui empechent la libre circulation des personnes
et des marchandises, a l'interieur meme de l'Autriche. La suppression immediate et
radicale de ces entraves aux communications, qui sont des plus dommageables
pour l'Autriche, nous parait une necessite; c'est meme une condition pour que l'Autriche puisse obtenir des pays voisins les mesures qui sont absolument necessaires a la
renaissance de sa vie economique. Il est en general desirable que les reglementations

entravant ou empechant encore le commerce des marchandises, des immeubles
et des valeurs de toutes sortes, soient rapidement rapportees (tout en assurant la
protection necessitee par la faiblesse economique) en vue d'accroitre la capacite
de production, de retablir la confiance et le credit et d'aider au relevement du pays.
Lorsque toutes les mesures envisagees auront ete prises et auront donne le
resultat attendu, it sera necessaire de creer une representation des facteurs strangers
organisant l'ceuvre de relevement, et qui cooperera avec 1'Administration supe-

rieure de l'Autriche, pour assurer l'execution du programme etabli et lui donner
toute son efficacite. La forme exacte et effective de cette cooperation devra etre
indiquee dans le proj et definitif.
Nous nous rendons parfaitement compte que ce qui precede obligera la population autrichienne tout entiere a des sacrifices sensibles. Nous sommes toutefois
egalement convaincus que ces sacrifices ne sont pas seulement une condition inevitable de l'aide reclamee de l'etranger, mais encore qu'ils doivent etre une partie
integrante de tout programme serieux d'assainissement susceptible de donner des
resultats inestimables pour la population autrichienne en retablissant la situation
monetaire et, par suite, la confiance et la vie economique generales. Une monnaie
stable, et avec elle la suppression d'une speculation, l'aide et l'encouragement
toute activite productrice, le retablissement du credit interieur et exterieur, voila
le resultat que nous desirons de tout cceur obtenir par les propositions que nous
soumettrons a la Societe des Nations. Nous sommes persuades que le Gouvernement est aussi convaincu que nous-memes de l'importance capitale de ce but. Nous
esperons, en consequence, que tour les elements responsables du sort du peuple et
de l'Etat et toute la population elle-meme feront tout ce qui est en leur pouvoir pour
atteindre ce but. Nous prions le Gouvernement de bien vouloir examiner cet exposé
provisoire et de le communiquer aux interesses afin qu'il en soit tenu compte dans
les propositions qui doivent nous etre soumises.
Le Gouvernement a publid ce memorandum dans la bresse le 3o avril, en meme
temps qu'une declaration redigie par le Gouvernement lui-meme et qui figure ci-incluse,
sous le No 4.


- 15 -


- 16-

Texte officiel 4.
Voir texte allenrand, page 35.,


Le communique suivant a ite publid par le Gouvernement Autrichien en meme
temps que la declaration de la Delegation figurant ci-dessus sous le No 3.

Les Delegues du Comite financier de la Societe des Nations, MM. Avenol
Sit Drummond Drummond-Fraser et Gliickstadt, apres avoir entendu des personnalites des milieux economiques, des experts financiers, ainsi que des Representants du
Gouvernement et des partis politiques, ont commence, le 25 avril, les negociations
officielles avec le Ministere des Finances. Les Delegues ont mis a la tete de leur programme, la question de l'assainissement de la monnaie, pour garantir aussi bien les
finances de l'Etat que l'ensemble de reconornie nationale. Pour arriver a ce resultat,
it ne suffirait pas de supprimer le deficit dans les finances de l'Etat - afin d'empecher
l'Etat de se servir de la Banque d'emission et de limiter la circulation fiduciaire
mais it faudrait encore prendre des mesures effectives pour consolider la circulation

fiduciaire et stabiliser le cours des changes. C'est pourquoi le Comite financier a
dernande au Gouvernement d'elaborer un programme financier, qui amenerait, dans
un temps determine, l'assainissement du budget par une serie de mesures successives.
Jusqu'au moment ofi requilibre du budget sera assure par la puissance financiere
meme de l'Etat et des contribuables, les besoins d'argent devront etre couverts par
des operations d'emprunt, pour arreter aussitot que possible remission de nouveaux
billets. C'est surtout la partie de ces besoins, ayant trait a l'achat des produits alimentaires necessaires a la population qui doit etre couverte par des emprunts exterieurs, pour decharger la marche des devises et aider a la stabilisation de la couronne.
De plus, une partie des emprunts exterieurs, devra etre employee a la creation de
la nouvelle Banque d'emission, laquelle doit prendre en charge la consolidation de

la circulation fiduciaire et la politique des changes. Des que les mesures les plus
importantes, notamment l'aide etrangere, seront assurees, et qu'une condition importante du relevement du credit public sera remplie- de ce fait, on procedera egalement

a des operations d'emprunts intirieurs, pour couvrir les besoins d'argent de l'Etat
pendant la periode transitoire jusqu'au moment de requilibre complet du budget.
Le Gouvernement a immediatement entrepris l'elaboration d'un tel programme
financier. Il comprendra la suppression progressive des subsides de l'Etat pour les
produits alimentaires, raugmentation des nouvelles sources de revenu et certaines
mesures d'econcmtie, tandis qu'il indiquera les sommes necessaires jusqu'a l'obtention
de requilibre. Comme les Delegues desirent avoir egalement, dans la mesure du pos-

sible, des garanties politiques. pour l'execution d'un programme financier ainsi
adopt& le Gouvernement a pressenti tous les partis politiques pour leur faire connaitre les desks du Comite Financier et les bases fondamentales du programme
financier et pour obtenir leur assentiment. Ces negociations ne sont pas encore terminees, toutes les parties du programme n'etant pas encore arretees.
Comme on le sait, les emprunts exterieurs devront etre garantis par certaines
ressources et certains actifs de l'Etat, qui seront places sous un contrOle special
commun. Les Delegues desirent specialement que cet emprunt exterieur soit egalement garanti specialement par la propriete privee autrichienne.
Les negociations sont activement poursuivies, les Delegues desirant remettre
au Comite Financier, aussitet que possible, un programme complet elabore d'accord

avec I'Autriche pour pouvoir continuer les negociations des son adoption. Les
Delegues voudraient surtout essayer d'obtenir immediatement une avance sur les
emprunts internationaux, afin de mettre le Gouvernement a meme, avant l'execution des grandes transactions financieres, de continuer l'iMportation de produits
alimentaires et la regie de l'Etat sans avoir rerours a remission de billets.



for the restoration of Austria. According to the Customs estimates, the deficit of
the trade balance amounts to about 5o million dollars per annum, a sum which is
approximately equal to the amount of foreign payments by the Government. But
the deficit from the trade balance constitutes only one aspect of the problem.
In the first place, the Austrian share of the debt of the former monarchy has
not yet been fixed. It is desirable that this should be done immediately. The
payment of interest on this share will form for Austria a burden which cannot at
present be estimated. Again account must be taken of sums arising from commissions and percentages in the Vienna market, sums spent by foreigners, revenues from
foreign movable securities. At present, owing to hoarding, a large portion of these
resources is, as has been seen, not available for the settlement of foreign debt. As
soon as stabilisation has been decided upon, these reserves will appear on the market,
as it would be burdensome to hold them up any longer. As soon, therefore, as foreign

credits allow the currency to be reformed, their action will be strengthened by the
additional supplies of currency coming from within Austria itself.
When Austria is provided with a sound and stable currency, the financial importance of Vienna will increase, both through the development of the accounts
involved by the large international payments effected in Vienna, and also by the
deposit of capital in search of investment ; foreign balances will increase, and will
act automatically as credit. Numerous operations will develope, sales in Austria on
account, participations, investments in Austria, foreign issues - in short, all those
innumerable transactions which will bring differences to a level, provided that equilibrium is maintained by a sufficiently powerful controlling machinery.
These varied and numerous credits will allow the Bank of Issue to maintain the
gold parity of the new currency. But it cannot perform this part unless a reliminary operation has placed it in possession of sufficient resources to establish its
conversion fund, and also to provide it with sufficient covering for purchases of food
supplies made by the State. As has already been seen, it is, moreover, essential for

the realisatio n of this scheme of budgetary equilibrium that the State should be
provisionally relieved, by means of a loan, from the burden imposed upon it at present
owing to its purchases.

It is difficult at once to fix the extent of the operation which the Delegation
It obviously depends on the possibilities of financial markets,
but, apart from this, it would be desirable that the first section should be fixed at a

considers necessary.

figure which for a period of six months or a year would permit this programme to be
carried out.
After this first section, several others may follow in succession. but it is obvious
that if the plan succeeds, these sections will diminish and will take place at longer
intervals in proportion as it is carried into effect.


The founding of the Bank of Issue, and therewith the obtaining of the first

instalment of foreign credits (enough, say, to cover Austria's needs for six months)
will be the starting-point of the whole plan of reform. That the Financial Committee
of the League of Nations will assist by every means in its power to hasten the putting into execution of this plan, if it meets ',With its approval, we are convinced.
The Committee will also, doubtless, exert its influence to secure the fulfilment
of the conditions which it declared essential to its undertaking of this task.

The Delegation ventures to quote the relevant portions of the Committee's
report of April nth last.

" II. The Financial Committee must first state that a certain number of preliminary conditions have appeared to it to be necessary before the restoration of
Austria's credit can be undertaken.
" (a) It notes with satisfaction that the Allied Governments, in order to assist in
the restoration of Austria, have decided to forgo, for a period to be decided later,
such liens as they derive, either from the Treaty of St. Germain or from the obligations entered into in respect of relief credits previously granted to Austria, provided that the other Governments concerned agree to take similar action with regard
to the debts due to them.
" A decision of this nature is undoubtedly a primary condition of the restoration
of Austrian credit. The Financial Committee expresses the desire that the Governments not represented at the London Conference will ta;se a similar decision as soon
as possible.

" Further, the Financial Committee considers it its duty to communicate to the
Governments concerned its opinion in regard to the duration of suspension (which
has been agreed to in principle), and to the conditions to be attached thereto, which,
from the point of view of the re- establishment of Austrian credit, have an evident


-1ocredits soient etablis sur une duree suffisamment longue. Le Comite financier
estime que la periode de suspension ne saurait etre inferieure a 20 ans.

« De plus, les emprunts et credits de toute nature contractes avec l'approbation
prealable du Comite financier (au cours des cinq premieres annees) devraient jouir,
pour leur service, pendant une periode allant jusqu'a leur complet amortissemect,
meme si cette periode devait etre superieure a 20 ans, d'un droit de priorite absolu par
rapport aux droits et privileges mis en suspens.

« b) Le Comite financier est convaincu que la reprise de la vie economique

en Autriche depend, dans une large mesure, du libre exercice de son commerce exte-

rieur, dont les Etats successeurs ne manqueront pas eux-memes de tirer benefice.
espere donc que des mesures efficaces seront prises incessamment par les Gouvernements de ces Etats et de l'Autriche pour supprimer les obstacles et les prohibitions. Il compte que la Conference de Porto-Rosa, sur l'importance de laquelle
ont deja insiste les Gouvemements allies aboutira a de promptes et satisfaisantes

conclusions. Il ne doit pas non plus manquer de signaler l'interet d'un prompt
reglement de la repartition des dettes de l'ancienne monarchie austro-hongroise.

«Il exprime enfin le vceu qu'a l'issue de liquidation de la Banque d'AutricheHongrie, l'Autriche puisse etre mise en possession d'une part equitable de l'actif, qui
facilitera la reorganisation de sa banque d'emission. »

Le fait que nous avons insiste tout particulierement sur l'importance essentielle
de la reforme monetaire pour la restauration de l'existence economique de l'Autriche
n'implique pas que nous n'estimions pas a sa juste valeur l'importance des causes
purement economiques. La suppression des nombreux obstacles qui existent actuellement au commerce entre l'Autriche et ses voisins constituerait un autre facteur
de developpement de la prosperite autrichienne et, a un degre egal, de la prosperite

de ces voisins, nous esperons que le Comite financier de la Societe des Nations
prendra toutes les mesures en son pouvoir pour aider a etablir cette liberte du commerce.

Le programme financier, s'il a l'approbation du Comite depend donc de la
creation de la Banque d'emission. En attendant, on ne doit pas laisser empirer la
situation de l'Autriche; l'aide qui lui a ete dorm& jusqu'ici, pour l'achat de produits
alimentaires, a constitue un des facteurs les plus importants qui ont rendu possible
son existence, et it faut que cette aide exterieure lui soit continuee, jusqu'au moment
ou la reforme pourra entrer en application. Cette periode intermediaire est une periode
critique et la reaction psychologique de l'Autriche en face d'une aide financiere ex-

terieure, aura des consequences importantes et immediates. La depression et les
difficultes financieres tres reelles, qui se produiraient si des avances temporaires
n'etaient pas faites a l'Autriche, contribueraient egalement pour une part considerable a developper les forces de dislocation contre lesquelles le nouveau regime aura

a lutter. De l'avis de la Delegation, it est certain egalement que l'octroi de ces

avances comme mesure temporaire qui permettra la reforme monetaire, aura pour
resultat irnmediat de faire renaitre la confiance en Autriche et les consequences financieres en seront des plus heureuses. La Delegation estime qu'il est juste que les avances

accordees a ce titre jouissent de tous les droits et meme d'un droit de priorite sur
toutes les garanties qui seront constituees des que le projet entrera en application.




Texte ofilciel r .

La Delegation est arrivee a Vienne le 15 avril et a commence immediatement a
recueillir des renseignements de sources variees (voir Annexe 2 au rapport). Des que la
Delegation a ete en mesure d'elaborer dans ses grandes lignes un plan de reforme financiere, elle a accepte l' invitation du Gouvernement a participer a une Conference.

Au tours de cette Conference, qui a eu lieu au Ministere des Al (tires Etrangeres le
23 avril 1921, sous la prisidence du Chancelier federal, le President de la Delegation
a presente le memorandum suivant, dont it a fait lecture :
Depuis notre derniere entrevue, comme vous le savez, nous avons eu des entretiens avec quelques personnalites parmi les plus eminentes de ce pays. Leurs avis experiment& ont acheve de nous eclairer sur la situation de l'Autriche que nous connais-

sions deja par les nombreux rapports qui ont ete ecrits jusqu'ici sur retat de votre

Notre but n'est pas assurement de rechercher les elements d'un nouveau rapport; nous desirons etablir en collaboration avec vous les projets necessaires pour

la restauration du credit autrichien, et permettre ainsi remission et la realisation d'un emprunt et de credits exterieurs. Nous sommes, en effet, convaincus plus

encore, si c'est possible, qu'au moment de notre arrivee, que ce concours exterieur est d'une necessite urgente. C'est la une condition essentielle de la restauration financiere de l'Autriche. Mais elle serait irrealisable si elle n'etait pas liee a votre
ferme decision de proceder aux mesures indispensables de reforme et d'assainissement interieurs.

- Nous ne voulons pas indiquer par la que la realisation totale de ces mesures
doit etre prealablement effectuee. Mais nous pensons que le relevement du credit
autrichien, et l'assainissement de la situation interieure doivent faire l'objet d'un
plan unique, dont toutes les parties sont solidaires.
Nous avons ete frappes de l' &tat economique et financier absolument anormal,
qui resulte des circonstances qu'a traversees votre pays. Mais nous devons vous
declarer, avec une franchise amicale, que si des maintenant on n'envisage pas la
necessite de replacer la situation economique de l'Autriche sur une base plus normale, en faisant courageusement abstraction de difficult& interieures, certainement
inevitables, it serait impossible que le credit de l'Autriche soit suffisant pour lui
obtenir une aide exterieure et cette aide, nous rayons déjà dit, est elle-meme indispensable pour le retablissement de requilibre en l'Autriche.
Il est essentiel que le monde entier, vis-à-vis duquel le credit de l'Autriche doit
etre retabli, puisse avoir confiance qu'elle a la volonte de faire face a ses engagements. C'est en montrant qu'elle n'hesite pas a affronter les difficultes interieures
de son assainissement qu'elle donnera la meilleure preuve qu'elle merite le credit
dfi a sa position et a ses ressources.
Si le Gouvernement est dispose a accepter nos suggestions dans cet ordre d'idees,

nous sommes a sa disposition pour discuter, avec les personnes qu'il voudra bien
designer, le plan repondant a ces necessites.
Il a ete convene que l'on commencerait, le plus tot possible, des negotiations avec le
Ministre des Finances.
La declaration ci-dessus a ete publide par le Gouvernement Autrichien dans la presse
autrichienne le 24 avril.



Official text



The Delegation arrived in Vienna on April 15th, and at once began to obtain
information from various sources, as described in Annex 2 of the Report. As soon as
the Delegation felt able to draw up the main lines of a plan of financial reform, they,
accepted the invitation of the Government to take part in a Conference. At this
Conference, held at the Ministry of Foreign Af fairs on April 23rd, 1921, the Federal
Chancellor being in the Chair, the President of the Delegation read and presented the
following memorandum :
Since our last meeting, as you know, we have had interviews with several of the
most eminent persons of this country. Their opinions, based on experience, have
finally made clear to us the Austrian situation, which we already knew through the

numerous reports which have been written up to the present regarding the state of
your country.
It is certainly not our intention to seek for the materials for a new report. We
desire to establish, in collaboration with you, the necessary schemes for the restoration of Austrian credit, and thus to allow the flotation of a loan, and the securing of
credit abroad. We are even more convinced - if that were possible - than at the
moment of our arrival, that this foreign help is urgently necessary. It is an essential condition for the financial restoration of Austria. But it could not be realised

it were not closely united with your firm determination to proceed to the

indispensable measures of reform and internal restoration.
By this we do not mean that the whole of these measures must be carried out as a
preliminary step. But we consider that the relief of Austrian credit and the restoration of the internal situation should be made the subject of a single plan, all parts
of which should be united.
We were struck with the entirely abnormal economic and financial state which
is the result of the circumstances through which your country has passed. But we
must tell you with friendly frankness that, if the necessity for placing the economic
situation of Austria once more on a normal basis is not faced at once, by courageously ignoring internal difficulties, which without doubt are inevitable, it would be
impossible for the credit of Austria to be sufficient for her to obtain foreign aid ; and,
as we have already said, this aid is itself indispensable for the re-establishment of
a normal state of affairs in Austria.
It is essential that the whole world, with which Austria's credit is to be restored,
should be assured that Austria is willing to face her obligations. It is by showing
that she does not hesitate to face the internal difficulties of her restoration that she
will best prove that she deserves the credit due to her position and to her resources.

If the Government is prepared to accept our suggestions in this matter, we are
ready to discuss, with such persons as it may appoint, a scheme which will meet
these necessities.

It was agreed that negotiations be opened with the Minister of Finance at the
earliest possible date.
The above declaration was published in the Austrian Press by the Austrian Government on April 24th.

- 12 -

Official text 2.


e Minister of Finance and his advisers took place on Monday,

onference the President of the Delegation read and handed to
ollowing memorandum :

e course of our interview on Saturday with the Chancellor
ce and Supply, Austria cannot, in our opinion, avoid an

ollapse unless she succeeds in satisfying the conditions
ign credits which are necessary to her. Such credit is,
order to allow of the import, on a considerable scale, of
o supply the needs of the country ; but as we understand
and financial situation of Austria cannot be sufficiently
ssuring these imports as regards the immediate future.

must further seek to strengthen the basis itself on which the
ria rests, and this cannot be done unless the value of the

uld seem more logical to postpone until later the question
e, with any chance of success, to proceed at once to carry
o choose the means of arriving at this end ; but it would
the success of the negotiations which are to take place,

we, on our part, desire that these negotiations should be
rriving at a practical method. It is, however, in our opin for the obtaining of the necessary foreign credits, that
y on Austria's concentrating all her forces in a firm and
quilibrium in her public finances; this is also necessary
tacles to the development of commercial life which at

Austria. Indeed, if we do not obtain beforehand the necesct, it cannot be expected that foreign countries will confiof Austria the necessary means for her financial restor-

establish a programme with a view to the securing of

allowing the value of the Austrian krone to be stabilised,
it a complete and sufficiently detailed plan for the reorganomy; a sufficient guarantee must also be furnished for
his plan, in accordance with a programme definitely laid

e, in reply, expressed the readiness of the Government to
ublished in the A ustrian Press by the Austrian Government



13 p

Texte officiel 3.



Les negociatioris avec le Ministre des Finances ont commence le lundi 25 avril et se

sont continudes les fours suivants. Le point de vue de la Delegation s'est trouve sire
conforme a celui du Ministre et on arriva bient6t a un accord general sur les points
principaux : credits strangers, garantie des credits, necessite d'emprunts interieurs, stabilisation de la couronne, creation d'une nouvelle Banque d'imision privee a l'aide
d'une certaine quantal de capitaux strangers. La discussion du budget aboutit a la
conclusion que c'est au Gouvernement qu'il appartiendra de decider des mesures
prendre, mais le Gouvernement et les difierents partis politiques devront d'abord se
mettre d'accord pour que soit assuree l'application de ces mesures.
Ce point de vue est diveloppe entre autres choses, dans le memorandum suivant,
en date du 28 avril.
A la fin de nos derrieres entrevues avec les Representants du Gouvernement,

on nous a promis, suivant le desk que nous avions exprime, d'elaborer un plan
pour apporter l'equilibre entre les recettes et les depenses de l'Etat, avec Vindication
de la methode a suivre et du delai necessaire. D'autre part, it sera necessaire de pre-

voir pour la periode transitoire jusqu'au moment de l'equilibre definitif, l'utilisation d'autres ressources que celles de remission du papier-monnaie. Cette condition est essentielle pour eviter toute nouvelle depreciation de la couronne. Nous
estimons, en effet, que la regularisation et rassainissement de la monnaie est rceuvre
la plus importante pour la restauration de l'Autriche; c'est elle seule, en effet, qui
peut prevenir l'accroissement incessant des prix; c'est elle seule qui peut permettre
d'aboutir a une stabilisation actuelle du coilt de la vie. Mais elle n'est possible que
si elle ne doit pas etre compromise par une rechute dans les deficits budgetaires.
Ainsi que nous l'avons deja fait remarquer a.plusieurs reprises, le succes de nos

est entierement lie a la faculte qui nous sera donnee de declarer au

Comite financier de la Societe des Nations que la realisation des mesures projetees
d'accord avec le Gouvernement Autrichien - pour autant qu'elles devront etre
appliquees et realisees par ce Gouvernement - est absolument assuree a tous les
points de vue, et qu'elle sera effectuee sans hesitation et avec toute l'energie voulue.
II est evident que ces mesures impliqueront, pour la population autrichienne, certains sacrifices sensibles. Mais nous sommes convaincus que, sans ces sacrifices,
le resultat souhaite par tous, c'est-h-dire l'assainissement de l'Autriche et de l'Etat,
ne peut etre atteint et que, d'autre part, it ne sera pas possible d'obtenir une aide de
l'etranger tant que retranger n'aura pas la conviction que l'Autriche elle-meme emploiera toutes ses forces pour justifier cette aide et pour se reconstituer completement.

Comme le Comite financier de la Societe des Nations ne peut et ne veut avoir

pour but de mettre l'Autriche sous une tutelle &mere, toutes garanties necessaires
devront etre donnees que l'Autriche elle-merne fera preuve de la force morale et de
la decision voulues pour que les actes qui lui incombent, soient effectivement executes de maniere satisfaisante. Il sera par consequent necessaire que nous puissions
declarer a la Societe des Nations que, non seulement le Gouvernement, mais egalement les autres facteurs publics qui collaborent a la legislation du pays, ou ont une
influence preponderante en cette matiere, se sont engages collectivement a realiser
le programme d'assainissement. Il sera en outre necessaire de pouvoir amener la
propriete privee, ne serait-ce que dans une mesure limitee, a participer a certaines
garanties et engagements solidaires, afin de permettre la reussite de rceuvre considerable qu'est la consolidation de la monnaie, retablissement de reconomie rationale sur une base sure, et le maintien de l'ordre social; nous presumons que tous les
interesses en reconnaissent la necessite et que, de son cote, le Gouvernement fera
tout ce qui est en son pouvoir pour nous donner les garanties en question.
Avant meme de recevoir les propositions du Gouvernement et de publier nousmemes le resultat de nos enquetes, nous tenons a preciser quelques points qui nous
paraissent essentiels. Nous avons entendu un certain nombre de personnalites des
plus eminentes des milieux economiques de l'Autriche, et, prenant pour base les
renseignements qu'elles nous ont fourths et ceux que nous avons recueillis a d'autres
sources, nous estimons qu'il sera necessaire d'exiger ce qui suit : Une fres large part du deficit actuel de l'Etat est due aux subsides fourths par

The negotiations with the Ministry of Finance began on Monday, April 25th, and
continued on the days following. The views of the Delegation were found to be in harmony with those of the Minister, and a general agreement was soon reached on the main
points : foreign credits,guarantees for credits, the necessity for internal loans, the stabilisation of the crown and the founding of a new private Bank of Issue, with some foreign
capital. The discussion of the budget led to the results that the Government must be left
to decide upon the measures required, but that the Government and the various political
parties must first come to an agreement, to ensure that such measures would be carried
into effect.

This view was explained, inter alia, in the foltowing memorandum, dated April

At the end of our last interview with the representatives of the Government,
we were promised, in accordance with our expressed desire, that a plan should
be drawn up to establish a balance between the State receipts and expenditure,
and also to indicate the method to be followed and the period of time required.

Further, it will be necessary, in order to provide for the transitional period up to the
moment of the final establishment of equilibrium, to utilise other resources than
the issue of paper money. This condition is essential in order to avoid any fresh
depreciation in the value of the krone. We consider, indeed, that the regularisation
and restoration of the currency is the most important task in the re-establishment

of Austria. This alone can prevent the constant increase in prices, and this
alone can allow a real stabilisation of the cost of living to be arrived at. But it can
only be effected if it is not checked by a relapse into Budget deficits.
As we have also pointed out on several occasions, the success of our efforts is
entirely dependent upon our being in a position to declare to the Financial Committee of the League of Nations that the realisation of the measures proposed in agreement with the Austrian Government - in so far as they are to be applied and carried
out by that Government - rs absoluleir assured from all points of riere, and that it
will be carried out unhesitatingly and with all the energy required. It is obvious
that these measures will call for certain very considerable sacrifices on the part of
the Austrian population. But we are convinced that without these sacrifices the
result desired by all - the restoration of Austria and of the State - cannot be attained, and also that it will not be possible to obtain foreign help, so long as foreign
countries are not convinced that Austria herself will use every effort to justify this
help, and to effect her complete re-establishment. As the Financial Committee of
the League of Nations cannot, and does not, desire that Austria should remain in
foreign tutelage, all the necessary guarantees must be given that Austria herself
will give proof of that moral strength and that decision which are required, in order
to accomplish effectively and satisfactorily those duties which are incumbent upon
her. We must therefore be able to declare to the League of Nations that not only
the Government but also those other organisations of a public nature which play a
part in the legislation of the country, or which have a preponderating influence
therein, have collectively undertaken to carry out the programme of
toration. It will further be necessary to induce owners of private property, even
if only to a limited extent, to unite in giving certain guarantees and undertakings,
in order to make possible the success of the great work of consolidating the currency, of establishing national economy on a sure basis, and of maintaining social
order. We assume that all the interested parties recognise the need for this, and
that the Government on its part will do all in its power to give us the guarantees in
Before even receiving the proposals of the Government and publishing the result

of our enquiries, we should like to deal with certain points which appear to us essential. We have heard the views of a certain number of the most eminent personalities
in Austrian economic circles, and taking as a basis the information with which they
supplied us, and that which we have collected from other sources, we consider that
it will he necessary to make the following demands: A very large part of the present State deficit is due to subsidies supplied by the


- 17 --


Official text 5.
ISee German text, page 36.s

MAY 9th, 1921.
After the publication of the above statements, discussions continued between the
Austrian Government and the Delegation in regard to certain special matters ; the plans
for the budget, the methods of raising an internal loan, the proposed Commisiion of
Control, and the chief problems involved in the founding of the Bank of Issue.
Negotiations were conducted between the Government and the political Parties, who
were informed of the Government's proposals.
The reply of the Government and the declarations of the Parties as set out below, were
handed to the Delegation on May 9th, and immediately published.

To the Delegates of the Financial Committee of the League of Nations, M. J. Avenol, Sir Drummond Drummond-Fraser and M. E. Gliickstadt, (VIENNA).
According to the verbal and written statements of the Delegates of the Financial
Committee of the League of Nations, the Government understands that the financial
reforms to be effected by Austria are combined with the measures of assistance and
restoration which are to be organised by the Financial Committee of the League of
Nations, in such a way that each of the measures proposed will depend on the realisation of all the others. An increase in taxation, the abolition of subsidies on foodstuffs,
and the large demands made on domestic capital, form heavy tasks which cannot
be undertaken and carried out by the Austrian people, despite hopeful readiness to
make sacrifices, unless the other measures provided by the Delegation of the Financial
Committee of the League of Nations, i.e., assistance from abroad and the stabilisation
of the currency, are really carried into effect, and definitely result in the re-establishment of the currency, and thereby in the revival of public and economic activity as a
whole. Thus it is especially hoped that the necessary resources from abroad will be
available at least during the first two years, in order to enable payment to be made for
the foodstuffs which Austria must import, (and thereby to provide at the same time
for the necessary food supplies and to relieve the bill market), and also to furnish the
financial assistance needed for the State budget until its complete reorganisation has
been effected. Further, any plan of affording definite financial assistance will, from
the outset, be without value, and the task of stabilising the exchange will be compromised from its very inception, unless the State is afforded means, within the shortest
possible time, of abandoning the issue of fresh paper money ; the continuous increase
in the fiduciary circulation would, indeed, in a few months completely overturn the
basis of any financial scheme or any system for improving the exchange. The

Government therefore - and the Delegates of the Financial Committee of the

League of Nations will undoubtedly agree with it on this point - considers it strictly
itecessary and of the highest importance to obtain by way of an advance, even before
the completion of the extensive financial transactions, the foreign credit necessary
for the purchase of foodstuffs abroad. The Government therefore earnestly begs
that means and possibilities may be found for obtaining such credits for use as speedily as possible.
In order to put an end to fluctuations in the value of the currency, and in order
to stabilise the exchange, Austria is ready to afford to a proposed joint stock company, in which foreign capital will participate to a sufficient extent, the exclusive
privilege of issuing notes within a reasonable period, subject to the reservation that
Austria shall be granted a reasonable amount of influence in the administration of
this new institution. The new Bank of Issue must undertake to maintain the par

value (Go/dkursweri) of the krone at a fixed rate, even during the period which
precedes the future resumption (for which provison must be made) of payment
in specie. The proportion which shall determine the fixing of the future gold par

value of the krone cannot, of course, be fixed until credit operations have
been realised, the Bank of Issue has been founded, the advances referred to above

have been granted and the total amount of the fiduciary circulation which depends on them has been definitely fixed. The discussion of this scheme is,
therefore, postponed until the foundation of the Bank. The final fixing of a new
monetary unit depends on the completion of all the measures of revival, and cannot


- toutes les mesures d'assainissement, et ne pourra etre etudiee sans elle. Dans une
annexe speciale (Annexe I, texte of ficiel 6) sont formules les principes essentiels qui

peuvent etre prevus pour la future Banque d'emission et les mesures necessaires
concernant la monnaie, etant entendu que la forme definitive doit etre reservee a la

Pour gager les credits strangers, et pour garantir la dette de l'Etat envers la nouvelle Banque d'emission, qui devra prendre a sa charge, comme son propre passif,
la circulation de billets autrichiens, le Gouvernement - ainsi que cela avait déjà
ete prevu lors des pourparlers anterieurs a Londres et a Paris - nantira les revenus
de sources determinees, au nombre desquelles on pourrait specialement envisager
les revenus du monopole des tabacs et de la douane, comme le cas echeant, les revenus des forks domaniales. Pour fortifier la position de la Banque d'emission, l'Etat
transferera a la nouvelle Banque des actifs pouvant lui echoir a la liquidation de la
Banque austro-hongroise, la Banque donnant decharge a 1'Etat d'une part correspondante de la dette resultant de la circulation fiduciaire. De meme, l'Etat emploiera
les sommes qui pourraient lui echoir par la realisation de biens publics, pour rembourser ses dettes envers la Banque. Le controle de l'emploi des revenus hypotheques et de la realisation de toutes les autres parties du plan financier, sera exerts
par une Comission, composee de Delegues du Comite Financier de la Societe des Nations,

avec la collaboration du Gouvernement Autrichien, ou de ses Representants design&
(voir Annexe I).

En outre, l'Autriche accepte de donner aux preteurs une garantie morale
et economique particulierement effective, sous cette forme que toute la fortune
privee immobiliere, en Autriche, sera grevee d'une hypotheque legale representant 4 % de sa valeur d'avant guerre, en faveur des dits preteurs, de sorte que
la propriete fonciere sera subsidiairement responsable des interets et de l'amortissement dans le cas ou les revenus specialement gages, ainsi que les autres revenus de
1'Etat, ne suffiraient pas pour le service de cet emprunt. Cette hypotheque generale

legale aura le premier rang, sans egard a d'autres hypotheques pouvant etre enregistrees au cadastre.
Comme desire. le Gouvernement Autrichien a etabli un plan financier qui doit
demontrer quelles sont les mesures realisables pour obtenir des economies et pour
ouvrir des nouvelles sources de revenus, et qui pourront etre realisees successivement pour mettre la vie publique en kat et arriver a l'equilibrer, a une époque aussi

rapprochee que possible, par ses propres ressources. On peut voir par ce plan

(Annexe II, texte of flciel 7) que la situation financiere de l'Autriche n'est pas absolument desesperee, si on la met a meme, par l'obtention de credits suffisants, de traverser une certaine periode transitoire durant laquelle les mesures financieres necessaires
seront executees successivement mais sans recourir de nouveau a l'emission de billets et, par consequent, sans nouvelle depreciation de la monnaie.
va sans dire qu'en ce qui concerne les details de ce plan financier, on ne peut
donner une garantie que ce seront precisement ces reformes, ces reglementations d'impots et ces autres mesures memes qui seront realisees ou que ce seront exactement ces
montants memes qui seront obtenus; mais, sur ce point, le Gouvernement et tous les
partis politiques parlementaires sont d'accord que le resultat budgetaire final vers
lequel on tend pourra et devra etre atteint meme s'il y a des divergences d'opinion
sur les details, selon les interets economiques generaux ou les points de vue individuels, sur l'opportunite du choix et des decisions, du rang de priorite, de l'importance
des mesures a prendre. On doit egalement faire certaines reserves au sujet du montant total des depenses prevues, attendu que specialement les charges resultant des
conditions du Traits de St-Germain ne sont pas encore fixees. Un arrangement, tenant
compte de la situation de l'Autriche, au sujet des arrerages d'interets depuis 1914 sur la
Dette publique, dans la mesure ou ils devront etre support& par l'Autriche, devra

donc etre un element important de faction d'assainissement. D'un autre cote, tout
le plan est calcule sur la base du bas cours actuel de la couronne autrichienne, de
sorte qu'une amelioration eventuelle du cours et des prix plus favorables du marche
mondial pourront faciliter ou hater la realisation du programme.
Malgre tous les efforts, it subsistera, les premieres annees, un deficit pour la couver-

ture duquel d'autres operations de credit seront necessaires. Dans l'opinion des De-

legues du Comite financier de la Societe des Nations, tout ce qui ne sera pas
couvert par les credits alimentaires et le rendement des impots, ou qui ne pourra etre

obtenu par des economies, devra etre obtenu par des operations d'emprunt int&
rieur. L'Autriche est d'accord sur ce point, mais elle doit faire remarquer qu'on ne
pourra s'adresser avec succes au marche interieur que Torque le credit de l'Autriche
et la confiance en la valeur de la couronne seront retablis. Il faudra, par consequent,

d'abord obtenir la certitude absolue de la realisation du plan financier complet
avant de pouvoir esperer placer avec succes des emprunts interieurs. D'autre part,
aussitOt que la confiance envers l'Etat, son administration et sa monnaie, sera fortifiee avec l'aide internationale et le concours des Representants du Comite Financier
de la Societe des Nations, it ne sera pas necessaire de recourir a la contrainte pour

- 18 be considered until these have been carried out. In a special annex (Annex I, official text 6), the fundamental principles are laid down which may guide the future
Bank of Issue and the necessary measures relating to the currency, it being understood that the final form of these must be reserved for legislation.

In order to give security for foreign credits and to guarantee the indebtedness
of the State to the new Bank of Issue, which must be responsible and assume .financial

liability for the issue of Austrian notes, the Government - as has already been

laid down during former discussions in London and Paris - will allocate to revenue
from definite sources, amongst which might be regarded in particular revenue from
the tobacco monopoly and from customs, and also, if need be, the revenue from State

forests. In order to. strengthen the position of the Bank of Issue, the State will

transfer to the new Bank the credit balance which may be due to it on the liquidation
of the Bank of Austria-Hungary, the Bank discharging the State from liability for a

corresponding part of the debt arising from the fiduciary circulation. At the same
time, the State will employ such sums as may fall due to it from the realisation of
public property to repay its debts to the Bank. The control of the use of the revenue
thus mortgaged, and of the realisation of all other parts of the financial scheme, will
be exercised by a Commission composed of Delegates of the Financial Committee of

the League of Nations, with the collaboration of the Austrian Government or its
appointed representatives (see Annex I).
Further, Austria undertakes to afford to the lenders a moral and economic
guarantee of a particularly effective nature in such a way that all private real estate
in Austria shall be charged with a legal mortgage, representing 4% of its pre-war
value in favour of the said lenders, so that real property will be responsible in a
subsidiary way for the interest and the amortisation, should the case arise that the
revenue specially allotted thereto, together with the other State revenue, should
not be sufficient to meet this loan. This general legal mortgage will be of the first
class, without regard to other mortgages which may have been entered on the land
The Austrian Government has, as requested, drawn up a financial scheme showing what steps are possible to effect economies and to open up fresh sources of revenue :
such steps as might be successively realised, for the purpose of restoring activity to
public life and securing an equilibrium at as early a date as possible, by means of the
country's own resources. It may be seen from this plan (Annex II, official text 7) that
the financial situation of Austria is not actually desperate, if she be enabled, by means
of sufficient credit, to pass through a certain transition period, during which the necessary financial measures will be carried out successively, but without having further
recourse to the issue of paper money and therefore without further depreciation of
the currency.
It is obvious that. as regards the details of this financial scheme, no guarantee

can be given that it will be precisely these reforms, these regulations of taxes and
these other measures which will themselves be realised, or that it will be exactly these

totals which will be reached ; but on this point the Government and all the Parliamentary political parties agree, that the final budget result which is aimed at both
can and will be attained, even if there are differences of opinion arising from general
economic interests or from individual points of view, regarding details as to the
advisibility of the choice and the decisions, the order of priority and the importance
of the measures to be taken. Certain reservations must also be made with regard to
the total amount of expenditure provided for, particularly so long as the burdens
resulting from the conditions of the Teeaty of St. Germain have not yet been fixed.
An arrangement, taking into consideration the situation of Austria with regard to
arrears, since 1914, of interest on the National Debt, and the extent to which they
should be borne by Austria, should therefore form an important element in this
restoration. Again, the whole plan is calculated on the basis of the present low rate
of the Austrian krone; so that any subsequent improvement in this rate of exchange
and more favourable prices in the world market will facilitate or hasten the realisation of this programme.
In spite of all efforts that may he made, a deficit will remain during the first
years, and to cover this other credit operations will be necessary. In the opinion
of the Delegates of the Financial Committee of the League of Nations, whatever is
not covered by foodstuff credits and the yield of taxation, or which cannot be gained
by economy, should be obtained by internal loans. Austria agrees on this point ;
but it should be pointed out that it will not be possible to have recourse successfully
to the internal market until Austrian credit and confidence in the value of the krone
are re-established. Consequently it will be necessary, first of all, to obtain absolute
certainty as to the realisation of the complete financial scheme, before any hope may
be placed in the success of internal loans. Moreover, as soon as confidence in the
State, its administration and its currency is strengthened by international aid, and by
the co-operation of the representatives of the Financial Committee of the League of
Nations, recourse need no longer be had to force, in order to compel Austrian capital-


-9engager les capitalistes autrichiens a souscrire aux emprunts de l'Etat. Pour donner
au Comite financier de la Societe des Nations, comme elle le demande, le plus de
certitude possible sur l'obtention eventuelle des capitaux necessaires par la voie d'emprunts interieurs, l'Autriche se declare des maintenant prate a garantir le prelevement de ressources interieures par une autre hypotheque de 2 % sur les biens prives
immobiliers autrichiens.
Les deux hypotheses generales susmentionnees devront etre exprimees dans la
nouvelle unite monetaire et exprimer ainsi qu'elles sont une condition de l'assainissement prealable du budget de l'Etat et de la monnaie.
En ce qui concerne les autres mesures reclamees par les Delegues du Comite
financier de la Societe des Nations dans leur memorandum du 28 avril 1921 pour

reconstituer la vie publique normale du pays, l'Administration autrichienne est
prate a s'y conformer aussi rapidement que le permettront les managements dus
aux malheureux, d'autant plus que ces desks s'accordent entierement avec le but
que le Gouvernement s'est jusqu'a present efforce d'atteindre.
Ainsi que les Delegues du Comite financier de la Societe des Nations pourront le constater par les autres annexes, le Gouvernement a negocie avec tous les
groupes de l'Assemblee Nationale au suj et des declarations ci-dessus, tous les groupes les approuvent et, particulierement, Hs sont d'accord avec les actions prevues
en ce qui concerne leur but et leur importance, bien qu'ils fassent certaines reserves
conformement a leur programme politique, social et economique, sur des points de

details du plan. Le Comite financier de la Societe des Nations peut donc etre

persuade que tous les facteurs decisifs de l'Autriche sont convaincus de l'importance
et de la necessite de faire preuve de toute leur energie, et que, de leur cote, rien ne

sera epargne pour realiser cette grande entreprise, vitale pour l'Autriche, dont le
Comite financier de la Societe des Nations a pris l'initiative et pour la

mener a bonne fin. En exprimant aux Delegues du Comite financier de la
Societe des Nations ses meilleurs remerciements pour l'ardeur, l'humanite et la

profondeur avec lesquelles ils ont jusqu'ici conduit les negociations et enquetes,
le Gouvernement les prie de renseigner le Comite financier de la Societe des
Nations dans le mane esprit sur la situation de l'Autriche et sur les espoirs de
l'Autriche, et de travailler avec la plus grande energie dans le but d'obtenir rapidement des decisions et des actes, attendu que rceuvre sera d'autant plus facile et
plus complete que sa realisation aura lieu plus tot, chaque retard augmentant les
maux dont souffre l'Autriche et pouvant a la fin les rendre inguerissables.
Vienne, le 9 mai 1921.


ists to subscribe to State loans.

In order to afford the Financial Committee of the
League of Nations (as it demands) the greatest possible certainty of eventually
obtaining the necessary capital by means of internal loans, Austria declares herself
to be ready at once to guarantee the raising of internal revenue by another 2%
mortgage on Austrian private real estate.
The two general mortgages mentioned above will be expressed in the new mone-

tary unit, and will thereby make clear that they are a condition of the preliminary
re-establishment of the State budget and of the currency. As regards the other
measures required by the Delegates of the Financial Committee of the League of
Nations in their memorandum of April 28th, 1921, to re-establish the normal public
life of the country, the Austrian Administration is prepared to agree to them as
quickly as pcssible in accordance with giving due consideration to those who have
suffered, the more so as these wishes are in entire agreement with the aim which
the Government has hitherto endeavoured to attain.
As the Delegates of the Financial Committee of the League of Nations will
observe in the other annexes, the Government has negotiated with all the groups of
the National Assembly with regard to the above-mentioned declarations these
declarations are approved by all the groups and are in particular in agreement with
the course of action proposed, both as regards its object and its importance, although
these groups make certain reservations, in accordance with their political, social and
economic programmes, as to certain details of the scheme. The Financial Committee of the League of Nations may therefore be assured that all the decisive elements
in Austria are convinced of the importance and the necessity of displaying their
energies to the full, and they will spare nothing to carry out this great enterprise,
vital to Austria, which the Financial Committee of the League of Nations has taken
in hand, and thus to bring it to a successful conclusion.
The Government expresses its best thanks to the Delegates of the Financial
Committee of the League of Nations for the enthusiasm, humanity and thoroughness

with which they have hitherto conducted the negotiations and enquiries ; the Government, in the same spirit, begs them to give to the Financial Committee of the League
of Nations information as to the situation in Austria, and also as to Austria's hopes,

and to work with the greatest energy, in order to obtain decisions and take action

rapidly, in view of the fact that the work will be easier and more complete, the sooner
its realisation is accomplished. Every delay increases the evils from which Austria
is suffering, and may finally render them incurable.
Vienna, May 9th, 1921.



- 20 -


- 2t of stamped notes put into circulation in Austria; the State would become debtor of
the Bank for the equivalent amount in Austrian currency, calculated according to
the equation established for the taking over of the old currency (in so far as part of
this debt is not redeemed by handing over certain securities to the Bank or notes
withdrawn from circulation by exchange against metal currency).
10. More especially, the State will hand over to the new Bank of Issue the part
of the metal reserve of the Bank of Austria-Hungary, which will revert to it after the
liquidation of the latter, and the Bank of Issue in return shall deduct a corresponding
part of the debt contracted by the State resulting from the issue of notes.
Ir. If the State should obtain other assets from the liquidation of the bank of
Austria-Hungary, the new Bank would also take them into account and deduct a
corresponding part of the debt contracted by the State arising from the issue of
notes; should part of these assets be charged with liabilities of the Bank of AustriaHungary, a corresponding amount would be deducted from the said assets.
12. That part of the Bank of Austria-Hungary which transacts Austrian business
shall be handed over to the new Bank of Issue, complete with its present organisation
and services.
13. Moreover, the State will utilise the proceeds of the sale of national property
for the repayment of the debt to the Bank. In the term " national property
is included the capital belonging to the State ; this does not apply to sales which
form part of regular administrative operations. The State, in order to diminish
its debt towards the Bank, will also examine the cession to the said Bank of properties which are judged suitable, after agreement with the Bank in each case.
14. As regards the balance of the debt incurred through the issue of notes, the
State will give the Bank of Issue promissory notes on which it will pay interest at the
% per year. An amortisation plan will also be prepared for the rddemprate of
tion of these debts.
15. In order to strengthen the position of the Bank, with a view to the definite
stabilisation of the currency, the Financial Committee of the League of Nations, in
addition to the loan intended to cover the purchase of foodstuffs abroad, will negotiate
abroad a special exchange credit for an appropriate amount. The proceeds of this
loan, which the State will guarantee as it does the other Austrian relief credits contemplated by the Financial Committee of the League of Nations, will be handed over to the
Bank to increase its reserve in foreign currency. The Bank will be indebted to the
State for this sum, and will allow interest on this amount according to the plan described below

i6. The Bank will receive for a period of 25 years the exclusive privilege of
issuing notes in Austria; the precise regulations regarding the exercise of this privilege. and the activity of the Bank will be, in a general manner, drawn up on the model
of the Statutes in force for the Bank of Austria -Hungary; but the disposition relating
to the metal backing and the repayment of bank notes in specie will only be put into
force at a later time, to be fixed by agreement between the Government, the Directorate of the Bank and the joint Commission of Control (see below). The right of
modifying the Statutes of the Bank at any time, even in other respects, is reserved.
17. Until then, the Bank undertakes by every means in its power to see that the
value of its notes, expressed in terms of foreign exchange, is permanently maintained

at the parity of the legal standard of the new currency, i.e., the number of units of
the new Austrian currency, according to the equation determined, must be equal, if
possible, to the value of i kg. gold (9 /ro fine gold) and in any case at least to the
value of as many American dollars (legal unit of the currency of the United States)
as can be struck out of i kg. of minted gold (9 /I° fine gold).

18. The State will hand over to the Bank its assets in foreign exchange and its
organisation of payments abroad. The Central Exchange Bureau will be united
with the Bank, which shall take over its assets in foreign exchange, and the State will

be credited by the Bank with a corresponding amount for the amortisation. of the
debt contracted through the issue of notes. The relief credits which the State
receives will be administered by the Bank. The Government has under consideration also the handing over to the Bank of the Treasury organisation ; it is taking
all measures as soon as possible to centralise in the Bank the assets of the Treasury
and its control.
19. One half of the members of the Board of Directors chosen by the General
Meeting of the shareholders of the Bank shall be Austrians. The general management of the Bank shall be entrusted to a managing Committee of from 3 to 5 members.
One Director shall be chosen by the Government, the others by the Board of Directors. The Director nominated by the Government will be President of the Bank.
20. A dividend for the shareholders up to 8% of the share capital will have first
claim on the yearly profits of the Bank. Out of the remaining profits, the Bank will

allow the State an interest of 6% on the capital (foreign credits having first claim)


- 22 credits strangers ayant un droit de priorite - que l'Etat a mis a sa disposition (voir
No 15).- Un tiers du reliquat servira a constituer un fonds de reserve, destine a augmenter l'encaisse metallique (fonds en devises etrangeres) de la Banque, jusqu'a ce que le

fonds de reserve soit egal a la moitie du capital. La moitie du solde sera remise a
1'Etat pour etre versee comme bonus aux porteurs de titres des emprunts d'assainissement, tant que ceux-ci ne seront pas rembourses, et servir ensuite au rachat de
sa dette contractee envers la Banque en raison de remission des billets. Un quart
sera distribue aux actionnaires comme dividende supplementaire et un quart servira
au rachat de la dette contract& par l'Etat envers la Banque en raison de remission
deF. billets.


21. Le controle de l'emploi de toutes les ressources obtenues a ]'stranger par
rintermediaire du Comite financier de la Societe des Nations, celui de la rentree
et de l'emploi des recettes provenant des revenus de 1'Etat, specialement dorm&
en gage a cet effet, et destinees au paiement des interets et a l'amortissement de ces
emprunts, et a la realisation du programme financier d'assainissement arrete entre
le Comite financier de la Societe des Nations et l'Autriche, sera exerce par une
Commission de six membres, dont trois membres nommes par le Comite financier
de la Societe des Nations, et trois par l'Autriche. Elle se reunira a Vienne selon les
besoins. On propose que le Ministre des Finances ou son Representant dfiment
autorise, un Representant designs par l'Assemblee Nationale Autrichienne, et un
Representant des biens immobiliers touches par les priorites prevues, soient les
Representants de l'Autriche dans cette Commission.
22. La competence de la Commission de controle devra etie exactement definie.
23. Dans le cas oiI l'Autriche se croirait les& par des decisions de la Commission

de controle, elle aura le droit d'appeler de ces decisions au Comite financier de la
Societe des Nations, dont les jugements seront sans appel. D'autre part les representants du Comite financier de la Societe des Nations faisant partie de la Commission de controle auront le droit de faire appel au Comite financier de la Societe
des Nations de decisions de la Commission de controle qu'ils considereront
comme contraires aux conventions ou aux interets des creanciers.

24. L'appel a effet suspensif, sans que toutefois la conduite normale des affaires

de l'Etat puisse en etre entravee.
25. Le Comae financier de la Societe des Nations nommera un representant
permanent aupres du Gouvernement Autrichien pour surveiller l'execution des decisions de la Commission de controle et en rendre compte a cette derniere.


- 22
which the State has put at its disposal (see No. 15). One third of the remainder will
be put aside to create a reserve fund which shall increase the metal reserve (foreign
currency fund) of the Bank until such time as the Reserve fund is equal to one half

the capital. Half of the remainder will be handed over to the State, which will

employ it to give a bonus to holders of relief loan securities, so long as these have not

been repaid, and to acquit the debt to the Bank for the issue of notes. One

quarter shall be distributed to shareholders as a supplementary dividend, and one
quarter will go towards redeeming the debt contracted by the State towards the

Bank by the issue of notes.

21. The Control of utilisation of the funds obtained from abroad through the
Financial Committee of the League of Nations, and that of the collection and appropriation of the inland revenue given in guarantee, besides being allocated for the
payment of the interest and amortisation of the said loans, and the proper carrying
out of the plan of financial reconstruction agreed on between the Financial Committee of the League and Austria, will be exercised through a Commission of six Members,

three being appointed by the Financial Committee, and the remainder by Austria.
This Commission will meet in Vienna as required. It is proposed that the Minister of Finance, or his duly authorised representative, a representative nominated
by the Austrian National Assembly, and a representative of the landed interests
affected by the aforesaid prior claim measures, shall be the representatives of Austria
on this Commission.
22. The competence af_the Commission of Control must be clearly defined.

23. Should Austria at any time consider herself wronged by a decision of the
Commission of Control, she will have the right to appeal against such decision to the
Financial Committee or the League of Nations, whose judgment shall be final. On

the 'other hand, the representatives of the Financial Committee of the League of
Nations sitting on the Commission of Control will have the right of appeal to the
Financial Committee of the League of Nations against any decision of the Commission

of Control which they may consider as contrary to the agreed conventions or to the
interests of the creditors.
24. The appeal has a suspensive effect. This, however, must not be allowed to
interfere with the normal course of State business.
25. The Financial Committee of the League of Nations will nominate a permanent representative with the Austrian Government. It will be his duty to supervise
the carrying out of the decisions of the Commission of Control, and to report to the


- 23 Texte ofj7ciel 7.
Annexe II au texte officie1.5.
Voir !exie allemand, page


Vienne, le 5 mai 1921.


Le projet comporte deux series de mesures a appliquer successivement :
A. Mesures destinees a assurer l'equilibre durable du Budget dans deux ans environ,
B. Mesures a appliquer au cours de la prochaine annee financiere 1921-1922.


En calculant la valeur de la couronne sur la base de Ioo couronnes pour 1 franc
suisse, les subventions payees par l'Etat pour le ravitaillement
annuellement a 26 milliards de couronnes. Sur cette somme 19 milliards de couronnes
sont destinees a l'achat de farine et de pain, 25 millions a l'achat de viande, 37 millions a l'achat de graisse et 72o millions de couronnes a l'achat de lait. Ces subventions
devraient disparaitre dans un delai de douze a dix-huit mois, de sorte qu'en principe,
les citoyens autrichiens devront alors subvenir aux frais de leur alimentation par leurs

propres moyens. Jusqu'a present, l'Etat n'a pu retirer aucun benefice de la baisse
des prix des denrees alimentaires sur le marche mondial, parce que l'effet de cette
baisse a ete continuellement neutralise par la baisse de la couronne. Dans le cas
pourtant ou, grace a l'intervention de la Societe des Nations, une stabilisation de la
couronne viendrait a se produire, l'Etat autrichien pourrait, lui aussi, profiter de la
baisse des prix du marche mondial. Si le cours de la couronne venait a s'ameliorer,
ce profit serait encore plus grand. La suppression des subventions pour les denrees
alimentaires se produira donc d'autant plus rapidement que le cours de la couronne
Maintenant le Gouvernement a pris des mesures pour reduire ces subventions.
Par l'augmentation du prix de la ration de graisse d'environ 3o pour cent, les charges
de 1'Etat pour cette denree seront considerablement reduites, a partir du ter mai 1921.

Une reduction de la subvention pour la viande est en preparation. L'etablissement d'une echelle des prix de vente du pain et de la farine et l'augmentation generale du prix de la farine reduiront les charges de 1'Etat pour ces deux denrees. Cependant, pour des raisons d'ordre social, la suppression totale des subventions ne peut
etre decretee d'un seul coup. L'Etat doit se reserver d'operer cette suppression par
des etapes successives, soigneusement combinees en tenant compte de la situation
du commerce et de l'industrie et des necessites sociales du pays. On prevoit que la
suppression totale de ces subventions pourra etre realisee a la fin de 1922.
Le tableau suivant montre l'influence qu'une- amelioration du cours de la couronne pourrait avoir sur les subventions accordees par l'Etat pour l'achat de denrees
alimentaires :
Pertes en milliards de couronnes subies en la mois avec un cours de :

- 23 Official text 7.
Annex II to the Official text 5.
See German text, page 42.

Vienna, May 5th, 1921.


The Draft consists of two parts, applicable during successive periods:
A. Measures to establish a permanent equilibrium within a period of about two

years, and
B. Measures to be applied during the financial year 1921-1922.


Taking the value of the crown at Ioo kronen, equal to one Swiss franc, the subsidies paid by the State for the supplying of the country with foodstuffs amount
for one year to 26 milliard kronen. Out of this sum ig milliard kronen are allotted
to the purchase of flour and bread, 25 million for meat, 37 million for fats and 72o
million kronen for milk. These subsidies should disappear within one year, or a
year and a-half, so that, in principle, Austrian citizens should defray the expenses
of their food supplies out of their own pockets. Up to the present, the State has
been unable to take advantage of the fall in the prices of foodstuffs in the worldmarket, since the effect of this fall has been continually neutralised by the fall of the
krone. Should, however, the intervention of the League of Nations bring about a
stabilisation of the krone, the State also would be able to take advantage of the fall
in prices on the world-market. If the rate of the krone improves, this advantage
would be still greater. The suppression of subsidies on foodstuffs will take place
all the more rapidly as the krone improves in value.
The Government has now taken steps to reduce these subsidies. By increasing
the price of the ration of fats by about 3o %, the outlay of the State on these foodstuffs will be considerably reduced after May 1st, 1921.

A reduction of the subsidy on meat is being arranged. By grading the price
of bread and flour and by a general increase in the price of the latter, the burden
by the State will be diminished as regards these two kinds of foodstuffs. However,
for social reasons, the State subsidies cannot all he stopped at the same time. The

State must retain the right to do away with them gradually, and by successive
stages, according to the commercial and industrial situation, taking into careful
consideration the social needs of the country. It is estimated that the subsidies
will have totally disappeared by the end of 1922.
The following table shows the influence of an improvement in the krone on the
State subsidies for the purchase of foodstuffs.
Losses in milliards of kronen
incurred during 12 months
with the exchange standing at

too kr. =

1 Swiss fr.

too kr. =

t.So Swiss fr.







Condensed Milk





too kr. =

2 Swiss fr.





- 24 II


La nomination de nouveaux fonctionnaires, et la creation d'administrations
nouvelles, ne devraient plus etre autorisees. Le personnel existant devrait etre
reparti d'une fawn plus rationnelle, de maniere a repondre aux besoins d'un service
par la mutation d'employes preleves dans un autre ou ils ne sont pas indispensables
On devrait favoriser la reduction du personnel en accordant aux employes qui se

declareraient prets a quitter le service de l'Etat, plusieurs annees de traitement,

pour leur permettre, pendant la periode ou leur existence sera ainsi assuree, d'essayer
de consacrer leur activite a des besognes qui puissent aider au developpement economique du pays. Mais ces mesures ne seront pas appliquees immediatement ; elles
offrent seulement la possibilite d'ameliorations pour l'avenir. Actuellement, it serait

necessaire d'arreter l'augmentation presque journaliere du nombre des employes,
et de refuser toute augmentation nouvelle des traitements. Cette politique devrait
etre pratiquee jusqu'au moment ou les credits mis a notre disposition par la Societe
des Nations seraient obtenus. Il ne faudrait pas que l'ceuvre entreprise soit compromise par une situation qui risquerait de faire echouer les negociations. Si des credits
nous sont accord& ou si, au moins, it est etabli d'une facon certaine que nous pouvons compter sur ces credits, une hausse de la couronne se produira et, le prix des
vivres diminuant dans la meme proportion, les traitements, -tout en restant les
memes, seront plus avantageux et leur augmentation n'aura plus de raison d'être.



En ce qui concerne la possibilite de nouvelles augmentations de recettes importantes, it faut etablir ce principe que les revenus de l'Etat doivent tenir compte de
la depreciation de la valeur de la monnaie. Certaines recettes devront etre augmentees pour repondre aux besoins croissants du Tresor appauvri, cette augmentation
devant merne depasser parfois la depreciation proportionnelle de la monnaie.
Les mesures suivantes, en particulier, seraient necessaires:

1. Imptits directs.
Les impOts directs ont ete releves d'une facon tenement considerable, au cours
des derrieres annees, qu'il n'est pas possible de songer a les augmenter encore d'une
maniere generale. Pourtant, le service chargé de l'etablissement de ces impots ne s'est
pas encore habitué au fonctionnement des lois nouvelles; un mode d'evaluation plus
rigoureux pourrait, en ce qui concerne l'impot sur le revenu, faire rentrer dans les
caisses de l'Etat, en plus, environ i milliard de couronnes. On pourra, a partir de
1923, songer a etablir un imp& permanent sur la fortune, dont on peut esperer, sans
surcharger l'epargne publique, une recette supplementaire d'environ 500 millions
de couronnes.
2. Douanes.

Les reglements douaniers en vigueur prescrivent les paiements en or. Neanmoins, la perception du tarif nominal des douanes s'est faite jusqu'a it y a quelques
mois, en couronnes-papier. C'est seulement au cours de l'annee derniere que le tarif
nominal des douanes a ete releve par etapes au cours approximatif de la parite de
l'or. Si tous les droits de douane etaient percus de cette facon (ce qui ne se produit
encore actuellement que pour les denrees coloniales et certains articles de luxe)
on pourrait escompter une augmentation des recettes douanieres d'environ 2 milliards de couronnes.
3. Impats de consommation.

Les taxes de consommation sont restees extraordinairement peu elevees en
comparaison de celles d'avant guerre et relativement au prix des marchandises
taxees. Il serait necessaire de retablir la proportion entre le prix de chaque marchandise et la taxe qui la frappe. Ce principe ne peut pourtant pas etre appliqué imrne-

diatement pour toutes les marchandises taxees. Cependant, des augmentations
raisonnables peuvent etre decretees d'ici quelque temps; elles donneraient a peu
pres les recettes supplementaires suivantes:


- 24 II


The appointment of new officials and the creation of new administrations

should not be authorised. The staff already appointed should be distributed in a
more practical manner, in such a way as to meet the requirements of one branch
of the administration by transferring employees from another branch, where their
services are less indispensable. The reduction of the personnel ought to be encouraged by granting several years' salary to employees who declare themselves ready
to leave the service of the State, so that these employees during the period when
their existence is assured may be able to devote themselves to other professions,
profitable from the point of view of the political economy of the country. These
measures, however, will not be put immediately into execution ; they only afford
a possibility of subsequent improvements.
At present, it is necessary to put a stop to the almost daily increase in the number
of employees, and at the same time to refuse further increases in regular salaries.
This policy should be adhered to until such time as the credits put at our disposal
by the League of Nations are obtained. The work undertaken must not be imperilled by any circumstances which might cause the negotiations to fail. If the

credits are granted, or if we may definitely depend on their being granted, the
krone will improve, the price of foodstuffs will decrease accordingly, and salaries,
by remaining unchanged, will have a greater value and there will no longer be any
grounds for increasing them.



As regards important increases in revenue which are still possible, the principle
must be laid down that the revenue of the State should take into account the depreciation of money values. Certain taxes, however, ought to be still further increased,
to meet the growing requirements of an impoverished Treasury; this increase must
at times even exceed the proportional depreciation in the currency. The following
measures will in particular be necessary :
I. Direct taxes.

Direct taxes have been increased to such a considerable extent in the course
of the last years that it is not possible, generally speaking, to contemplate a further
increase. However, the Department whose duty it is to assess these taxes has not
completely adapted itself to the new laws. As regards income tax, a more rigorous system of assessment might result for the Treasury in an increase of about
1,000 million kronen. We might also consider the possibility of a permanent tax
on capital, beginning in 1923, which, without constituting too great a strain on the

savings of the public, may be expected to bring in a supplementary revenue of
about Soo million kronen.
2. Customs.

The customs law at present in force provides for payments in gold. However,
in point of fact, until some months ago the payment of the nominal customs tariffs
was made in paper kronen. It is only in the course of the last year that the nominal
customs tariff has been gradually increased up to gold parity. If all the customs
duties were collected in this way (which at the present moment is only the case
as regards groceries and certain luxuries) an increase in the customs receipts of
about 2,000 million kronen might be effected.

3. Taxes on consumable articles.
Taxes on consumable articles in relation to the prices of goods have remained
extraordinarily low, in comparison with pre-war days. This proportion between the
prices of the goods and the tax for each particular article should be restored. This

principle cannot be immediately applied to all taxed goods; suitable increases
of taxation, however, might be imposed after some time and would give,
approximately, the following returns:


- 25 - sur les alcools






vins mousseux


L'Etat pourrait, en outre, deduction faite de la part d
munes, retirer de:

'Imp& sur le sucre




les huiles minerales
les allumettes et produits analogues


4. Taxes.

Le produit brut des taxes (timbres, impots sur la circ
taxes judiciaires) est actuellement d'environ 5o % sup
guerre. Le Gouvernement pourrait porter cette augmenta
ration laisse esperer un supplement de recettes d'environ 3
L'impot sur les transactions entre dans ce chiffre pour en
ronnes, ainsi que l'impot sur la circulation en chemin de fe
tions progressives de tarifs, doit s'elever a environ un millia
5. Tabacs.

Les prix de vente sont actuellement de 3o a 8o fois s
guerre. La balance des depenses et des recettes montrait, a
dent de recettes brutes, pour l'entreprise et le monopole de
Cet excedent est tombe actuellement a environ 3o %. La p
pourrait etre retablie par une augmentation des prix de ven
de la couronne, cette augmentation devrait etre de ioo %. Si
mation actuelle, insuffisamment satisfaits, l'etaient comple
tation de la production, et si, d'autre part, les exportation
s'ensuivrait un relevement d'environ 10 milliards de cou
brutes. Pourtant une augmentation aussi considerable des t
saire si le cours de la couronne venait a s'elever, ou si le pri
venait a baisser.
Nous attirons l'attention sur les points suivants:
a) En 1913, les chiffres de l'exploitation des tabacs p
nouvelle Autriche, etaient les suivants:


Recettes nettes

ou 6
b) Pour l'annee financiere 1921-1922, on peut prevoir

Recettes nettes

5 60

2 20

ou 28

c) Si les prix de vente actuels sont major& de 100 %, o
tion reduite, les chiffres suivants:

Recettes nettes




ou 64

Excedent des recettes
d) Si les prix de vente actuels sont majores de 100 %
production normale:

Recettes nettes



ou 62
Excedent des recettes


Tax on spirits

1,000 million kronen

sparkling wines


2,630 million kronen


Further, the State, after allotting certain sums to the provinces and municipalities, would retain the following:

Tax on sugar


2,000 million kronen

mineral oils
matches and similar products

3,670 million kronen

4. Duties.

The gross returns of the duties (stamps, tolls, registry, judicial fees) are at pre-

sent about 5o % higher than those of pre-War days. By suitable increases the
Government might raise these returns to ioo °,/o. The surplus taxation estimated
under this head would amount to about 3 milliard kronen. Duties on the sale
of goods are included in this figure, to the extent of about I milliard kronen, as
well as duties on railway traffic, which, with the gradually increasing tariffs, will
amount to about one and a-half milliard kronen.
5. Tobacco.

The selling prices are at present 3o to 8o times higher than those before the
As regards the administration and taxes levied on this monoply, before the
War gross receipts showed a balance over expenditure of 66 %. This balance has
at present been reduced to about 3o %. The pre-war proportion may be restored
by increasing the selling prices. In view of the present rate of the krone, this
increase should be raised to ioo %. If the requirements of consumers, which are
at present insufficiently supplied, were completely satisfied by an increase in proWar.

duction, and if the exports were also increased, an increase in gross receipts of about
10 milliard kronen would result. However, such a considerable increase in tariffs

would not be necessary if the rate of the krone were to rise or the price of raw
material to fall.
We draw attention to the following points:
(a) In 1913, in the territories of the new Austria, the figures relating to the
tobacco industry were as follows:

Net receipts

132 million kronen





or 66 % of the gross receipts.

(b) For the financial year 1921-1922, the following are the estimates:
7,80o million kronen


Net receipts



or 28 % of the gross receipts.

(c) If the present selling prices are increased by 100 %, the reduced production
will give us:
15,60o million kronen
Net Receipts
or 64 % of the gross receipts.
Increase in receipts
7,80o million kronen
(d) If the present selling prices are increased by 100 %, a normal production
would yield :
20,200 million kronen
Net Receipts
or 62% of gross receipts.
Increase in receipts
io,000 million kronen


e) Les calculs ci-dessus sont bases sur le cours de ioo couronnes pour i franc
suisse. Si le cours etait de Ioo couronnes pour i fr. 5o suisse, it resulterait d'un relevement de 77 % des prix de vente, les chiffres suivants :

13.800 millions de couronnes

Recettes nettes





9.200 millions de couronnes

ou 66 % des recettes brutes.

f) Si le cours de la couronne etait de rno couronnes pour 2 francs suisses, it
suffirait pour obtenir la proportion d'avant guerre entre les recettes et les depenses
(66 % des recettes brutes) d'une elevation des prix de vente de 38 %, comme le
montrent les chiffres suivants:

io.800 millions de couronnes



Recettes brutes




7.200 millions de couronnes

ou 66 % des recettes brutes.
6. Sel.

En renoncant aux etablissements qui emploient des procedes arrieres, et en
concentrant toute la production dans des centres pourvus des derniers perfectionnements techniques, on pourrait retirer du monopole du sel de grands benefices. On
obtiendrait ainsi, tout en maintenant le prix actuel du sel, des benefices plus eleves.

Le fait que certains des nouveaux Etats qui autrefois s'approvisionnaient a nos
salines des Alpes souffrent du manque de sel, permet de prevoir une augmentation
des exportations. Il serait ainsi possible d'obtenir une augmentation de benefices
nets d'environ 200 millions de couronnes.
7. Chemins de ter d'Etat.

Les chemins de fer d'Etat sont actuellement en deficit de plus de 10 milliards
de couronnes. Pourtant les tarifs ont ete major& de sorte que les tarifs de voyageurs

sont environ dix fois superieurs a ceux d'avant guerre et ceux des marchandises
120 fois. Il serait possible de relever les tarifs de voyageurs jusqu'a 20 fois, et ceux
de marchandises jusqu'a 200 fois. On realiserait ainsi une augmentation de recettes
de 6.000 millions de couronnes en chiffres ronds.
8. Postes, Telegraphes et Tdlephones.

Le passif de ces services est egalement tres lourd. Le montant des tarifs est
20 fois plus eleve qu'avant guerre pour les postes, et 33 fois pour les telegraphes.
En doublant les tarifs actuels, on obtiendrait un supplement de recettes de 2 milliards de couronnes en chiffres ronds.

9. Fortis de l'Etat.
L'exploitation des forets de l'Etat est peu rationnelle. Une reorganisation plus
economique de ce service et la modification de certains contrats d'abattage peu avan-

tageux pour l'Etat, seraient susceptibles de produire un supplement de recettes
d'environ i milliard de couronnes.
ro. Etablissements industriels de l'Etat.

L'Etat a ete oblige de prendre a son compte, apres le demembrement, plusieurs
etablissements industriels d'Etat qui etaient pendant la guerre consacres a la fabrication du materiel militaire. Malgre de nombreuses tentatives, it n'a pas ete possible
de trouver jusqu'a present sous quelle forme ces etablissements pourraient assurer
des benefices a l'Etat. Its sont encore pour la plupart fortement en deficit. Si l'on

pouvait reussir a les administrer d'une facon rationnelle et economique - et les
conditions techniques permettant d'obtenir ce resultat existent, puisqu'il s'agit
d'etablissements completement neufs - le deficit serait pour le moins comble et
des benefices assez importants pourraient etre realises. Il est impossible de donner
des chiffres a ce sujet.

- 26 (e) The above calculations are based on a rate of no kronen = 1 Swiss franc :
if the rate were 100 kronen = I. 5o Swiss francs, the result would be an increase in
the selling prices of 77 %.
13,800 million kronen





Net receipts



or 66 % of gross receipts.

(/) If the rate of the krone were 100 krone] I = 2 Swiss francs, in order to obtain
the pre-war proportion between revenue and expenditure (66 % of gross revenue),
an increase in selling prices of 38 % would be sufficient, as is shown in the following

figures :

io,800 million kronen



Net receipts



or 66 °,/, of gross receipts.

6. Salt.
By giving up establishments which employ out-of-date methods, and by concen-

trating all production in centres supplied with the latest technical improvements,
it would be possible to secure from the salt monopoly a considerable profit. Thereby,
while maintaining the present price of salt, a rise in the profits might be guaranteed.

The fact that certain of the new States which formerly obtained their supplies from
our salt works in the Alps, are suffering from a lack of salt, leads us to anticipate
an increase in exports. An increase in the net profit of about zoo million kronen
would thereby be possible.
7. State Railways.
The State Railways show at present a deficit of over 10 milliard kronen. However, the tariffs have been increased in such a way that the passenger
10 times higher than before the War and the goods rates 120 times. It would be

possible to raise the passenger rates to 20 times the pre-War rates and the goods
to 200 times; thereby an increase in revenue of roughly 6,000 million kronen would
be obtained.
8. Postal, Telegraph and Telephone Services.

These services also show a heavy deficit. The rates are 20 times higher than
before the War for postal, and 33 times higher for telegraph services. By doubling the

existing charges an increase in revenue of roughly 2 milliard kronen would be

9. State forests.

The exploitation of State forests is not well organised. A more economical
reorganisation of this service and the modification of certain timber contracts which
are somewhat disadvantageous to the State might produce an increased revenue
of about 1 milliard kronen.

1o. State industrial establishments.

After the dismemberment of the Empire, the State was obliged to take on its
charge several State industrial establishments, which were, during the War, devoted
to war material. In spite of numerous attempts, it has not, up to the present, been
possible to discover a form in which these establishments might afford a profit to
the State. The majority of them still show a considerable deficit. If it were possible
to succeed in managing them in a satisfactory and economic manner, (and technical
conditions permitting of such a result are not lacking, seeing that completely new
installations are involved,) the deficit would at least be filled up and considerable
gains might be realised. It is impossible to give figures on this subject.

- 27 IV.

eut pas etre comble uniquement grace a l'augmentation des

est egalement necessaire de diminuer les depenses. Pour cela,
e par le principe qu'il est possible, dans un Etat diminue, de

ses des administrations centrales. De meme, un budget appauvri
de s'opposer d'abord a toute depense nouvelle imposee a l'Etat
realiser une economie dans l'administration de l'Etat, it faut
ne utilisation intensive du personnel, et faire en sorte que la
represente au moins un travail de 8 heures.

n de certains organes economiques, necessitee par la guerre,
ou les circonstances le permettent, faire place des que possible
erce. On a constate que ces organisations centrales fonctionnent
on peu economique, et conduisent presque touj ours a un gaspilEtat. On devra egalement s'efforcer de supprimer les nombreux

munications qui sont encore la consequence de la guerre. Its

ce nuisible de deux facons: Hs paralysent la production econoes frais de personnel dans les etablissements prives, frais qui ont
r la consommation; d'autre part, Hs exigent un systeme de sur-

nde egalement a l'Etat un personnel nombreux. Le retour aux

me d'economie politique qui n'admet une depense que lorsqu'elle

recettes, doit etre le principe directeur de notre politique de

FINANCIERE 1921-1922.

possible de le prevoir actuellement, les depenses budgetaires
ee 1921-1922 s'eleveront a 114 milliards de couronnes. A ce
s'ajouter encore 4 milliards representant les interets a payer
mprunts interieurs et exterieurs, au total 118 milliards de cou-

u'au cours de l'annee 1921-1922 la moitie des depenses occaventions alimentaires, soit 13 milliards, soient economisees par

des prix des denrees et que, pendant cette annee, les achats

res (30 milliards de couronnes) soient couverts par un emprunt
ossible, au moyen des mesures fisca]es ci-dessous indiquees et
es. d'atteindre un chiffre de recettes s'elevant a lot milliards de

Etat pour l'annee 1921-1922.
par le proj et de budget 1921-1922

Milliards de couronnes


au moyen de capitaux provenant d'un emr
ultant de la majoration du prix des denrees
t de subventions (actuellement 26 mil-


cte de Pimp& sur le revenu
mpert sur les boissons

taxes et de l'impot sur la circulation en che-

taxes douanieres
5o % des prix du tabac
tarifs des chemins de fer d'Etat
tarifs pour les postes, telegraphes et tele-

venant de:

et s'elevant a
par un emprunt interieur.






17 milliards

- 27 IV

A deficit cannot be avoided merely by an increase in State revenue. It is

equally necessary to diminish expenditure. We must therefore be guided by the
dominating principle that a diminution in the area of the State permits the expenses

of central administrations to be concentrated. In the same way, a diminished
revenue imposes the obligation to resist from the very outset the imposition of
any fresh and unnecessary expenditure. To obtain economy in the State's administration we must first of all make a practice of securing the utmost value from the
services of the employees, and act in such a way that the 8-hours' day represents
at least 8 hours' work.
The centralisation of certain economic organisations which became necessary
during the War should, so far as circumstances permit, be replaced as rapidly as
possible by free trade. It has been noted that these central organisations work, as
a rule, in an uneconomic way and almost always lead to a waste of public money.

Endeavours must therefore be made to remove the numerous hindrances to
in existence, resulting from the War; these
communications which are
exercise a harmful influence in two ways; they paralyse economic production,

and cause an increase of expenditure on staff in private undertakings, while this
expenditure, in its turn, affects consumption; at the same time, they call for a system
of supervision which also compels the State to employ a numerous personnel. A
return to that system of political economy which only permits expenditure when
this is covered by revenue should be the guiding principle of our expenditure policy.

YEAR 1921-1922.

As far as can be estimated at present, the expenditure in the State Budget for
the year 1921-1922 will amount to 114 milliard kronen. To this figure there must
also be added 4 milliards, representing interest to be paid on new internal and external loans; in all 118 milliard kronen.
Assuming that during the year 1921-1922 half the expenditure caused by the
subsidies for foodstuffs, say 13 milliards, will be saved as a result of the rise in the
price of provisions, and that during this year the purchase of necessary provisions

(3o milliard kronen) will be covered by an external loan, it would be possible,
by means of fiscal measures which are indicated below, and which have become
necessary, to obtain a revenue amounting to ror milliard kronen
State revenue for the year 1921-1922.
1. Revenue provided for by the Budget Scheme for 1921-1922
2. Purchase of provisions on capital derived from an external loan

Milliard Kronen


3. Economies resulting from increase in the price of subsidised
provisions (at present 26 milliards)


4. More accurate grading of income tax


5. Increase of tax on liquor

6. Increase of charges and tax on railway travelling
7. Increase of Customs Charges
8. 5o % increase in the price of tobacco

9. Increase of rates on State railways
1o. Increase of charges for posts, telegraphs and telephones.

A deficit arising from:
Expenditure .

Amounting to:
will have to be covered by an internal loan.



17,0 milliard,


Texte of ciel R.


I Voir textes atlemands, page 47.)

i a) Declaration du parti populaire pangermaniste.
b) Declaration complementaire du parti populaire pangermaniste.
2. Declaration du groupe chretien-social de l'Assemblee Nationale.
3. Declaration du groupe social-democrate.
4. Declaration du groupe travailliste bourgeois.
5. Declaration du parti allemand des paysans.

Official text 8.


Sec German texts, page 47.)

i (a). Declaration of the Pan-German Popular Party.
(b). Supplementary Declaration of the Pan-German Popular Party.
2. Declaration of the Christian Social Group of the National Assembly.
3. Declaration of the Social-Democratic Group.
4. Declaration of the Bourgeois Labour Party.
5. Declaration of the German Peasant Party.


- 29


Bureau Parlementaire,
Vienne, le 6 mai 1921.

Le parti populaire pangermaniste se declare pret, en maintenant les principes
de son programme, a soutenir le Gouvernement Federal dans la realisation des me-

sures detainees dans le memorandum de la Delegation financiere de la Societe
des Nations, malgre les lourds sacrifices qui seront imposes a la population. Le parti
doit, toutefois, faire ressortir que toutes les propositions faites jusqu'ici s'occupent

presque exclusivement, et uniquement du cote financier du probleme autrichien,
alors que le point essentiel se trouve etre le probleme economique dont la solution
devra titre recherchee en meme temps.
L'engagement du parti populaire pangermaniste est enfin lie a la realisation
des hypotheses suivantes sans laquelle un resultat meme limite ne saurait etre obtenu:
r. Le meme engagement doit egalement etre pris par les autres partis. La reussite de cette tentative necessite toutefois aussi la collaboration de la population
elle-meme. Il est donc aussi du devoir de chaque parti d'exercer son influence sur
ses membres et les corporations economiques ou autres dependant de lui ou s'appuyant sur lui, de fawn que les sacrifices imposes en vue d'atteindre le but poursuivi
soient supportes de bonne volonte, et que soit evite tout ce qui pourrait causer
l'echec de toute l'entreprise. Il serait particulierement recommandable que le parti
social-democrate exea.t une telle influence sur ses organisations et syndicats,
attendu que toute opposition ouverte ou cachee de la part des ouvriers ferait echouer
tout le programme de secours.
2. Il est a presumer que l'aide financiere etrangere n'attendra pas d'abord que
le succes des efforts de la population soit visible, mais qu'elle sera realisee simultanement et proportionnellement a ces efforts.

Pour l'Association des Deputes du Parti populaire pangermaniste.

Le Parti populaire pangermaniste.
La direction generale du parti:


- 29 -

- 3o -


Vienne, le 6 mai 1921.

laire pangermaniste se declare d'accord avec les principes de l'exe refere a la declaration qu'il a fournie par ailleurs. Lors de la reali-

ssainissement, des questions d'une telle portee se poseront, qu'il
donner en temps utile aux corporations economiques, a la presse,
iscuter et de faire connaitre leur avis.

nt de la monnaie presuppose la stabilisation de la couronne. Les
leme, particulierement la determination de la proportion entre la
velle unite monetaire, ne sont, de l'avis du parti, pas encore murs

cerne la creation de la nouvelle Banque d'emission, on presume
oyer une part, a determiner, de ses benefices nets, au remboursede l'Etat autrichien.
mobiliers devront, dans l'opinion du parti populaire pangermaniste,
ent a toute hypotheque legale de 2 % qui doit etre prise comme
ns montants.

Parti Populaire pangermaniste,
Direction gendrale du parti.

3o --


Vienna, May 6th, 1921.

The Pan-German Popular Party declares itself in agreement with the principles
of the above exposd, and refers to the declarations which it has furnished elsewhere.
Resides the realisation of tho plan for improving Austrian finance, questions will
Fosent themselves of such importance that it will be necessary to give in good time
to economic bodies and to the Press an opportunity to discuss them and to make their
views known.
The change in currency presupposes the stabilisation of the krone. The details
of this problem, particularly the determination of the proportion between the krone

and the new monetary unit are not yet, in the opinion of the Party, ripe for

As regards the creation of the new Bank of Issue, it is presumed that it will have

to devote a portion, to be determined, of its net profits to the reimbursement of
the Austrian State Debt.
Finally, movable property must, in the opinion of the Pan-German Popular
Party, contribute in equal proportions to any legal mortgage of 2 % which may be
taken as a guarantee of certain sums.

Pan-German Popular



- 31 -


Le groupe chretien-social de l'Assemblee nationale est pret, malgre ses wives
apprehensions, a realiser le programme financier et d'assainissement economique
des Delegues du Comite Financier de la Societe des Nations et du Gouvernement,
considers comme une entite, a la condition que l'association pangermaniste et le
parti independant des paysans prennent egalement les memes engagements au
suj et de ce programme et que le groupe social-democrate n'apporte pas d'obstacle
son examen et a sa realisation.
Le groupe chretien-social se declare d'accord avec la reponse du Gouvernement
Federal, c'est-h-dire, au cas d'insucces, de trouver pour garantir les emprunts exte-

rieurs et interieurs, d'autres gages de meme valeur, de meme nature legale qui
auront l'assentiment a la fois de la Societe des Nations et des preteurs.

La forme a donner aux hypotheques projetees sur la fortune immobiliere et aux
suites legales resultant de ces hypotheques, de meme que l'appel eventuel d'autres
gages reels, sont reserves a la legislation.
Pour le groupe chretien-social des deputes allemands
au Parlement autrichien :


Vienne, le 5 mai 1921.



- 31 -




A Messieurs les De legues du Comite financier de la Societe des Nations (Vienne).

Le groupe des Deputes sociaux-democrates a fait connaitre, par une lettre ex,plicite adressee a M. le Chancelier Federal, la position prise par lui au sujet des questions soulevees par les negociations de credits. Les soussignes sont autorises a porter,
par la presente, les idees fondamentales de la dite lettre a la connaissance de Messieurs
les Delegues du Comite financier de la Societe des Nations.
L'association considere qu'il appartient au Gouvernement de passer des accords

avec le Comite financier de la Societe des Nations, eta la majorite gouvernementale de l'Assemblee Nationale d'accorder a son Gouvernement les recettes
necessaires. Il n'entre pas dans les fonctions et les devoirs d'un parti d'opposition
de se charger de la responsabilite de la politique financiere d'un Gouvernement

adverse. Toutefois it va sans dire -que, si notre parti, a quelque moment que ce soit,
prenait gouvernement, nous nous considererions comme lies par tous les accords
internationaux anterieurs legalement conclus.
Pour faciliter dans la mesure du possible les negociations concernant les credits,
le Groupe n'hesite pas, toutefois, a declarer que la reponse que le Gouvernement se
propose de donner au memorandum de Messieurs les Delegues de la Societe des
Nations, correspond egalement, dans ses grandes lignes, a l'opinion du groupe des
Deputes sociaux-democrates. Le groupe se voit toutefois dans l'obligation de faire
une reserve au sujet des « mesures budgetaires » du programme annexe a la reponse
du Gouvernement. Nous estimons egalement que l'augmentation des revenus de
l'Etat jusqu'au montant propose par le Gouvernement est necessaire et realisable.
Nous sommes toutefois d'avis que cette augmentation des revenus de l'Etat peut, et

doit etre obtenue par d'autres sortes d'impOts et par d'autres sources imposables
que ceux proposes par le Gouvernement. Nous notons avec satisfaction qu'egalement
Messieurs les Delegues du Comite financier de la Societe des Nations considerent

que le choix de la categoric d'impots et des sources d'impOts est une question

interieure de la legislature autrichienne.

Agreez, Messieurs, l'expression de notre consideration la plus distinguee.

Vienne, le 7 mai 1921.
(Signe) SEITZ, Depute.
BAUER, Depute.


- 32 -


- 33 -


A la Delegation de la Societe des Nations,

La presidence du parti travailliste bourgeois a pris la decision unanime d'approuver les principes exposés dans le memorandum des Delegues financiers de la
Societe des Nations et relatifs a l'assainissement economique de l'Autriche, attendu
qu'ils correspondent en tous points au programme du parti de realiser le relevement
par la reprise du travail plein et entier et par le rassemblement de toutes les forces
de la population.
Le parti exprime a ce sujet l'espoir que les sacrifices absolument necessaires
seront repartis uniformement sur toutes les classes de la population, et que tous les
facteurs du pouvoir politique auront a se subordonner a la pens& de l'assainissement economique de l'Etat et du pays.
Sous cette prevision, le parti a decide que son Depute a l'Assemblee Nationale,
Ottokar Czernin, aura a soutenir le Gouvernement sur toutes ces mesures qui serviront a la realisation des propositions contenues dans le memorandum de la Societe
des Nations.

Vienne, le 4 mai 1921.

Parti Travailliste Bourgeois:
Le President,
(Signe) Dr BROSCHE.


- 33 -


To the Delegation of the League of Nations.

The President of the Bourgeois Labour Party has decided, with the unanimous
approval of the Party, to approve the principles set forth in the Memorandum of the
Financial Delegates of the League of Nations, relative to the improvement of the

economic situation of Austria, on the understanding that they correspond in all

points with the Party's programme of obtaining relief by full and complete resumption of work and by assembling all the forces of the population.
The Party expresses on this subject the hope that the sacrifices which absolutely necessary will be uniformly distributed over all classes of the population, and
that all the various forms of political power will have to subordinate themselves to the
consideration of the economic improvement of the State, and of the country at large.

With this in view, the Party has decided that its Deputy in the National Assembly, Ottokar Czernin, shall support the Government in all such measures as will
tend to the realisation of the proposals contained in the Memorandum of the League
of Nations.
Vienna, May 4th, 1921.

Bourgeois Labour Party :
(Signed) Dr. BROSCHE, President.


- 34 -


Decision du parti allemand des paysans au sujet du plan financier du Gouvernement.

Le parti allemand des paysans prend acte de la reponse du Gouvernement aux
Delegues financiers de la Societe des Nations. Il a de vives apprehensions au sujet
de certairres mesures du programme d'assainissement, particulierement des charges
hypothecaires importantes sur la fortune fonciere privee. Toutefois, comme d'apres
la declaration du Gouvernement elles sont une condition absolue pour l'obtention
des credits strangers, it declare vouloir soutenir le Gouvernement dans la realisation
des mesures indispensables que doit prendre l'Etat. II proteste toutefois energiquement contre le fait que des hypotheques forcees pourraient etre prises sur la propriete
fonciere si les credits strangers ne sont pas accordes ou s'ils le sont dans une mesure

Vienne, le 6 mai 1921.

Pour le Parti allemand des paysans
(Signe) F. KOLLARZ,

- 34 -


Decision of the German Peasant Party on the subject of the Financial Scheme
of the Government.

The German Peasant Party takes note of the reply of the Government to the
Financial Delegates of the League of Nations. It has keen apprehension with
regard to certain measures in the programme of re-establishment, particularly as to
the heavy mortgage charges on private landed fortune. However, as according to
the declaration of the Government, they are an absolute condition for the obtaining
of foreign credits, this Party declares itself willing to support the Government in the
realisation of such indispensable measures as the State may take. It protests energetically, however, against the fact that the forced mortgages should be taken on
landed property if the foreign credits are not granted, or if they are insufficient in
Vienna, May 6th, 1921.

For the German Peasant Party,
(Signed) F. KOLLACZ, Secretary.



Texte officiel 4

Official Text 4



Die vom Finanzkomitee des VOlkerbundes delegierten Herren Avenol, Sir Drummond Drummond-Fraser und Staatsrat Glfickstad haben, nachdem sie zunachst privatim wirtschaftliche und finanzielle Sachverstandige sowie Vei treter der Regierung und
der politischen Parteien angehort haben, am 25. April die officiellen Besprechungen
mit dem Finanzministerium eingeleitet. An die Spitze ihres Programmes stellen die

Delegierten das Programm der Sanierung der Wahrung, urn so wohl die Staatsfinanzen Oesterreichs als die gesamte Volkswirtschaft sicherzustellen. Zu diesem
Zweck miisse nicht allein das Defizit im Staatshaushalte beseitigt werden, urn die
weitere Inanspruchnahme der Notenbank durch den Staat auszuschliessen und den
Papiergeldumlauf zu begrenzen, sondern es waren zugleich auch wirksame Massregeln zu ergreifen, um die Papiergeldzirkulation zu fundieren und die Wechselkurse zu stabilisieren. Das Finanzkommitee hat deshalb von der Regierung die Ausarbeitung eines Finanzplanes verlangt, der durch eine Reihe schrittweise aufeinanderfolgender Massregeln absehbarer Zeit eine Sanierung des Staatshaushaltes herbei-

fiihren soil. Bis zu jenem Zeitpunkte, wo das Gleichgewicht im Staatshaushalte
durch die eigene finanzielle Kraft des Staates und der Steuertrager gesichert erscheinen wiirde, ware der Geldbedarf, urn so rasch als moglich die weitere Ausgabe
von Papiergeld zu sistieren, durch Anleiheoperationen zu decken. Insbesondere soil
jener Teil des Geldbedarfs, der der Versorgung der BevOlkerung mit Lebensmitteln
dient, durch aussere Anleihen aufgebracht werden, urn den Valutenmarkt zu entlasten und zur Stabilisierung der Krome beizutragen. Ausserdem soil ein Teil der
zu beschaffenden ausseren Anleihen fiir die kiinftige Notenzirkulation und die Valutapolitik iibernehmen soil, herangezogen werden. Sobald die wichtigsten Massregeln,

insbesondere die auswartige Kredithilfe, sichergestellt erscheinen, und damit eine
wichtige Voraussetzung ffir die Wiederherstellung des Offentlichen Kredits verwirklicht ist, soil auch mit innern Anleiheoperationen vorgegangen werden, urn den
Geldbedarf des Staates in der Uebergangsperiode bis zur volligen Herstellung des
Staatshaushaltes ganz zu bedecken.
Die Regierung hat sofort die Ausarbeitung eines derartigen Finanzplanes in
Angriff genommen. Dieser wird den allmahlichen A bbau der staatlichen Zuschusse
zu den Preisen der Lebensmittel, die ErhOhung neuer Einnahmequellen und gewisse
Eysparungsmassnahmen ins Auge fassen, so die den bis zur Herstellung des Gleichgewichts erforderlichen Geldbedarf veranschlagen. Da die Volkerbunddelegierten
wfinschen, dass fiir die Einhaltung eines vereinbarten Finanzprogramms nach Moglichkeit auch politische Garantien geboten werden, hat die Regierung die Fiihlungname mit alien politischen Parteien eingeleitet, um sie mit den Wiinschen des Finanzkomitees und den Grundziigen des Finanzprogramms bekannt zu machen und ihrer
Zustimmung dazu zu erlangen. Diese Verhandlungen sind noch nicht abgeschlossen,
da das Programm noch nicht in allen Teilen feststeht.
Die im Auslande aufzunehmenden Anleihen sollen, wie bekannt, auf gewissen
Einkiinften und Aktiven des States sichergestellt werden, die unter eine besondere
gemeinschaftliche auszufibende Kontrolle gestellt werden sollen. Ein besonderer
Wunsch der Finanzdelegierten geht dahin, die aussere Anleihe auch noch durch
eine besondere Garantie des Oesterreichischen Privateigentums zu verbiirgen.
Die Verhandlungen werden mit grossem Nachdruck betrieben, da die Volker- bunddelegierten mOglichst bald der Finanzsektion des Volkerbundes ein vollstandiges, im Einvernehmen mit Oesterreich festgesetztes Programm vorzulegen wiinschen, urn nach seiner Annahme sofort mit den weitern Verhandlungen vorgehen
zu kOnnen, Insbesondere wollen die Finanzdelegierten, urn noch vor Durchfiihrung
der grossen Finanztransaktionen die Oesterreichischen Regierung in die Lage zu
versetzen, Nahrungsmittelimport und Staatswirtschaft ohne in Anspruchnahme der
Notenpresse fortfiihren zu kOnnen, anstreben, einen auswartigen Vorschuss auf die
internationalen Anleihen sofort flussig zu machen.


- 36 -


-37nalen Verkehrsschwierigkeiten immer mehr abnehmen, muss angestrebt werden,
die Beschaffung der Nahrung tunlichst rasch wieder normal zu gestalten. Wir halten
es dabei nicht fiir wesentlich, ob der Staat allgemein den freitn Handel fiir alle
Lebensmittel wieder zulasst, oder ob er gewisse Zweige des Lebensmittelhandels
aus besonderen Griinden weiterhin in der Hand behalten will. Letzteres mag in
manchen Richtungen auch weiterhin als wiinschenswert erachtet werden. Aber

auch wo der Staat ein Monopol oder eM staatliches Wirtschaftssystem aufrechterhalten will, sei es vor der Hand um die billigste Versorgung zu ermo-

glichen, sei es urn Verbrauchsteuern einzunehmen, muss unbedingt in alien Richtungen das Prinzip zur Geltung gebracht werden, dass die betreffenden Artikel
nicht unter den Selbstkosten abgegeben werden diirfen. Nattirlich muss auch die
Finanzierung eines solchen etwa als wiinschenswert erachteten Handelsmonopols
durch andere Mittel als durch die Inanspruchnahme der Notenpresse sichergestellt
werden. Es ist selbstverstandlich, dass eine pleitzliche ErhOhung der Preise aller
bisher vom Staate bewirtschafteten Lebensmittel auf die voile Mille der Selbstkosten
nicht moglich und nicht wiinschenswert ist ; aber es wird damit in energischen und
schnellen Schritten vorgega.ngen werden miissen.
Der Rest des heutigen Staatsdefizits wird durch neue Abgaben oder durch
Ersparungsmassnahmen bedeckt werden mfissen. In dieser Beziehung erwarten wir
einen detaillierten Plan der Regierung, worin die einzelnen Massnahmen sowie
der Zeitpunkt und das Ergebnis ihrer Durchfiihrung angeffihrt sein sollen. Jedem

Fremden, der nach Oesterreich kommt, drangt sich sehr rasch die Wahrnehmung auf, dass in Oesterreich jene Waren und Leistungen, auf die der Staat einen
Einfluss hat, zu Preisen angeboten werden, die der Geldentwertung bei weitem
nicht in jenem Masse Rechnung tragen, wie dies in der tibrigen privaten Volkswirt-

schaft der Fall ist. Unsere Studien haben dies bestatigt, denn Eisenbahn, Post,

Telegraph, und Genussmittel, wie Tabak, Bier, Wein und andere, tragen gegenwartig verhaltnismassig nicht in dem Masse zu den Einnahmen des Staates bei, wie dies
vor dem Kriege der Fall war. Die Belastung des Volkes mit neuen Steuern, soweit
die Ausgaben nicht auf andere Weise bedeckt oder nicht vermindert werden konnen,
gehort zu den Opfern, die verlangt werden mflssen. Wir gedenken uns nicht in das
spezielle des Steuersystems und des Ausgabenetats einzulassen, da wir wiinschen,
dass die oesterreichische Regierung darin moglichst freie Hand behalte ; worauf
wir aber dringen miissen, ist, dass die in Aussicht genommenen Massnahmen wirklich wirksam und durchfiihrbar sind, dass die Einnahmeerhohung moglichst wenig
neue Kosten verursache, und nicht zur Schaffung neuer Aemter und Vermehning des
Personals Anlass gebe.
EM allzugrosser Teil der Staatsausgaben wird durch die Erhaltung des grossen
Apparates staatlicher Beamten und Angestellter verursacht. Eine allgemeine Herabsetzung der Gehalte und LOhne, sowie eine sofortige Entlassung iTherzahliger Funktionare zu fordern liegt uns ferne, da dies die Not verscharfen miisste. Notwendig aber
ist, dass die Schaffung neuer Aemter und Funktionen weiterhin unterbleibe, und zwar
hat dieser Grundsatz nicht allein beziiglich der eigentlichen Offentlichen Staats
Land- und Gemeinde-Funktionen eingehalten zu werden, sondern es ist natiirlich
auch darauf zu achten, dass nicht Organisationen und Einrichtungen geschaffen
und vergrossert werden, welche indirekt dadurch, dass der Staat an ihnen Interesse

nimmt, die offentlichen Finanzen belasten. Wir erwarten ferner, dass wirksame
Vorschriften aufgestelit werden, urn die Beamten und sonstigen Funktionare,
welche in einem Zweige der Verwaltung entbehrt werden kOnnen, in einem anderen Zweige, wo sie mehr von Nutzen sein kOnnen, wirksam verwenden zu konnen. Ferner sollten alle Mittel aufgewendet werden, um die Offentlichen Funk-

tionkre zum Uebergang in private Berfue anzuregen und ihnen die Wahl einer neuen
Beschaftigung, welche den Staat nicht belastet, zu erleichtern. Neuanstellung von
Beamten ist tunlichst zu vermeiden, und man hat zu trachten, in alien Richtungen

mit dem bestehenden Beamtenkorper auszukommen. Das wichtigste aber ist,

dass dem System fortwahrender Gehaltserhohungen Ziigel aufgelegt werden. Wenn
nicht neue sofort fliessende Einnahmen erschlossen werden konnen, miisste jede
Erhohung der Beamtenbeziige unterbleiben. Aber selbst, wenn neue Einnahmequellen
moglich sind, muss man sich vor Augen halten, dass diese besser zur Erleichterung
des Schuldenstandes des Landes und zur Fundierung seiner Wahrung zu verwenden
sind, als fitr die Konsumaufwendungen eines fiir die Dimensionen Oesterreichs zu
kostspieligen Beamtenapparats.
Das heutige Budget des Staates ist in grossem Masse belastet durch Darlehen,
Vorschiisse, Kapitalbeteiligungen und Subventionen, die der Staat an neue Unternehmungen, Konsum- und Handelsorganisationen, Selbsthilfeverbande und andere
private Stellen unter den. verschiedensten Begriindungen gewahrt hat, und noch
gewahrt. Dieses System muss aufhOren, und es ist der Geldbedarf solcher Organisa-

tionen auf die normalen cekonomischen Wege zu verweisen. Die auf Grund der
bisherigen Bewilligungen in solcher Weise ausstehenden Staatsgelder sind zu rasch
als moglich aufzukiindigen und zuriickzuziehen.
Ein schon in der ersten Erklarung des Finanzkomitees des Volkerbundes her-

- 38 vorgehobenes Mittel zum Wiederaufbau Oesterreichs ist der rascheste Abbau jener
Verkehrsbeschrankungen, welche heute den freien Austausch mit den Nachbar-

landern Oesterreichs hemmen. Wir haben tins hier durch eigenen Augenschein
uberzeugt, wie wichtig dieser Programmpunkt ist. Umsomehr hat uns die Tatsache
befremdet, dass innerhalb der osterreichischen Grenzen zahlreiche und sehr verschie-

denartige Vorschriften einzelner Lander, Bezirke, ja selbst Gemeinden den freien
Personen- und Giiterverkehr, innerhalb Oesterreich selbst, beeintrachtigen. Die
allerschnellste und griindliche Beseitigung dieser Oesterreich selbst aufs schwerste
schadigenden Verkehrsbeschrankungen erscheint uns unerlasslich und eine Voraussetzung dafiir, dass Oesterreich von den Nachbarla.ndern das erlangt worauf es zum
Wiederaufblithen seiner Volkswirtschaft unbedingt angewiesen ist.
Ueberhaupt ist zu wiinschen, dass die behOrdlichen Vorschriften, welche jetzt noch
den freien Verkehr mit Waren, Immobilien, und Werten aller Art hemmen und beschweren, tinter Bedachtnahme auf den berechtigten Schutz der wirtschaftlichen
Schwachen, rasch abgebaut werden, um alle produktive Fahigkeiten und Betatigungen zu beleben, das Vertrauen und den Kredit allgemein herzustellen und der
Wiederaufbau dienstbar zu machen.
Wenn alle in Aussicht genommenen Massregeln wirksam und zu dem erwiinschten Ergebniss fiihren sollen, wird es notwendig sein, dass eine cooperierende Vertretung, der die Milsaktion organisierenden auswartigen Faktoren und der obersten
Verwaltung Oesterreichs geschaffen wird, urn die Durchfiihrung der Plane zu sichern
und fur deren erfolgreiche Wirksamkeit zu sorgen. Es wird Sache der konkreten

Entwfirfe sein, die richtigen und wirksamen Formen fiir diese Cooperation zu

Wir sind uns dessen vollig bewusst, dass mit dem Vorstehenden der gesammten

Bevolkerung Oesterreichs empfindliche Opfer zugemutet werden. Wir sind aber
ebenso uberzeugt, dass diese Opfer nicht alle in die unvermeidliche Voraussetzung
fiir die angestrebte Hilfe des Auslandes sind, sondern dass sie auch ein unentbehrlicher Bestandteil eines ernsthaften Sanierungsprogrammes sein mussen, welches dem
osterreichischen Volke, das in seiner Wichtigkeit nicht hoch genug anzuschlagende
Ergebnis der Wiederherstellung guten Geldes und damit des allgemeinen Vertrauens

und der gesamten Volkswirtschaft bringen wird. Ein stabiler Geldwert und damit
die Beseitigung der heutigen krankhaften Spekulation, welche alle Teile des Volkes

zu ergreifen droht, die Stiitzung und Anregung jeder fruchtbaren Tatigkeit, die
Wiederherstellung des inneren und ausseren Kredites: Dies alles wiinschen wir herzlich* durch die, die wir dem VOlkerbund vorlegen werden, zu erreichen.
Wir sind uberzeugt, dass die Regierung von der entscheidenden Wichtigkeit dieses
Zieles ebenso durchdrungen ist, wie wir selbst, und vertrauen deshalb, dass alle fiir
sie Geschicke des Volkes und des Staates verantwortlichen Faktoren und das ganze
Volk selbst, sich gerne dazu aufraffen werden, alles zu tun, was dieses Ziel erreichen
lassen kann. Wir bitten die Regierung, diese unsere vorlaufige Postulate in Erwagung
zu z ehen, alle sonst Berufenen damit zu befassen und bei den Vorschlagen, die sic
uns zu machen gedenkt, zu beriicksichtigen.


- 39 Official Text 6

Texte officiel 6



r. - Es wird in Aussicht genommen, die jetzige osterreichische Kronenwahrung durch eine neue auf Gold lautende Wahrung zu ersetzen. Nach der mit « 100
Kronen = x Gramm Feingold oder = x Goldcentimes (oder Goldgroschen, Goldheller
usw.) » bestimmten Gleichung sollen die jetzt zirkulierenden Banknoten gegen
Zahlungsmittel der neuen Wahrung umgetauscht werden. Die definitive Bestimmung der Relation soil erst stattfinden, sobald das vereinbarte Finanz- und Sanierungsprogramm allseitig angenommen, die darin vorgesehenen internationalen Kreditoperationen gesichert und die neuen Massnahmen so wirksam sind, dass die Inanspruchnahme der Notenbank und der Notenpresse durch den Staat aufhOren und

endgiltig sistiert werden kann.

2. Die osterreichische Regierung wird nach Feststellung der Relation die neuen
Wahrungsgesetzte vorbereiten und die nOtigen Anstalten treffen, urn die Miinzen
der neuen Wahrung pragen lassen zu kOnnen. Die neue Wahrung ist eine Goldwahrung, bloss die notwendigen Scheidemiinzen sollen in Silber oder unedlem Metall
hergestellt werden. Doch wird der osterreichische Staat nach wie vor Handelsmiinzen (die keinen legalen Kurs haben) aus Gold und aus Silber herstellen kOnnen.
3. Bis die neuen Zahlungsmittel in geniigender Menge hergestellt und gegen die
alten umgetauscht werden, haben die bisherigen Zahlungsmittel in dem angenommenen Wertverhaltnis in Verkehr zu bleiben.

4. - Neben den Miinzen der neuen Wahrung werden die Noten einer neu zu
errichtenden osterreichischen Notenbank, welche auf die neue Wahrung lauten
werden, gesetzliche Zahlungsmittel sein, d. h. sie werden von jedermann zum Nennwerte unbeschrankt in Zahlung genommen werden miissen. Die neue Notenbank
hat den Umtausch der jetzigen Zahlungsmittel in ihre eigenen Noten raschestens
vorzubereiten und durchzufiihren, soweit der Staat nicht den Umtausch gegen Metallgeld (Scheidemunzen) vornimmt.

5. Das Kapital der neuen Notenbank wird auf roo Millionen Goldfranken

bestimmt. Das Kapital ist mindestens zur Halfte im Auslande aufzubringen, der Rest
der Aktien ist in Oesterreich zu plazieren, jedoch unter solchen Modalitaiten, dass
eine StOrung des Valutenmarktes vermieden wird.
6. Insbesondere 'nimmt die osterreichische Regierung in Aussicht, die von ihr
auf Grund des Gesetzes vom 4. Juli 1919 aufgerufenen auslandischen Wertpapiere,
soweit sie nicht bereits verwendet oder, falls im ehemals feindlichen Ausland erliegend, sequestriert und zur Abtragung Osterreichischer Privatschulden bestimmt,
daher nicht verfiigbar sind, zur Beschaffung der inlandischen Tranche des Aktienkapitals heranzuziehen, indem den Eigentiimern anheimgestellt wird, fiir den Wert
ihrer Wertpapiere gleichwertige Aktien der Notenbank anzunehmen oder aber sie
gegen Vergiitung dem Staate zu iiberlassen, der sie selbst zur Zeichnung von Aktien
der Notenbank verwenden wird.

7. Die Reparationskommission hat bisher die Verwendung der aufgerufenen
auslandischen Wertpapiere nur zur Beschaffung von Lebensmitteln im Auslande,
und die Verwendung sokher Wertpapiere, die in den ehemals kriegfiihrenden Staaten

ausgegeben worden sind, uberhaupt nicht gestattet. Es ware erwunscht und wird
erbeten, dass das Finanzkomitee des Volkerbundes bei der Reparationskommission die Verwendung der Wertpapiere in dem angegebenen Sinne erwirke.

8. Das Aktienkapital ist von dem Zeichner bar, d. h. in solchen auslandischen
Valuten oder sofort verfiigbaren Guthaben, wekhe das Grundungskomitee fiir ausreichend befinden wird, einzuzahlen. Fiir die Einzahlung der Halfte der Zeichnungsbetrage kOnnen kurze Termine zugelassen werden, doch miissen die Zeichner fur
die gestundeten Betrage gehorige Unterlagen in solchen Werten bestellen, dass nach
Bedarf die Trassierung auf die auf solche Weise garantierten Betrage moglich ist.


nehmen mit der Regierung, der Bankleitung sowie dem gemeinsamen Kontrollkomitee (siehe unten Nr. 21) zu bestimmen sein wird. Es wird vorbehalten, zu jenem

Zeitpunkte die Statuten der Bank auch in anderen Beziehungen einvernehmlich
17. Bis dahin wird die Bank verpflichtet sein, mit allen ihr zu Gebote stehenden
Mitteln dafiir zu sorgen, dass der im Kurse der auslandischen Wechsel zum Ausdrucke

gelangende Wert ihrer Noten entsprechend der Paritat des gesetzlichen Miinzfusses der festzusetzenden neuen Goldwahrung dauernd gesichert bleibe, d. h. es
soll die der angenommenen Relation entsprechende Zahl neuer cesterreichischer

Geldeinheiten womoglich dem Werte von i Kg. Gold 9 /10 fein, jedenfalls und mindestens aber so vielen amerikanischen Dollars (legal tender currency der Vereinigten
Staaten) gleich sein, als Golddollars aus einem Kilogramm Miinzgold (9 /io fein)
ausgebracht werden.

i8. Der Staat wird seine Valutaguthaben und seinen Zahlungsverkehr mit


dem Auslande der Bank ubertragen, die Devisenzentrale mit der Bank vereinigen
und deren Valutenbestande an die Bank ubertragen, die ihn dafiir bei der Notenschuld entsprechend entlasten wird. Die Sanierungskredite, die der Staat verlangt,
werden von der Bank verwalten werden. Auch fasst die Regierung die Uebertragung
des staatlichen Kassendienstes an die Bank ins Auge und wird alles vorbereiten,
urn sobald als moglich alle staatlichen Kassenbestande und deren Bewegung bei der
Bank zu konzentrieren.

Der von der Generalversammlung der Aktionare der Bank gewahlte

Verwaltungsrat muss zur Halite aus Oesterreichern bestehen. Die Verwaltung der
Bank wird von einem Direktorium gefiihrt, welches aus drei bis fiinf Mitgliedern
besteht. EM Direktor wird von der Regierung, die ubrigen werden vom Verwaltungsrat bestellt. Das von der Regierung ernannte Mitglied des Direktoriums ist zugleich
President der Bank.


- 41 20. Die jahrlichen Ertragnisse der Bank sind zunachst zur Verteilung einer
Dividende an die Aktionare bis zu 8 % des Aktienkapitals zu verwenden. Aus den
dariiber hinausgehenden Ertragen vergfitet die Bank dem Staate 6 % Zinsen fiir die
ihr vom Staat aus den auslandischen Krediten zur Verfiigung gestellten Kapitalien
(siehe Nr. 15). Vom Rest wird ein Drittel zur Bildung eines Reservefonds verwendet,
der zur Verstarkung des Metallschatzes (Valutenbestandes) der Bank zu dienen hat,
und zwar so lange, bis er die HOhe von 5o % des Aktienkapitals erreicht hat, vom
ubrigen wird die Halite an den Staat abgefiihrt, der sie zur Zuwendung eines Bonus

an die Inhaber der Titres der Sanierungsanleihen, solange diese nicht zuriick-

gezahlt sind, nachher zur Herabminderung seiner Notenschuld an die Bank zu verwenden hat, ein Viertel wird als Superdividende an die Aktionare verteilt, und ein
Viertel dient zur Herabminderung der Notenschuld des Staates an die Bank.


21. Die Kontrolle iiber die Verwendung der durch die Aktion des Finanzkomites

des Volkerbundes aufgebrachten auslandischen Mittel, fiber den Eingang und die
Verwendung der der Verzinsung und Amortisierung dieser Anleihen besonders gewidmeten Ertrage aus staatlichen Einnahmequellen sowie iiber die Durchfiihrung
des zwischen dem Finanzkomitee des Volkerbundes und Oesterreich vereinbarten
Sanierungs- und Finanzprogrammes wird von einem Komitee ausgeiibt, in welches
das Finanzkomitee des Volkerbundes drei und Oesterreich ebenfalls drei Vertreter
entsendet, und welches nach Bedarf in Wien zusammentritt. Als die Osterreichischen
Vertreter werden in Aussicht genommen : der Finanzminister oder ein von ihm
hiefiir bevollmachtigter Vertreter; ein vom Osterreichischen Nationalrat designierter Vertreter; sowie ein Vertreter des von den vorgesehenen allgemeinen Sicherungshypotheken betroffenen Osterreichischen Immobiliarbesitzes.

22. Die Kompetenzen des Kontrollkomitees werden genau zu bestimmen


23. Oesterreich wird berechtigt sein, gegen Beschliisse des Kontrollkomitees,
durch die es sich beschwert erachtet, an das Finanzkomite des VOlkerbundes zu apellieren, dessen Entscheidungen endgiltig sein werden. Andererseits werden die dem

Kontrollkommittee angehorigen Vertreter des Finanzkomitees des Volkerbundes
berechtigt sein, gegen Beschliisse des Kontrollkomitees, die sie den Abmachungen
oder den Glaubigerinteressen widerstreitend erachten, an das Finanzkomitee des
Volkerbundes zu appellieren.
24. Ein Appel hat aufschiebende Wirkung; doch dad die normale Fiihrung
der Staatsgeschafte dadurch nicht aufgehalten werden.
25. Das Finanzkomitee des VOlkerbundes wird einen standigen Vertreter bei
der Osterreichischen Regierung bestellen, der die Ausfiihrung der Beschliisse des
Kontrollkomittees zu ilberwachen und an dessalbe su berichten hat.



Texte officiel

Official Text 7.

Annexe II au texte oficiel 5

Annex 11 to the Oficial text 5.

Der Plan umfasst zwei zeitlich aufeinanderfolgende Abschnitte:

A. Massnahmen zur dauernden Ordnung des Budgets in etwa zwei Jahren und
B. Massnahmen, welche schon im kommenden Finanzjahr 1921 /22 zu trellen sind


Bei einem Kurse von 100 Kronen = 1 Schweizerfrank betragen gegenwartig
die staatlichen Subventionen ftir Volksernahrung in einem Jahre 26.000 Millionen
Kronen. Hievon entfallen 19.100 Millionen Kronen auf Mehl und Brot, 2500 Millionen Kronen auf Fleisch; 3700 Millionen Kronen auf Fett und 72o Millionen Kronen auf Mich. Diese staatlichen Zuschiisse waren im Laufe von I bis I y2 Jahren
vollstandig, zu beseitigen, so dass schiesslich der osterreichische Burger grundsatzlich
den Nahrungsbedarf ganz aus eigenem Einkommen bestreiten wiirde. Bisher konnte
der Staat aus dem Sinken der Lebensmittelpreise auf dem Weltmarkte keinen Vorteil

ziehen, weil die sinkenden Preise stets wieder durch das Sinken der Krone ausgeglichen wurden. Tritt aber durch Intervention des VOlkerbundes eine Stabilisierung
der Krone eM, so wird auch der Staat aus der sinkenden Tendenz der Weltmarktpreise Vorteile ziehen. Bessert sich der Kronenkurs, so wird der Vorteil noch grosser.
Die Aufhebung der Lebensmittelsubventionen kann sick' urn so rascher 'vollziehen,
je rascher sich der Kronenkurs bessert.
Schon jetzt sind Massnahmen zur Minderung des Staatszuschiisses fiirFett ab
1. Mai 1921 namhaft herabgesetzt. Die Einschrankung des Zuschusses zum Fleisch
wird vorbereitet. Durch Staffelung der Abgabepreise fiir Brot und Mehl und durch
eine allgemeine Erhohung des Mehlpreises soil der Staat bei Brat und Mehl entlastet

werden. Aus sozialen Griinden kann aber die Aufhebung der Subventionierung
nicht mit einem Schlage erfolgen. Es muss vorbehalten bleiben, die Subventionen
je nach der Konjunktur, dem Geschaftsgang der Industrie und unter Beriicksichtigung der sozialen Verhaltnisse einzustellen oder abzubauen. Die vollstandige Einstellung der Subventionen ware bis Ende 1922 ins Auge zu fassen.
Die Wirkungen einer Besserung des Kronenkurses auf die staatlichen Subventionen fiir Lebensmittel zeigt folgende Zusammenstellung:
I. Mehl
2. Fleisch

Verlust in 12 Mormten in Milliarden Kronen bei einem Kurse von
too K.
too K.
too K.
t.- Schw. fr.
15o Schw. fr. 2.- Seim. fr.


3. Fett


4. Kondenzmilch





o . 16



Personalvermehrungen und Personalvermehrung bedingende Amtervermehrungen waren nicht zuzulassen. Das vorhandene Personal ware rationneller zu verteilen, so dass Bedurfnisse eines Verwaltungszweiges durch Versetzung aus anderen

minder in Anspruch genommenen Verwaltungszweigen befriedigt warden. Per
Personalabbau ware dadurch zu erleichtern, dass Angestellte, die den Dienst zu
verlassen bereit sind, aus eine Reihe von Jahren voile Beziige eingeraumt erhalten,
damit sie wahrend dieser Zeit unbeeinflusst von Existenzsorgen den Versuch machen

sich anderen volkswirtschaftlich produktiven Berufen zuzuwenden. Diese Massnahmen wirken aber nicht sofort sie bilden vielinehr nur den Anlass ffir kiinstige



- 43 -


Verbesserungen. Augenblicklich miisste der fast taglich wachsenden Personalaufwand dadurch gebremst werden, dass Erhohungen der systemmassigen Beziige der
Angestellten nicht zuzulassen waren. Die Hilfsaktion des VOlkerbundes darf nicht
dadurch unmoglich gemacht werden, dass sich die Voraussetzungen wiederstreitenden Richtung verschieben. Tritt die Kredithilfe ein oder tritt wenigstens klar zurage,
dass Hilfe in sicherer Aussicht steht, dann entfallt durch Besserung des Kronenkurses bei gleichbleibenden Nominalbeziigen und sinkenden Preisen der Antrieb
zu neuen Personalausgaben.


Fur die noch moglichen mannigfachen EinnahmenerhOhungen hatte als Grundsatz zu gelten, dass im allgemeinen die staatlichen Revenuen der Geldentwertung
Rechnung tragen miissen. Dardber hinaus werden aber einige Staatseinnahmen den
gewachsenen Bediirfnissen der notleidenden Staatswirtschaft entsprechend sogar
fiber das valutarische Niveau hinaus erhOht werden mOssen.
Im einzelnen waren folgende Massnahmen notwendig:

1. Direkte Steuern.

Die direkten Steuern sind im Laufe der letzten Jahre so betrachtlich erhoht
worden, dass im allgemeinen an eine weitere Erhohung nicht gedacht werden kann.
Der Veranlagungsapparat hat sich aber noch nicht vollkommen den neuen Gesetzen
angepasst. Eine intensivere Veranlagungstatigkeit diirfte bei der Einkommensteuer
einen Mehrertrag von I000 Millionen Kronen ergeben. Auch kann ab 1923 an eine
dauernde VermOgenssteuer gedacht werden, die bei einer die Spartatigkeit nicht all-

zusehr belastenden Hohe jahrlich Einnahmen von etwa 500 Millionen Kronen
erwarten 'asst.
2. Z011e.

Das geltende Zollgesetz sieht Goldz011e vor. Tatsachlich wurden aber bis vor
nigen Monaten die Nominalzolle des Tarifes in Papierkronen erhoben. Erst im
ufe des letzten Jahres wurden die Nominalzolle der Goldparitat etappenweise
genahrt. Wiirden alle &ilk der Goldparitat entsprechend erhoben werden - dies
schieht derzeit nur fur Kolonialwaren und gewisse Luxuswaren - so konnte mit
er ErhOhung der Zolleinnahmen um etwa 2000 Millionen Kronen gerechnet wer-


3. Verbrauchssteuern.
Die Satze der Verbrauchssteuern sind im Verhaltnis zu den Preisen der von ihnen

roffenen Waren gegeniiber der Vorkriegszeit noch stark zuriickgeblieben. Es
re notwendig, dieses Verhaltnis zwischen Preis und Steuer pro Einheit wieder
rzustellen. Dieser Grundsatz lasst sich aber weder sofort noch gleichmassig bei

en mit Verbrauchssteuern belegten Waren durchfiiren. Doch liessen sich durch entechende SteuererhOhungen nach einiger Zeit etwa folgende Mehreinnahmen er-

en :

moo Millionen Kronen



Summe :

263o Millionen Kronen

Hievon wiirde nach Ueberweisung eines Teiles an Lander und Gemeinden dem
Millionen Kronen
taate verbleiben



- --- ---


3670 Millionen Kronen


- 44 4. Gebiihren.

Der Bruttoertrag der Gebiihren (Stempel, Verkehrssteuern, Enregistrement,

Gerichtstaxen) betragt gegenwartig ungefahr das 5ofache der Vorkriegszeit. Die
Regierung hofft, durch entsprechenden Ausbau dieser Einnahmen in Verbindung
Federal Reserve Bank of St. Louis


- 45 b) das Vorkriegsverhaltniss zwischen Einnahmen und Ausgaben (66 Prozent der
Bruttoeinnahmen) bei einer TariferhOhung urn 38 Prozent entstehen ; namlich
10 800 Millionen Kronen
7:200 Millionen Kronen
66 Prozent der Bruttoeinnahmen.

6. Salt.
Das Salzmonopol lasst sich durch Auflassung technisch zuruckgebliebener
Produktionsstadten und Konzentration in technisch gut ausgebildeten okonomischer

verwalten. Daraus ist auch bei gleichbleibenden Salzpreisen einer Erhohung des
Reinerertrages zu gewartigen. Der Umstand, dass einige der neuen Staaten, die frilher aus den alpenlandischen Salinen versorgt wurden, unter Salzmangel leiden,
lasst eine Steigerung des Exportes erwarten. Dadurch ware eine Erhohung der Nettoertragnisse urn etwa zoo Millionen Kronen moglich.

7. Staatsbahnen.

Die Staatsbahnen haben gegenwartig ein Defizit von fiber io.000 Millionen
Kronen. Dabei sind ihre Tarife derart aufgebaut, dass die Personentarife das 10fache der Friedenspreise und die Frachttarife durchschnittlich das i2ofache der
Friedenstarife betragen. MOglich ware die durchschnittliche Erhohung der Personentarife auf das 2ofache und der Frachttarife auf das 2oofache Dadurch lassen
sich Mehreinnahmen von rund 6000 Millionen Kronen erzielen.

8. Post, Telegraph und Telephon.
Auch diese Betriebe sind schwer passiv. Die Tarifsatze betragen gegeniiber den
Friedenssatzen ; bei der Post das 2ofache, beim Telegraph dass 33fache und beim
Telephon das I5fache. Dadurch eine Erhohung der gegenwartigen Tarife das
Doppelte liessen sich Mehreinnahmen von rund 2000 Millionen Kronen erzielen.

9. Staats/orste.

Der Betrieb der Staatsforste ist wenig rationell. Eine Ekonomosierung derForste
und Abanderung mancher dem Staate unvorteilhafter Abstockungsvertrage liessen
Mehreinnahmen bis moo Millionen Kronen erwarten.
1o. Staatliche Industriewerke.

Der Staat musste nach dem Zusammenbruche mehrere Industriewerke, die im
Kriege militarischen Zwecken gewidmet waren, iibernehmen. Trotz mannigfacher
Versuche ist es bisher nicht durchwegs gelungen, zur Fortfiihrung dieser Betriebe
Formen zu finden, die dem Staate Einnahmen sichern. Sie sind zum Teile noch arg
passiv - die technischen Voraussetzungen sind fast flberall gegeben, weil es sich urn
ganz neue Anlagen handelt - so wiirde zu mindestens ihr Defizit beseitigt und viel-

leicht sorgar ein nicht unbetrachtlicher Gewinn erreichbar sein. Ziffermassige
Angaben sind derzeit


Das Defizit kann nicht allein durch Vermehrung der Staatseinnahmen abgebaut
werden, auch die Ausgaben miissen gemindert werden. Hiebei ware von dem Gedanken auszugehen, dass ein verkleinerter Staat auch die Konzentration der Zentralleitungsausgaben gebietet. Ebenso muss eine verarmte Staatswirtschaft die Bestrebungen, dem Staate neue unwirtschaftliche Ausgaben zu ubertragen, grundsatzlich
bekampfen. Zur CEkonomisierung der staatlichen Verwaltung gehOrt auch eine intensive Ausniitzung der menschlichen Arbeitskraft, wobei der Achtstundentag mindestens einer wirklichen achtstiindigenArbeitsleistung entsprechen muss. Die im Kriege
notwendig gewesene Zentralisierung volkswirtschaftlicher Funktionen muss, soweit
nicht ganz besondere Verhaltnisse vorliegen, so rasch als moglich durch den freien

- 46 Verkehr ersetzt werden. Es hat sich gezeigt, dass diese Zentralwirtschaften vielfach
sehr unokonomisch arbeiten und sehr haufig zur Verschwendung Offent licher Mittel
fiihren. Anzustreben ist ferner die Aufhebung der mannigfachen, noch aus der Kriegszeit stammenden Verkehrshemmungen, sie wirken in doppelter Richtung schadlich;
sie hemmen die volkswirtschaftlichen Produktionen, verursachen in Privatbetrieben
Personalausgaben, die wieder auf den Konsum iiberwalzt werden, gleichzeitig aber

bedingt das System der volkswirtschaftlichen Bevormundung auch staatlichen
Personalauswand. Die Riickkehr zum Prinzipe einer jeder Okonomischen Wirtschafts-

fiihrung, die Ausgaben nur dann kennt, wenn sie durch Einnahmen voll gedeckt
sind, musst der Leitsatz der Ausgabenpolitik bleiben.



Soweit derzeit ein Ueberblick besteht, werden die Staatsausgaben im Jahre
1921 /22 114 Milliarden Kronen betragen. Zu ihnen kamen noch 4 Milliarden als
Zinsenerfordernis fiir neue Inlands- und Auslandsanleihen. Zusammen 118 Milliarden
Wird angenommen, dass im Laufe 1921 /22 durch Einstellung und Abbau der
Staatszuschiisse fur Lebensmittel die Halite dieser Ausgaben, also etwa 13 Milliarden

Kronen, erspart werden und dass die in diesem Jahre notwendigen Lebensmittel
(3o Milliarden Kronen) aus ether Auslandsanleihe bestritten werden, so warden die
in der Folge aufgezahlten Steuermassnalunen notwendig sein, um wenigstens
rot Milliarden Kronen Einnahmen zu erzielen.
Staatseinnahmen fur 1921 /22.
Milliarden Kronen

1. Voraussichtliche Einnahmen nach dem Praliminare 1921 /22 .
2. Aus dem Ankaufe von Lebensmittel aus Mitteln der Ausland-


3. Ersparungen durch Erhohung der Preise der. subventioniertenLebens-


mittel (jetzt 26 Milliarden Kronen)
4. Intensivere Veranlagung der direkten Steuern
5. Erhohung der Getrankesteuer
6. Erhohung der Gebiihren und automatischen Eisenbahnverkehrs-

7. Erhohung der Zollzuschlage
8. Erhohung der Tabakverschleisspreise urn 50 %
9. ErhOhung der Staatsbahntarife
io. ErhOhungen der Tarife fiir Post, Telephon und Telegraph.

Das dadurch entstehende Defizit aus:

miisste durch eine innere Anleihe bedeckt werden.
Anmerkung: 1. JUR 1921 bis 3o Juni 1922.

Anmerkung: r. Juli 1921 bis 30 Juni 1922.








Summe: En .o
I18 .o





- -'


Die Christlichsoziale Vereinigung in der Nationalversammlung ist trotz mancher
schwerer Bedenken bereit, das finanzielle und wirtschaftliche Sanierungsprogramm
der Delegierten des Finanzkomittees des Volkerbundes und der Bundesregierung
als geschlossene Einheit betrachtet durchzuffihren unter der Voraussetzung, dass die
Grossdeutsche Vereinigung und die Unabhangige Bauernpartei Oesterreichs sich ebenfalls auf theses Programm verpflichten und der Sozialdemokratische Verband der
Beratung und Durchfiihrung kein Hindernis bereitet.
Die Christlichsoziale Vereinigung erklart sich mit der Antwortnote der Bundesregierung einverstanden falls es nicht gelingt, zur Sicherstellung der ausseren und

der inneren Anleihe andere vollkommen gleichwertige Pander privatrechtlicher
Natur zu ermitteln, welche die Zustimmung des VOlkerbundes, beziehungsweise
der Kreditgeber finden.

Die Formulierung der geplanten Hypotheken auf dem Immobilarbesitz und
der sich aus diesen Hypotheken ergebenden Rechtsverhaltnisse, sowie insbesondere
die Heranziehung eventuell anderer greifbarer Pander ist der Gesetzgebung vorbehalten.1
Wien, am 5. Mai, 1921.

Fiir die christlichsoziale Vereinigung deutscher Abgeordneter
im Osterreichischen Parlamente.



Der Verband der zozialdemokratischen Abgeordneten hat seine Stellung zu den
in den Kreditverhandlungen aufgeworfenen Fragen in einem ausfiirhlichen an den
Herrn Bundeskanzler gerichteten Schreiben dargelegt. Die Unterzeichneten sind
ermachtigt, die Grundgedanken theses Schreibens hiemit den Herren Delegierten derr
Finanzkommission des Volkerbundes zur Kenntnis zu bringen.
Der Verband betrachtet es als Sache der Regierung, die Vereinbarungen mit
der Finanzkommission des VOlkerbundes zu schliessen, und als Sache der regierenden
Mehrheit des Nationalrates, ihrer Regierung die notwendigen Einnahmen zu bewilligen. Es gehort nicht zu den Funktionen und zu den Pflichten einer oppositionellen

Partei, die Mitverantwortung fiir die Finanzpolitik einer gegnerischen Regierung
zu iibernehmen. Doch ist es selbstverstandlich, dass wir uns, falls unsere Partei,
wenn immer die Regierung iibernehmen sollte, durch all vorher rechtswirksam abgeschlossenen internationalen Vereinbarungen fiir gebunden erachten werden.
Um jedoch die Kreditverhandlungen moglichst zu fadern, steht der Verband
nicht an zu erklaren, dass die allgemeinen Grundsatze der Antwort, die die Regierung
den Herren Delegierten des VOlkerbundes auf ihr Memorandum zu geben gedenkt,

auch den Auffassungen des Verbandes der sozialdemokratischen Abgeordneten
entsprechen. Jedoch sieht sich der Verband gezwungen, einen Vorbehalt beziiglich
des der Antwort der Regierung angeschlossenen Programms «budgetarer Massregeln »

zu machen. Wohl halten auch wir die Erhohung der Staatseinnahmen um den von
der Regierung in Aussicht genommenen Betrag fiir notwendig und erreichbar. Doch
sind wir der Meinung, dass these ErhOhung der Staatseinnahmen mittels anderer
Steuergattungen und aus anderen Steuerquellen aufgebracht werden kann und soil,
als dies die Regierung in Aussicht nimmt. Wir nehmen mit Genugtuung zur Kenntnis, dass auch die Herren Delegierten der Finanzkommission des Volkerbundes die
Wahl der Steuergattungen und Steuerquellen als eine innere Angelegenheit der Osterreichischen Gesetzgebung ansehen.

Genehmigen Sie, sehr geehrte Herren, den Ausdruck unserer vorziiglichen


Wien, 7. Mai, 1921.

SEITZ, M. p.
BAUER, In. p.

(No. 4. Le texte allemand n'est pas encore parvenu.)
(No. 4. German text not yet to hand.)


- 40 -


Stellungnahme der deutschen Bauernpartei zum Finanzplane der

Die Deutsche Bauernpartei nimmt die Antwortnote der Regierung an die Finanzdelegierten des VOlkerbundes zur Kenntnis. Sie hegt schwere Bedenken gegen einzelne Massnahmen des Sanierungsprogrammes, insbesondere gegen die bedeutende
hypothekarische Belastung des privaten Realbesitzes. Da aber nach der Erklarung
der Regierung dies eine unumstossliche Voraussetzung fiir die Gewahrung der auslandischen Kredite ist, erklart sie, die Regierung bei der Durchfiihrung der Staatsnotwendigkeiten zu unterstiitzen. Sie verwahrt sich aber entschieden dagegen, dass
etwa, die Zwangshypotheken auch dann auf den Grundbesitz gelegt werden, wenn
der auslandische Kredit nicht oder in unzureichendem Ausmasse gegeben wird.
Wien, am 6. April,


Fur die deutsche Bauernpartei, Wien, r. Parlament.





Societe des Nations


au Rapport de la Commission d'Enquele



i. Liste des personnalites entendues par la delegation.
2. Resume de l'enquete.
3. Rapport sur la situation economique de l'Autriche.
q. Projet du plan d'assainissement de la situation monetaire et financiere de l'Autriche.
5. Chiffres des depOts dans les Banques et les Caisses


League of Nations


to the Rapport of the Commission of Enquiry in Vienna.

i. List of personalities heard by the Delegation.
2. Resume of enquiry.
3. Report on Economic conditions in Austria.
4. Draft scheme for the reconstruction of the currency
and finances of Austria.
5. Figures of Bank and Savings Bank deposits.





Les personnel suivantes ont ete entendues par nous pendant la premiere semaine

de notre sejour a Vienne:
DR. SCHULLER, Chef de section au Ministere des Affaires Etrangeres.
DR. SCHWARTZWALD, Chef de section au Ministere des Finances .

DR. PATZAUER, Conseiller au Ministere des Finances.
M. A. von SPITZMULLER, Gouverneur de la Banque Austro-Hongroise.
M. MAX RAPPE, Secretaire General de la Banque Austro-Hongroise.
M. L. von NEURATH, Directeur de la Oesterreichische Credit-Anstalt fiir Handel and
DR. PITNER, Directeur du Wiener Bank-Verein, Membre du Conseil d'Administration.
M. FEILSCHENFELD, President de la Nieder-Oesterreichische Escompte Gesellschaft.
M. MAXIME KRASSNY, Directeur de la Nieder-Oesterreichische Bodenkredit-Anstalt.
M. N. SIEGHART, President de la Allgemeine Oesterreichische Bodenkredit-Anstalt.

M. A. WEINER, Directeur General de la Allgemeine Oesterreichische BodenkreditAnstalt.
DR. ROSENBERG, Vice-President de la Anglo-Oesterreichische Bank.
DR. H. SIMON, Directeur de la Anglo-Oesterreichische Bank.
DR. ROTTER, Directeur General de la Oesterreichische Landerbank.
BARON LOUIS ROTHSCHILD, Banquier, Chef de la Maison S. M. V. Rothschild.

M. URBAN, President du Hauptverband der Industriellen.
DR. WEISS, Secretaire General du Hauptverband der Industriellen.
DR. PISTOR, Directeur de la Chambre de Commerce de Vienne.
M. H. REIF, President de la « Getreideanstalte ».
M. ELDERSCH, Membre de l'Assemblee Nationale. Social-Democrate.
DR. STRAKOSCH, Grand proprietaire foncier.
DR. OTTO BAUER, Membre de l'Assemblee Nationale. Leader du Parti socialiste.

M. A. HuEBER, Membre de l'Assemblee Nationale. Gewerkschaftskommission.

M. FINK, Membre de l'Assemblee Nationale, chef du Parti chretien social, ancien

DR. GiiRTLER, Membre de l'Assemblee Nationale. Professeur de l'Universite de
Gratz. Parti chretien social.
M. KRAFT, Membre de l'Assemblee Nationale. Membre du parti pangermaniste.

organisations de fonctionnaires.
BARON WLADIMIR BECK, President de la Cour des Comptes et de la Commission
des Economies.
DR. RENNER, Ancien Chancelier federal. Social-Democrate.









En arrivant a Vienne pour proceder sur place a un examen de la situation economique et financiere de l'Autriche, la Delegation a cru devoir d'abord, et immediatement apres ses visites officielles, interroger un certain nombre de personnalites
du monde des finances, des affaires et de la politique, afin de se renseigner, d'une part,
sur la gravite et les causes profondes de la crise, et de rechercher, d'autre part, les
remedes qui paraitraient les plus appropries et les plus acceptables a l'opinion publique.
Ce n'est qu'apres avoir obtenu ces renseignements et les avoir, en quelque sorte,

control& par la lecture de documents statistiques et autres, que la Delegation s'est
mise en rapport avec les membres du Gouvernement pour discuter de ces questions
avec eux.
Nous avons evidemment tenu compte, dans toute la mesure du possible, de
l'etat d'esprit de nos interlocuteurs, mais nous avons essaye, en leur posant un certain nombre de questions, mfirement arretees d'avance, de connaltre exactement
la situation politique generale du pays et les consequences qui en decoulent, les
possibilites de developpement economique, telles que le permettait la situation nouvelle du pays.
Comme le nceud de toute la question se trouvait indiscutablement dans la situation financiere, ce sont les points sur lesquels nos interrogations ont le plus specialement port& de facon a aboutir a des conclusions pratiques. Pour les mieux formuler en connaissance de cause, nous avons cru devoir demander a chacun l'expose
des remedes qu'il preconisait. Pour plus de clarte, nous avons etabli ainsi qu'il
suit le cadre de nos questions :

I. - La situation politique de

II. - La situation economique.

a) Subsides alimentaires.
b) Fonctionnaires et employes de l'Etat.
c) Question des loyers.
d) L'unite nationale.

a) L'industrie et le commerce.
b) L'agriculture.

III. - La situation financiere.

a) Les changes.
b) La valeur interieure de la couronne
c) Le budget.

IV. - Les remedes.

a) Stabilisation de la couronne.
b) Les moyens d'assainir le budget.
c) Les emprunts interieurs.
d) Les emprunts exterieurs.
e) La banque d'emission et l'introduction
d'une nouvelle unite monetaire.

D'autre part, la Delegation a résumé ci-apres, aussi brievement que possible,

les opinions exprimees par les personnalites les plus eminentes du pays, apparte-



4nant aussi bien a l'administration qu'au monde des affaires, de la finance, de l'industrie, du commerce, de l'agriculture et de la politique. La liste de ces personnel
forme l'Annexe (I),


La revolution de novembre 1918 fut courte et essentiellement pacifique, ce qui
s'explique par le caractere paisible et une certaine apathie du peuple autrichien,
qui, cependant, se trouvait en presence d'une situation alimentaire quasi desesperee
et en contact avec le communisme bavarois et hongrois.
A la suite des dernieres elections, le parti chretien social, qui s'appuie principalement sur la population des campagnes, a pu constituer le gouvernement. L'opposition est formee surtout par la Socialdemokratie, qui a perdu un certain nombre de

mandats, tandis que le parti pangermaniste fait plutet preuve d'une neutralite
bienveillante. Les elections semblent prouver que le peuple tient a conserver le fruit
de ses conquetes democratiques, mais ne veut pas se lancer dans les aventures et
prefere avoir un gouvernement susceptible d'etre ecoute par les Allies.

Quoi qu'il en soit, la division des partis est telle que le Gouvernement au pouvoir est forcement instable, etant donnee la faible majorite dont it dispose. Il a ete
elu principalement pour remettre de l'ordre dans les finances de l'Etat et l'opinion
generale est que, s'il ne reussissait pas, on trouverait difficilement d'autres personnalites disposees a accepter la responsabilite de former un autre gouvernement. Mais
cet affaiblissement de la majorite oblige le gouvernement a suivre une politique de
compromis, qui explique en partie les difficult& causees par la question des subsides alimentaires, celle du personnel administratif et celle des loyers.
a) Subsides alimentaires. - Des 1918, les parties de l'ancienne monarchie qui
subvenaient autrefois aux besoins du pays en cereales panifiables etant devenues
independantes et ayant cesse toute livraison, l'Etat dut prendre immediatement des
mesures pour assurer l'alimentation de la population. En outre, afin de maintenir

la tranquillite et l'ordre, it dut assurer le pain a un prix raisonnable. Or, a cette
époque, la production des cereales panifiables etait deficitaire dans le monde entier ;
les societes privees autrichiennes importatrices de cereales ne disposaient pas, a elles
toutes, de ressources financieres suffisantes pour faire face a la situation, et comme

elks n'etaient pas en relations avec les exportateurs d'outre-mer - ce commerce
etant, avant la guerre, exclusivement interieur - elles ne pouvaient en obtenir des
credits; enfin la fourniture des cereales etait liee a des conventions diplomatiques
avec l'Entente; aussi l'Etat fut-il oblige de se charger lui-meme du ravitaillement
du pays.
Les achats se font par l'intermediaire de la Einfahrgesellschaft, organisee specialement et agissant pour le compte du Gouvernement lui-merne. Cette societe
fonctionne avec un fres petit capital et toutes les grandes maisons de cereales,
brasseries, malteries, minoteries, associations de consommateurs, etc... sont representees dans son Conseil.
Les cereales importees sont cedees par l'Etat aux communes qui les repartissent entre les negociants, lesquels assurent la vente au public, contre remise des
cartes de pain.
Les besoins annuels de l'Etat en cereales panifiables, sur la base de la ration
actuelle de 900 grammes de pain et Soo grammes de farine par semaine et par tete,
representent environ 550.000 tonnes de seigle et de froment. Sur cette quantite,
450.000 tonnes environ sont importees, tandis que la production locale s'eleve a
environ ioo.000 tonnes. Cette derniere quantite est, en realite, requisitionnee par

l'Etat a des prix atteignant jusqu'a 20 couronnes le kilogramme; le producteur
conserve la quantite dont it a personnellement besoin et it cede a l'Etat, a un
prix fixe, une quantite evaluee d'apres le rendement probable de sa recolte.
L'agriculteur peut disposer librement de tout surplus.

Les cereales importees ont touj ours du etre payees aux prix du j our. A mesure que
le prix mondial montait, la couronne autrichienne baissait, si bien que les prix d'achat
en couronnes ont atteint des proportions considerables. Cependant, le Gouvernement
a ete dans l'impossibilite, pour des raisons economiques et politiques, d'augmenter

proportionnellement les prix de vente du pain a la population. On est ainsi arrive
a cette disproportion que le ble importe cofitait jusqu'a. 62 couronnes le kilogramme,

mais etait livre a la population au prix de 9 couronnes, ce qui provoque, pour

l'annee budgetaire en cours, un deficit d'environ 3o milliards de couronnes.
Il a ete tout aussi impossible de reduire les rations, qui sont restees les memes
que pendant la guerre, c'est-h-dire, en realite, insuffisantes. Mais cette insuffisance

a provoque le developpement d'un commerce frauduleux, qui est extremement
intense, et elle a pousse la population a acheter d'autres aliments, tels que du chocolat et des conserves, qui ont plutot le caractere de produits de luxe.


State service, the business world, finance, industry, trade, agriculture, commerce,
The list of these persons will be found in Annex (I).

or politics.



The revolution of November, 1918, was short and essentially pacific; this is
explained by the peaceful and somewhat apathetic nature of the Austrian people,
who, however, were faced with an almost desperate situation as regards food supply,
and were also in contact with the communists in Bavaria and Hungary.
As the result of the last elections, the Christian Social Party, which draws its

support mainly from the country population, was able to form a Government.
The opposition is composed mainly of the Social Democrats who lost a certain
number of seats, whilst the Pan-Germanist Party adopts, in general, an attitude
of benevolent neutrality. The elections seem to show that the people are desirous of
retaining the fruit of their democratic conquest, but do not desire to launch themself

in adventurous schemes, and prefer a Government to which the Allies are likely
to listen.
However, the division of the Parties is such that the Government in power is
necessarily insecure, owing to its small majority. It was elected chiefly to re-esta-

blish order in the State finances, and the general opinion is that if it were not successful it would be difficult to find other persons to accept the responsibility of forming

another Government, but the feebleness of its majority compels the Government
to follow a policy of compromise, and this partly explains the difficulties caused
by the questions of food subsidies, administrative officials and rents.

(a) Food Subsidies. - In 1918, those parts of the former Monarchy which
used to supply the cereal requirements of the country became independent, and ceased
to afford any supply. The State was therefore bound immediately to take steps


to provide for the food supply of the population. Further, in order to maintain
peace and order, it was compelled to provide bread at reasonable prices. At this
time, however, there was a deficit in the production of bread cereals throughout the
world. Private companies in Austria which imported cereals did not all together
possess sufficient financial resources to meet the situation, and as they were not in
touch with exporters over sea - this trade having before the War been confined to
the home country - they were unable to obtain credit from them ; finally, the supply
of cereals was closely bound up with diplomatic conventions concluded with the
'Entente Powers; the State was therefore obliged itself to undertake the food supply
of the country.
Purchases are made through the " Einfuhrgesellschaft, " which is specially
organised and operates on behalf of the Government itself. This company is
working with a very small capital, and all the important corn-merchants, brewers,
maltsters, millers, consumers' associations, etc., are represented on its Board of

The imported cereals are handed over by the State to the communes,which
distribute them amongst the merchants, who sell them to the public in return for
bread tickets.
The annual requirements of the country in bread cereals, based on the present
ration of 900 grams of broad and 500 grams of flour per head per week, represent
about 550,000 tons of rye and wheat. Out of this quantity, about 450,000 tons are
imported, whilst the production amounts to about 100,000 tons. This latter quantity is, in fact, requisitioned by the State at prices as high as 20 kronen per kilogramme ; the purchaser retains the quantity of which he himself has need, and hands

over to the State at a fixed price, a quantity calculated according to the probable
yield of his crop. The farmer can dispose freely of any surplus.
Imported cereals have always been paid for at current prices. As the world
price rose, the Austrian krone fell, so that purchase prices in kronen have risen considerably. The Government, however, was unable, for economic and political reasons, to increase proportionately the selling price of bread to the population, This
resulted in such a disproportion that imported grain cost as much as 62 kronen per

kilogramme, but was sold to the public at 9 kronen; this involves for the present
financial year a deficit of about 3o milliard kronen.


It has also been quite impossible to reduce the rations which remain the same
as during the War, that is to say, in reality, insufficient. But this insufficiency has
favoured the development of fraudulent trade, which is extremely common, and has
driven the population to purchase other food supplies such as chocolate and tingoods, which are rather luxury articles.


-5b) Fonctionnaires et employes de l'Etat. - Le nombre des fonctionnaires de l'Etat
est evalue a environ 260.000, ou, avec leurs families, environ 700,000, soit plus du
dixieme de la population totale du pays. Toutefois, si on vent comparer ces chiffres
avec ceux des administrations des autres Etats, it ne faut pas oublier que l'Autriche
dirige un certain nombre d'entreprises et de grandes manufactures monopolisees,
et dont l'administration et l'exploitation necessitent un personnel nombreux. Une
comparaison ne serait exacte que si elle etait faite pour chaque administration et,
en ce qui concerne l'administration centrale, avec chaque service correspondant
Apres l'armistice et la signature de la paix, les fonctionnaires autrichiens residant dans les parties de l'ancienne monarchie devenues independantes, furent obliges
de rentrer en Autriche. L'administration centrale, qui avait ete organisee a Vienne
pour repondre a l'importance considerable de l'ancienne monarchie, n'a, pour ainsi

dire, pas ete diminuee. L'opinion est unanime sur ce point, aussi bien parmi les
hommes politiques que chez les hommes d'affaires, que le nombre des fonctionnaires

est beaucoup trop eleve et qu'il faudra proceder a une reduction. La principale

difficulte est de trouver les services dans lesquels les fonctionnaires sont trop nombreux. En effet, ce n'est pas partout le cas ; les services de l'Instruction publique et
de la Justice, les ateliers de reparations des chemins de fer manquent plutot de personnel; par contre, on pourrait simplifier l'administration centrale et supprimer les
bureaux et services nes de la guerre. L'introduction de la journee de huit heures a
occasionne une augmentation sensible du personnel des chemins de fer et les enormes
depenses resultant de cet accroissement ajoutent au deficit de l'exploitation. D'autre
part, les mutations d'un service dans un autre sont rendues difficiles par les reglements en vigueur, par l'opposition des fonctionnaires et par la difficulte de trouver
des logements. Un certain nombre de fonctionnaires, surtout ceux des grades sup&
rieurs, ont volontairement quitte le service pour rentrer dans des entreprises privees
ou ils ont obtenu des traitements plus avantageux. La grande majorite des anciens
officiers a egalement reussi a trouver des emplois civils. Mais, it n'y a pas eu de reduction sensible, surtout dans les rangs inferieurs.
En ce qui concerne les traitements, les fonctionnaires eux-memes nous ont dit
qu'ils ont vecu pendant la guerre dans des conditions particulierement difficiles,
leurs traitements n'ayant pas ete augmentes. La plupart auraient du, pour subsister,
vendre ou mettre en gage les valeurs ou objets qui ne leur etaient pas absolument
indispensables et it leur a ete, jusqu'a present, impossible de les remplacer.
Si, depuis l'etablissement du nouveau regime, les fonctionnaires ont reussi
obtenir les augmentations de traitements demandees, leur situation n'a pas ete, en

realite, amelioree, car ces augmentations ont toujours ete tardives, c'est -a -dire
qu'elles ne se sont produites qu'apres une nouvelle baisse de la valeur de la couronne,

qui detruisait a nouveau requilibre qu'on avait essaye d'etablir.
c) Les loyers. - La situation des loyers est aussi anormale que celle des vivres.
Comme dans la plupart des autres pays, des mesures ont ete prises, presque au debut
de la guerre, en vue d'interdire l'augmentation des loyers au-dessus d'un certain
taux juge necessaire pour assurer l'entretien des immeubles. Cette restriction est
appliquee fres rigoureusement, si bien que, etant dorm& la forte baisse de la couronne,

les loyers d'aujourd'hui sont anormalement bas, tant par comparaison avec ceux
d'avant-guerre, qu'avec les revenus des proprietaires et des locataires; un ouvrier,
avec un salaire d'environ Ioo.000 couronnes, ne paie pas plus de 2.000 couronnes de
loyer (environ 20 francs suisses), soit 2 % de son revenu.
Cependant, on a reconnu que le prix des immeubles a augmente de 5o a 6o fois:
cela provient de ce que des personnes possedant des capitaux cherchent a se procurer
des valeurs independantes de la baisse de la couronne; elles ache tent des immeubles
comme elles achetent des devises etrangeres ou des marchandises.
Tout le monde admet que les loyers ne peuvent etre maintenus a un taux aussi

bas et les ouvriers eux-memes comprennent le danger social qui resulte de cette
situation, d'autant plus qu'on n'entretient plus les immeubles et qu'on n'en construit
pas de nouveaux. D'apres tous nos interlocuteurs, it faudrait augmenter graduellement le prix des loyers. Toutefois, les representants de la Socialdemokratie sont prets a collaborer a cette mesure - insistent sur les difficultes de cette reforme
qu'ils considerent comme une des plus dangereuses au point de vue social; a leur
avis, elle doit etre liee a la fixation des salaires et du prix des produits alimentaires.
Certains nous ont concede qu'on pourrait trouver une source d'impots nouveaux
dans l'augmentation des loyers et a l'exemple de la Ville de Vienne, qui a deja etabli
une taxe speciale sur tous les locataires payant un loyer superieur a un certain

d) L'unite.nationale. -A l'extreme division des partis, faut ajouter, comme
cause de faiblesse de l'Autriche. le fait que la constitution politique du nouvel Etat,
qui est une federation de sept provinces ou cantons, n'a pas su faire naitre un sentiment d'union et d'harmonie interieures suffisamment fort, ni creer un Gouvernement

federal ayant assez d'autorite, non seulement aupres du Parlement, mais encore
aupres des differentes provinces. It en est resulte une exageration du sentiment d'inde-




of these States, which is shown by the series of measures and regulations which considerably hamper communications and the free exchange of goods from one part of
the country to another. Even the communes are following this tendency, so that
communications and trade are completely paralysed, and great harm has been done
to the country's prosperity.

It is generally admitted that an end must be put as quickly as possible to this

state of affairs, which is more especially due to the critical financial situation of Austria,

in particular as regards the idea of a union with Germany. After the signing of
the Treaty of Peace, when hope of economic assistance from abroad appeared justified, the idea of political union with Germany was only upheld by a very small minor-

ity of the population, but when this assistance was not given, and as the financial
situation of the country grew worse, the movement increased in force, so much so
that a growing part of the population began to maintain that economic and political
salvation could only be assured through political union with Germany.

But the Delegation was also told that this idea was further supported by the
fact that a large part of the population was looking for a real authority and guidance
which they did not find in their own rulers.
Whatever may be the extent and the origin of these sentiments the great majority of witnesses admit that an Austrian national feeling does exist. The country

has not yet recovered from the upheaval caused by the war and by its dismemberment, but it retains its own traditions, its culture and mentality, which afford
it the elements of a very real vitality. Save of course among the representatives
of the Pan-German Party, the general opinion is that Austria is capable of an active
and independent existence.

All the representatives of the different branches of economic life also admit that
an independent Austria as it exists to-day, in spite of the profound changes introduced in its existence by the Treaty of Peace, must be considered as capable of an
active and independent existence. They therefore maintain that assistance from
abroad not only would not be useless, but would actually ensure the development of
the country, which is the indispensable centre of the economic future of Central
and Eastern Europe.

(a) Commerce and Industry. - The existing - and temporary - difficulties

are caused solely by the dismemberment brought about by the Treaty of Peace. It
- --is necessary to pass through a critical period in which Austria must adapt herself
to new conditions. The withdrawal of demands for reparations on the part of the
Entente, together with the cancellation of the general mortgage on all the assets of
the country - the re-establishment of freedom of communications, trade and commerce with the Succession States, the stabilisation of the currency, and, above all,
the equilibrium in the State budget, will, it is generally held, ensure the economic
future of Austria.
Almost all witnesses declared, in particular, that the City of Vienna, despite

its population, apparently far too great for the size of the country, has every
chance of fully retaining its former position. It is giving proof of its vitality
by maintaining its trade, which is even more extensive than before the War, in

spite of the difficult situation of the country. Not only have imports, exports and
transit increased, but also Vienna is the centre in which important foreign business
is transacted. This therefore does away with the opinion current in certain circles,
that Vienna must necessarily lose its position and dwindle away, owing to the division of the former monarchy, and in consequence become a burden to Austria.
The position of Vienna, built up in the course of centuries, is unique in this part of
Europe. The great banks of the town possess an excellent technical organisation :
the commercial concerns understand the language, habits, methods, and financial
standing of the Succession States; Vienna is a centre of good communications. The
city itself affords all the conveniences and advantages of a great town, together with
the artistic treasures of an old civilisation. Moreover, in a sense, dismemberment
has served to increase the Vienna market, by pushing back the frontiers of certain provinces formerly Austrian. Thus, the market available covers the whole of Roumania
instead of Transylvania only, the whole of Yougo-Slavia instead of Bosnia and Dalmatia, and the whole of Poland instead of Galicia.

But in however favourable a light Austria's future may be regarded, a crisis
undoubtedly exists, the causes of which had to be enquired into.
Unemployment has been very great since the revolution and dismemberment.
Industry has suddenly been cut off from former important markets within the limits
of the old monarchy, and it has also ceased to receive coal from centres of production


-7des centres de production qui se trouvent maintenant en dehors des frontieres de
l'Autriche. Déjà une amelioration sensible se fait sentir. Les fournitures de charbon
ont repris, les anciens debouches ont ete ouverts a nouveau, les relations se sont
renouees peu a peu et la baisse de la couronne - et le niveau relativement bas des
salaires, qui en resulte - ont permis a l'industrie autrichienne d'acquerir une situation favorable. La crise industrielle n'a encore touché l'Autriche que relativement
peu, par comparaison avec les perturbations considerables dont souffrent la plupart

des autres pays de l'Europe. Actuellement, les usines realisent des benefices
importants, bien qu'aucune d'elles ne travaille a plus de 50 % de sa capacit& par

suite surtout de l'insuffisance des arrivages de charbon. Aussi, le chOsmage est-il

aujourd'hui pratiquement insignifiant en Autriche, ce qui permet d'eviter sans
doute une agitation sociale et doit faciliter la reconstruction financiere.

Toutefois, les representants de l'industrie reconnaissent eux-memes que cette
prosperite est artificielle. Ils montrent aussi que les gros profits des usines sont loin
d'etre toujours le resultat d'une active production, mais qu'ils sont dus souvent a
des benefices considerables de change: des matieres premieres sont achetees a une
époque oir le cours de la couronne est asset eleve, et la vente des produits finis n'a
lieu qu'apres une baisse sensible de cette devise.
La situation anormale des changes rend donc particulierement difficile le deve-

loppement rationnel de l'industrie. La base sur laquelle elle travaille est incertaine, tout calcul etabli est immediatement bouleverse et la baisse de la couronne

risque de reduire les benefices a un tel point que les capitaux manqueront pour l'achat des matieres premieres indispensables a la continuation de l'exploitation.
Toutefois, tous les representants des banques sont d'accord avec ceux de l'industrie pour dire que les achats de matieres premieres par l'industrie ont ete sans
grande influence sur la baisse de la couronne. Ils reconnaissent meme que l'industrie
n'a pas eu besoin jusqu'ici d'aide speciale de l'etranger pour ses achats, ni pour l'obtention de son charbon, les banques autrichiennes ayant ete a meme - et tout porte
a croire qu'elles le seront encore dans l'avenir - de procurer le credit necessaire a la
couverture de ces importations. Or, la grande industrie represente, pour le pays, une
importance considerable, d'une part, parce qu'elle occupe et nourrit environ un million
d'ouvriers, d'autre part, parce que seul l'excedent de ses exportations pourra payer
l'importation necessaire de produits alimentaires. Il est donc indispensable, pour
l'existence future du pays, que l'industrie se developpe dans le calme. C'est egalement
l'avis des ouvriers, organises et groupes en une grande federation centrale.
D'ailleurs, grace a son niveau technique eleve, a son organisation excellente,
aux qualites de ses ouvriers qui sont appliques, intelligents et peu exigeants et dont
les salaires sont relativement bas, l'industrie autrichienne sera, non seulement
meme de regagner sa position dominante dans les Etats successeurs, mais encore elle
trouvera dans le monde entier un marche interessant pour les articles dont elle a la

Aussi bien, l'industrie elle-meme, a la suite d'une enquete a laquelle elle a procede a la demande de la Delegation, se montre-t-elle generalement pleine d'espoir
sur les possibilites de l'avenir; it y a du charbon en Autriche meme et si les gisements
etaient convenablement exploites, Us pourraient couvrir pres du tiers des besoins de
l'Autriche. En outre, par l'utilisation de la force hydraulique, qui appartient h 1'Etat,
on obtiendrait une source extremement importante d'energie, evaluee a 250.000 HP.
(dont le dixieme n'est meme pas exploite), ce qui diminuerait environ de moitie la
consommation totale du pays en charbon.
II sera toutefois indispensable, pour assurer al'industrie un developpement continu

et satisfaisant, de laisser ouverte la porte qui conduit a ses marches naturels. Il y a
donc un interet capital a arriver a un arrangement politique et commercial, avec les
Etats successeurs, lequel limitera le plus possible les entraves qui Orient actuellement le libre echange des produits, et qui ont ete principalement elevees dans un but
b) L'agriculture pourra etre considerablement developpee, bien qu'elle ne puisse,
en tout etat de cause, fournir que la moitie environ des cereales necessaires a l'alimentation du pays. La recolte de 1919 a ete faible, a cause des nombreux obstacles
rendant la production plus difficile et du manque d'engrais chimiques ; elle n'est
evaluee qu'a la moitie du rendement normal d'avant-guerre. Pour 1920, elle a augmente, dans une certaine mesure et on peut esperer atteindre la normale avant longtemps.
Mais it faudra touj ours importer une quantite de cereales panifiables a peu pres
egale a celle produite dans le pays. En effet, une grande partie de la superficie de
l'Autriche est couverte par les Alpes et est impropre a la culture. Mais l'elevage du
betail peut etre augment& et les races devront etre ameliorees par l'importation
d'animaux selectionnes ; cependant, meme lorsque le cheptel aura ete completement
recoriStitue quanta sa quantite, l'Autriche ne sera pas en mesure de se stiffire entierement en viande.
Comme on l'a vu plus haut, la requisition par l'Etat des produits agricoles a des
prix peu renumerateurs, incite souvent l'agriculteur a ne pas developper sa produc-



-8is equally handicapped by the numerous obstacles placed in the way of freedom o
Many of those who were questioned by the Delegation, however, were led spont
aneously to make a comparison between Austria and Switzerland. Not only is the


political constitution of the two States identical, but the natural resources are also
the same. They see in this comparison a reason for their optimism as regards Austria's economic future. All, in fact, argeed in stating that an independent Austria
is capable of conomice existence, provided it can remain in that state of tranquillity which is at present indispensable, and can obtain from abroad the assistance
which would permit the State to consolidate itself. The fact is that the political and
economic situation of Austria depends, above all, on the financial condition of the


(a) Exchange. -A very clear expression of the present difficult situation in

Austria may be observed by all from the fact that the Austrian krone has continually
depreciated and has fallen so low that it is not worth even one Swiss centime. All,
admittes however, that the depreciation in the krone is not the cause but the effect
of the economic position of the country. The continual depreciation in the krone is,
in the opinion of all, due to the fact that the State budget shows an ever-increasing
deficit, which has to be covered by the issue of fresh notes guaranteed by interestbearing Treasury bonds, issued by the Government with the approval of Parliament,

and transferred to the special Austrian section of the Bank of Austria-Hungary.

As Austria's share of the gold reserve of the Bank will hardly be more than

40,000,000 gold kronen, and as the other assets are of small importance, practically the only guarantee of the Bank notes consists in the Treasury bonds.

For the financial year 1920-1921 this deficit is calculated at 45 milliard kronen,
and the fiduciary circulation of notes now reaches about the same figure, whereas
the normal amount was formerly only about a million.
The Government has, indeed, endeavoured to obtain the necessary resources by
means of internal loans. The first was issued immediately after the Revolution. Out
of consideration for the former holders of bonds, permission was given them to pay
the half of their subscriptions to the new loan in bonds of the former war loans, so
that the State only received about 200 million kronen of new money. The next loan
was issued in the form of Treasury bonds bearing interest, on the security of which
it was possible, to borrow up to the amount of their face value at any time after
agreement with the of BankAustra-Hungary. As a result of this clause, it was subscibed

almost entirely by the banks and large financial institutions, and did not contribute to the reduction of the fiduciary circulation.
The last loan was issued in December, 1920, in the form of Treasury bonds
repayable in three months and renewable. It produced in all about 1.80o million

These three loans together covered only a very small part of the enormous
deficit of a single year, and experts unite in stating that further resources can certainly not be obtained by means of an internal loan until the State finances have
been put in order.
Side by side with the ever-increasing issue of notes and the active demand for
foreign currency to cover purchases of foodstuffs jaboad, the depreciation of the
krone has steadily grown greater,rresulting also in the considerable increase of the

In October, 1919, Austrianlbank notes were worth 6.02 Swiss Francs at Zurich;
the average rate for February, 1920, was 2.29. The rate rose to 3.78 in July, but
from that date the depreciation steadily increased, reaching an average of 1.15 in
December, and:even 0.94 in March, 1921.
(b) Internal value of the krone. - Thiscontinual fall in the exchange has caused an
ever-growing increase in the cost of living, so much so that Austria is not at present
benefiting from the general fall in prices in the world markets. Moreover, it has also
constantly undermined the stability of the State budget. Finally, it has given rise
to frantic speculation, which does serious harm to the general moral of the population. Enterprise, and with it available capital, is no longer directed to productive work. On the one; hand, an ever-growing luxury may be observed in the classes
amongst which the profits of speculation are concentrated ; on the other hand, the

middle classes, honest and hardworking, which have always been the centre of
Austrian culture, are sinking deeper into distress and misery. Every incentive to
thrift has disappeared; the kronen which have been saved are rapidly reduced to a
mere fraction of their value; they are therefore spent as quickly as possible or
invested in real security, such as house property and foreign currency, but also m
jewels, antiques, etc.; but however.


-9Cependant, si depreciee qu'elle soit, la couronne conserve a l'interieur un pouvoir d'achat superieur a celui qui est indique par son cours. Aussi, la Delegation
a-t-elle cherche a se renseigner, aupres de toutes les personnalites susvisees, sur le
rapport pouvant exister entre la valeur interieure et la valeur exterieure de la couronne. Elle vane selon les differentes parties du pays et selon les produits, mais on
estime qu'il y a tendance a l'equilibre. La difference est plus forte dans les campagnes
que dans les villes, et plus forte dans les autres villes qu'a Vienne meme, oil le pouvoir
d'achat peut etre evalue a environ le double du cours du change. Naturellement, ce
pouvoir correspond au cours du change pour les marchandises de provenance &ranOre nouvellement importees.
La cotation a Zurich de la couronne exterieure etait, fin avril 1921: 1,5o franc

suisse pour Ioo couronnes autrichiennes, et, elle &ail a Vienne, pour la couronne
interieure, de 115 couronnes autrichiennes pour I franc suisse, change qui correspondait au cours des billets autrichiens a Zurich, soit environ o,98 pour Ioo couronnes.

Cette difference est inevitable, a cause des subsides alimentaires, des faibles

loyers, des faibles salaires des ouvriers et du manque de confiance dans la couronne.
En outre, on a insists sur l'influence exercee par la demande vraiment anormale de
devises etrangeres; au lieu de placer leur fortune dans les banques oh elle produirait
interet, les Autrichiens achetent des devises etrangeres de toutes sortes.
Plusieurs personnes ont reconnu que le maintien de cette difference artificielle
presente un reel danger pour l'Autriche; elles ont voulu dire par la que les prohibitions a l'importation sont la cause de ce que des quantites considerables de billets
autrichiens restent improductifs a l'etranger, pour le plus grand profit de la specula-

tion sur la devise autrichienne, sans compter que ces sommes possedees par des
strangers, peuvent aussi rendre plus difficile une reforme de la monnaie autrichi'enne;
en outre, les prohibitions donnent naissance a des benefices illicites et engagent a la
fraude. Toutefois, une suppression de la difference ne ferait guere monter la couronne
exterieure, mais amenerait plutOt le nivellement des deux valeurs sur la base de la
plus faible.
En tout cas, on a, de tous cotes, formule le desk de voir rendre entierement, et
le plus tot possible, la liberte au commerce des devises, des que la valeur de la cou-

ronne aura ete stabilisee. Cette question de la stabilisation de la couronne a fait
l'objet de nombreuses questions des delegues aux personnes susvisees et leurs reponses sont resumees dans le paragraphe IV ci-apres.

c) Le budget. - L'enorme deficit du budget de l'Etat est principalement du

trois causes:
10 les subsides de l'Etat qui atteignent provisoirement, pour Farm& budgetaire,
environ 3o millions de couronnes ;
20 les traitements des fonctionnaires;
30 l'exploitation des chemins de fer.

D'autre part, on a, de differents cotes, exprime la crainte de voir l'Etat oblige
de faire face aux demandes formulees par les Etats successeurs, relativement au
paiement au cours d'avant-guerre de la couronne, des avoirs de leurs ressortissants
en Autriche; par exemple, a la Caisse d'epargne postale, dans les banques, dans les
compagnies d'assurances, etc. Si ces demandes etaient agreees, l'Etat paierait la difference entre la couronne or et le cours actuel. Ces reclamations des Etats successeurs s'appuient sur les articles 248 et 249 du Traits de St-Germain, qui oblige l'Etat
autrichien a donner une garantie semblable aux ressortissants des Etats de l'Entente.
Cependant, de l'avis general, it n'y a aucune raison politique, ni aucun argument
juridique en faveur de cette analogie, puisque les sujets des Etats successeurs ont eu
la possibilite, pendant la guerre, de disposer librement de leurs avoirs, tandis que la
disposition susvisee du Traits de St-Germain a justement pour but de compenser les
pertes occasionnees aux ressortissants des pays ex-ennemis, par l'interdiction de
toute transaction avec l'Autriche pendant la guerre.
Pour Vann& budgetaire 1919-2o, le budget de l'Etat accuse un deficit de io,6
milliards de couronnes (recettes : 6,3 depenses : 16,9 milliards) et pour 192o-21,1a loi
budgetaire, telle qu'elle est votee, accuse un deficit de 41,1 milliards de couronnes
(recettes : 29,5 - depenses : 70,6 milliards), montant auquel it y a encore lieu d'ajouter

11,9 milliards resultant de nouvelles augmentations des traitements des fonctionnaires et des salaires des ouvriers de l'Etat, et d'augmentations des depenses provenant de la nouvelle derreciation du change, ce qui porte le deficit total a 53 milliards
de couronnes.
Bien que he budget de l'Etat soit deja en fait detraque, les exigences continuent
a croitre, qui ouvrent constamment les caisses de l'Etat: les fonctionnaires reclament

de nouvelles augmentations de traitements, representant un total considerable; les
depenses pour l'achat de produits alimentaires augmentent dans la meme propoi tion
que la baisse du change, comme aussi, le paiement des interets et les autres depenses
au profit d'etrangers. Par contre, it est impossible, partie pour des motifs purement
pratiques, partie par suite de difficultes politiques, d'accroitre les recettes dans la
Tame mesure que les depenses: it s'ensuit que l'emission de billets est perpetuelle
et que sa progression va de pair avec la baisse de leur valeur generale. Tout le monde



- 10 reconnait qu'il sera impossible de se procurer plus longtemps les ressources necessaires a la continuation de la vie publique et impossible aussi de trouver les moyens
indispensables au paiement des achats de produits alimentaires a l'etranger.
Dans toute la mesure du possible, nous avons demande aux personnes avec lesquelles nous nous sommes trouves en rapport de nous presenter leur maniere de voir
au sujet des remedes a apporter a la situation qu'elles nous exposaient : leurs reponses sont resumees dans le chapitre suivant :


En ce qui concerne les moyens a employer pour aider l'Autriche a sortir de ses
difficult& financieres actuelles, tout le monde est d'accord sur la necessite d'arreter la
baisse continuelle de la couronne autrichienne, de mettre fin aux fluctuations de sa
valeur vis-à-vis des devises etrangeres et de la stabiliser a un niveau determine, de
meme tons reconnaissent que ce resultat ne sera pas obtenu sans mettre fin a l'emission de nouveaux billets, qui elle-meme ne peut etre obtenue tant que le budget de

l'Etat n'aura pas ete assaini. It faut donc arriver a equilibrer les recettes et les de-

penses et mettre a la disposition de l'Etat les ressources necessaires sous forme d'emprunts ou de credits de facon a combler le deficit sans avoir a nouveau recours a une
nouvelle emission de billets.

a) Stabilisation de la couronne. - Certaines personnalites, particulierement
certains representants des milieux financiers ne desirent pas voir stabiliser la couronne a un cours determine, mais pensent qu'il serait preferable d'arriver a une
augmentation persistante de sa valeur. D'apres eux, it est necessaire, pour l'assainissement du pays, de faire monter le change de la couronne autant que possible,
de facon a reduire successivement le deficit de l'Etat et a faire renaitre la confiance
en donnant au peuple l'espoir d'une amelioration. Les autres, et ce sont de beaucoup
les plus nombreux, considerent dangereuse et inutile une hausse persistante de la
couronne: dangereuse a cause de l'industrie, - dont les benefices futurs sont d'une
importance capitale pour le relevement economique du pays, - qui ne pourrait plus
lutter contre la concurrence etrangere. Il serait en effet impossible de reduire les
frais, specialement les salaires, dans la meme proportion que l'augmentation de la
couronne; inutile, parce que le monde des affaires a besoin, non pas d'une hausse persistante, mais seulement de ce resultat positif qu'est rank, a un point determine, de
la baisse de la couronne. Si ce resultat est obtenu et si la stabilite persiste, la confiance
en la couronne renattra ; ce sera la fin de la speculation et le retour a une situation
saine. Une augmentation persistante aurait pour consequence un ajustement continuel des prix et des salaires, afin de permettre a la population de beneficier de cette
augmentation. Or, c'est la une procedure particulierement difficile et que beaucoup
meme jugent impossible. On a reconnu, d'ailleurs, que l'essentiel pour le pays n'est

pas de donner a la .couronne une valeur plus elevee, mais seulement d'arriver
l'equilibre du budget et a la certitude d'une fixation de la valeur de la couronne en
rapport avec son pouvoir d'achat interieur et d'un arret dans la depreciation.
Les representants des ouvriers et des patrons sont particulierement convaincus
sur ce point et ils montrent le danger que presenterait pour l'industrie une ascension

constante de la couronne. Its donnent comme niveau raisonnable de stabilisation une
valeur egale ou meme un peu superieure au pouvoir d'achat de la couronne a l'interieur. Certains autres se montreraient meme satisfaits si le change actuel servait de

point de depart. Tous nos interlocuteurs reconnaissent qu'une telle stabilisation
serait un rude coup pour une grande partie de la population, specialement pour les
petits capitalistes, qui ont toujours conserve le vague espoir de voir remonter un
jour la couronne a sa valeur primitive. Mais tous ont compris que le pays ne pouvait
sacrifier son avenir pour entretenir ce chimerique espoir. D'ailleurs, certains pensent
que l'Etat pourrait, le cas echeant, indemniser ces personnes, s'il avait a sa disposition les ressources necessaires.
On considere generalement que la baisse de la couronne a maintenant atteint
son maximum et c'est sur cette prevision que sont bases presque tous les calculs,
specialement en ce qui concerne les salaires, etc. Mais it serait preferable pour le
pays tout entier, d'arriver a une certitude sur ce point, de facon a le mettre en presence de realites brutales, condition ess3ntielle pour une amelioration saine et durable.
b) Assainisse;nent du Budget. - De tous cotes on a reconnu que l'assainisse-

ment du budget etait le premier pas, et le plus decisif, vers l'assainissement des
finances de l'Autriche: it faut augmenter les recettes et reduire les depenses.
ro Les recettes. - En ce qui concerne les recettes, on estime qu'il ne serait guere
possible d'augmenter les impots directs. Apres la Revolution, pour des raisons de
politique a tendances democratiques, ils furent enormement augmentes, au point

- 10
necessary resources for the continuation of public administration and that it will
also be impossible to obtain the necessary sums for the payments of purchases of
foodstuffs abroad.
As far as possible, the Delegation asked those persons with whom it came in
touch to inform it of their point of view as regards the remedies to be applied to the
situation as explained to the Delegation; their replies are summarised below.

As regards the methods to be employed in assisting Austria to emerge from her
present financial difficulties, everyone agrees as to the necessity for checking the
continual depreciation in the Austrian krone, and putting an end to the fluctuations
in its value as compared with foreign currencies, and fixing it at a definite level. At
the same time all agree that this result will not be arrived at without putting an end
to the issue of further notes; this result cannot be attained so long as the soundness
of the State budget has not been re-established. A balance between revenue and
expenditure must therefore be attained, and the necessary resources must be placed
at the disposal of the State in the form of loans or credits, in such a way as to cover
the deficit without the necessity for a further issue of notes.

(a) Stabilisation o/ the Krone. - Certain individuals, in particular certain

representatives of financial circles, do not wish the krone to be fixed at a definite
rate, but they thought it would be preferable to secure a financial increase in its
value. In their view it is necessary for the restoration of the country to cause the
rate of exchange of the krone to rise as far as possible, so as gradually to reduce
the State deficit, and cause confidence to revive by affording the people some hope of an
improvement. Others - and these are by for the most numerous - considered that

a steady rise in the krone would be dangerous and useless; dangerous, because of
industry - the future profits of which are of vital importance for the economic
revival of the country - which could no longer struggle against foreign competition,
(it would be impossible to reduce expenses, especially wages, in proportion to the
increase in the krone) ; useless, because the business world requires not a steady
rise, but only that definite result which consists in checking the fall of the krone at
a definite poirit. If this result is obtained, and if the krone remains stable, confidence in it will revive ; this will mean the end of speculation and the return to a sound
position. A steady increase would involve a financial adjustment of prices and wages
in order to permit the population to profit by this increase. Such a procedure is
particularly difficult and, in the opinion of many, impossible. It has been admitted,
moreover, that the essential point for the country is not to give the kron e a higher
value, but simply to obtain a budgetary equilibrium and the certainty of fixing the

value of the krone in relation to its internal purchasing power, and of checking

The workers and employers are especially positive on this point, and point out
the danger which the steady rise in the krone would involve for industry. They give
as a reasonable level for fixation a value equal or even rather higher than the internal
purchasing power of the krone. Certain others would appear to be more satisfied
if the present rate were to serve as a starting-point. All witnesses recognise that
such a stabilisation would be a serious blow to a large part of the population, especially for persons with a small capital who have always vaguely hoped that one day

the krone would recover its former value. But all realise that the country could
not sacrifice its future in order to cherish such a vain hope. Others, moreover, think
that the State might in certain cases indemnity such persons if it had the necessary
resources at its disposal.
If is generally thought that the fall in the krone has now reached its maximum,
and almost all calculations are based on this hypothesis, especially as regards wages,

etc , butj it would be preferable for the country as a whole to arrive at a certainty
on this subject, an essential condition of any sound and durable improvement. being
so that it may be placed face to face with stern realities, this

(b) Re-establishment of the Budget. - It was agreed on all sides that the re-establishment of the budget was the first and most decisive step towards the re-establishment of Austria's financial position ; revenue must be increased, and expenditure
i. Revenue. - As regards revenue, it is estimated that it would hardly be possible
to increase direct taxation. After the revolution they were enormously increased

for political reasons of a democratic nature, to such an extent that an income of


qu'un revenu de 500.000 couronnes autrichiennes paie aujourd'hui environ 6o %
d'impot. Les socialistes eux-memes reconnaissent qu'une nouvelle augmentation
ne serait pas pratique, qu'elle serait politiquement irrealisable et qu'elle ne donnerait
stlrement pas a l'Etat des revenus plus importants Beaucoup de nos interlocuteurs
interroges sur ce point ont meme pretendu que les taux actuels sont tellement
&eves qu'ils ne repondent pas a leur but et qu'au contraire des taux moires &eves
favoriseraient les affaires et donneraient a l'Etat des revenus plus considerables, en
ce sens que la renaissance des affaires serait a son tour productive d'imp8ts et aussi
que la population aurait moires tendance a cacher ses revenus reels, ce qui s'est
produit pour l'impOt sur la fortune preleve apres la guerre les contribuables ont

dissimule leur fortune en achetant, par exemple des devises etrangeres. Cette mesure

devait rapporter 13 milliards dont 7 seulement ont ete percus. On estime qu'une
nouvelle taxe du meme genre serait economiquement nuisible et politiquement

Par contre, on s'est mis presque unanimement d'accord pour dire que les impOts
indirects pourraient foumir de nouveaux revenus a l'Etat. Il s agirait d'augmenter les
taxes actuelles et d'en creer de nouvelles. Par exemple, on a reconnu que les Postes,

les Telegraphes et Telephones et les Chemins de Fer donnaient des revenus trop
faibles par rapport a la valeur effective de la couronne, tandis qu'il etait necessaire
et possible d'obtenir des ressources importantes par une meilleure exploitation et
par une augmentation raisonnable des tarifs.
Il en est de meme pour le monopole des tabacs, pour les impots sur les boissons,

qui produisent des revenus inferieurs a ce qu'ils etaient avant la guerre et meme
inferieurs proportionnellement a ceux des autres pays.

Enfin on nous a concede de tous cotes que tous impots indirects nouveaux etaient
realisables au point de vue politique, h la condition qu'ils frappent surtout les objets
de luxe et non pas les produits de premiere necessite.
L'administration a déjà tente de remedier a l'insuffisance du revenu des douanes,
en exigeant, comme le prevoit la loi, le paiement des droits en or. A mesure que la
couronne perdait de sa valeur, on a augmente dans une proportion correspondante
le nombre des couronnes-papier representant une couronne-or. La correspondante
exigee aujourd'hui n'est cependant que de 6o couronnes-papier pour une couronne-or.
Il y a donc sur ce point des possibilites de nouvelles recettes importantes.
L'opinion generale est egalement que les monopoles pourraient etre exploit&
d'une maniere plus lucrative si leur administration etait etablie sur des bases cornmerciales et non purement bureaucratiques comme c'est le cas actuellement. On nous
a meme signale certaine exploitation qui ne depend pas de l'administration centrale

et qui donne d'excellents resultats. Dans ce meme ordre d'idees on reconnait la
possibilite de creer de nouveaux monopoles.

2° Les depenses. - En ce qui concerne les depenses inscrites au budget de
l'Etat, les economies les plus importantes peuvent provenir d'une part de la suppression des subsides alimentaires. Il faut mettre fin a la reduction artificielle des prix

et rendre la liberte au commerce.

Tout le monde, cependant, reconnait la difficulte d'accomplir ces reformes, car
it est impossible d'obliger immediatement la population tout entiere a payer le pain
a son prix reel. La transition doit se faire graduellement, d'autant plus que les pensions, les traitements et les salaires sont etablis sur la base du prix du pain et qu'une
augmentation sensible de ce prix provoquerait une crise industrielle et sociale. On
estime notamment que la suppression des subsides de l'Etat justifierait une augmentation des salaires d'environ 27.000 couronnes pour un ouvrier, dont la famille se
compose en moyenne de 2 % personnes.
Le retour a la liberte du commerce des cereales est surtout desire par le monde
des affaires, tandis que d'autres, parmi lesquels le parti social-democrate, craignant

qu'une pareille mesure n'ait pour consequence une augmentation exageree des
prix. IN en donnent pour preuve les experiences faites lors de la suppression du
controle d'autres aliments: l'Etat devrait, en tout etat de cause, disposer toujours
de reserves suffisantes de cereales panifiables pour pouvoir suppleer lui-meme a une
importation insuffisante, jusqu'a ce que le commerce libre ait repris un developpement normal ; de meme, le Gouvernement devrait suivre attentivement le mouvement des prix et peut-titre aussi faciliter la reprise du commerce par l'ouverture de

credits d'Etat.
Tous reconnaissent que l'abondance actuelle de cereales panifiables dans le
monde et la baisse de prix qui en resulte, rendent plus facile le nivellement entre les

prix de vente et les prix d'achat du pain et de la farine. De plus, si l'on pouvait
importer, comme autrefois, des cereales panifiables de Yougo-Slavie, de Hongrie et
de Roumanie, dont l'excedent de production suffirait pour assurer le ravitaillement

de l'Autriche, non seulement l'approvisionnement serait facilite, mais encore on
realiserait des benefices appreciables, puisqu'on supprimerait ainsi les frais considerabies de transport. De toutes parts, on a exprime le desk de voir augmenter les rations, afin d'augmenter la capacite de travail de la population, et de mettre fin au
commerce frauduleux et a l'achat de produits alimentaires plus chers et plus mauvais que le pain.

500,00o Austrian kronen to-day pays 6o % in taxation. The Socialists themselves
1Precognise that a further increase would not be practicable, that it would be politically

unrealisable and that it would certainly not afford greater revenue to the State.
Many of the persons interrogated on this point even claimed that the present
rates were so high that they did not fulfil their intention, but that, on the contrary,
lower rates would encourage business and would bring in a greater income to the
State owing to the fact that the revival of business would, in its turn, produce more
revenue from taxation and also that the population would be less inclined to conceal
their real incomes. What has happened in the case of taxes on property which have
been levied after the War, is that persons liable to taxation conceal their wealth by
buying, for instance, foreign securities. The proposed step should have brought in
thirteen milliards, only seven of which have been collected. It is considered that a
fresh tax of the same kind would be harmful from the economic point of view, and
politically impossible.

On the other hand, it has been almost universally agreed that fresh revenue

could be provided for the State by means of indirect taxes. The present taxes would
have to be increased and new ones established. For example, it has been realised that
the post, telegraphs, telephones and railways brought in revenues too small as compared with the actual value of the krone, whereas it was both necessary and possible

to obtain considerable resources by improved methods and an adequate increase
of the rates.
The case is the same as regards the tobacco monopoly, and taxes on liquor,
the receipts from which are lower than before the War and even, in proportion,
lower than those of other countries.
Finally, it was admitted on all hands that fresh indirect taxation was politically
practicable on condition that such taxation applied to luxuries and not to necessities.

The Government has already tried to improve the deficit in the customs revenues by demanding, as is provided by law, payment of duties in gold. In proportion
as the krone depreciated, the number of paper kronen representing one gold krone

increased; but the present proportion is not more than sixty paper kronen to one
gold krone. In this respect, therefore, there are possibilities of considerable new

It is also generally considered that monopolies might be exploited in a more
lucrative manner if their administration were established on a commercial and not
merely a bureaucratic basis, as is the case at present. As an instance, an undertaking not under the control of the central administration was mentioned, the returns of which are excellent. In the same way, it has been realised that it was
possible to establish new monopolies.
2. Expenditure. - As regard the expenditure laid down in the State budget,
most important economies could result in part from the abolition of food subsidies;
the artificial reduction of prices must be stopped and freedom of trade must be restored.

Everybody, however, recognises the difficulty of carrying out these reforms,
as it is impossible to compel the whole population immediately to pay the actual
price for bread. These should take place gradually, all the more so as pensions,
salaries and wages are based on the price of bread, and a considerable increase
in this price would give rise to an industrial and social crisis. In particular, it is
thought that the abolition of State subsidies would justify an increase of wages of
about 27,000 kronen for a worker whose family consists on an average of 2 % persons.

The restoration of freedom of trade in cereals is desired principally by the
business world, while others, among them the Social Democratic Party, fear that
the consequences of such a measure would be an inordinate increase in prices.


base their contention on what happened at the time of the abolition of the control

of other foodstuffs; in case of any dispute, the State should always have at its

disposal sufficient reserves of breadstuffs, in order itself to make up for an insufficiency of such imported cereals, until free trade again resumes its normal development; similarly, the Government should carefully follow the fluctuations of prices
and perhaps even facilitate the resumption of trade by the opening of State credits.

All recognise that the present world abundance of breadstuffs and the fall in
price resulting thereform, facilitate the readjustment of the selling and buying
prices of bread and flour. Moreover, if it were possible, as was formerly the case,
to import breadstuffs from Jugo-Slavia, Hungary and Roumania, whose surplus
would suffice to meet the requirements of Austria, not only would the necessary
supplies be easily available, but appreciable profits would result as the considerable
transport expenses would be saved. A general desire was expressed for rations to be
increased, in order to augment the working capacity of the population and to put an
end to fraudulent traffic and fo the sale of foodstuffs dearer in price and worse in
quality than bread.


- 12 Les agriculteurs reconnaissent que si le Gouvernement fixait les prix de requisition a un taux plus raisonnable, la production locale pourrait etre sensiblement
augmentee, ce qui diminuerait d'autant les importations. Its pretendent que les prix
actuels sont au-dessous du prix de revient et que, par consequent, ils n'incitent pas
le cultivateur a se livrer a une culture intensive.
Enfin, l'opinion generale est que les subsides destines a combattre le rencherissement de la viande, de la graisse, de la margarine et du lait condense, doivent etre
egalement supprimes, aussi vite que possible.
D'autre part, tout le monde est d'accord sur la necessite de reduire le nombre
des fonctionnaires et le montant de leurs traitements; quelle que soit la difficulte
rencontree dans la reduction des traitements, tant que la valeur de la couronne ne
sera pas stabilisee, on pourrait, en tout etat de cause, realiser des economies considerables en n'augmentant pas, pour quelque motif que ce soit, le nombre des fonctionnaires; au cas oil it faudrait suppleer a une insuffisance dans un service donne,
on opererait un prelevement sur un service ayant du personnel en surnombre. En
outre, on pourrait essayer d'obtenir des fonctionnaires, en leur versant une indemnite.
forfaitaire de licenciement, leur entrée dans l'industrie privee.

Enfin, it faut rendre moins stricte l'application de la journee de 8 heures dans
les entreprises de l'Etat, specialement des chemins de fer, et veiller en tout cas a ce
qu'une journee de huit heures represente un travail effectif de huit heures. Ces mesures
auraient pour resultat d'augmenter le rendement de ces entreprises tout en diminuant les effectifs. De plus, on reconnait que le moment n'est plus de laisser l'Etat
participer, sous forme de prets, d'avances et de subventions, a des entreprises nouvelles de caractere prive et que les participations en cours devraient etre arretees.
Enfin, l'Etat pourrait sans doute cesser d'exploiter lui-meme, un certain nombre

d'entreprises industrielles ou de participer a leur exploitation, et mettre ainsi fin
aux subsides importants qui alourdissent le budget.
c) Emprunt interieur. - L'arret de l'emission de billets ne pourrait etre obtenue,
de l'avis des personnes interrogees, que si l'Etat obtient les ressources necessaires
pour couvrir ses depenses jusqu'au moment ou le budget sera equilibre. Or, nos inter-

locuteurs estiment que de telles ressources ne pourront uniquement etre obtenues
que par une augmentation des impots existants ou par les revenus de nouvelles
taxes. Il faudra par consequent avoir recours a un emprunt, soit exterieur soit interieur.
Or, on nous a repondu de tous cotes qu'il etait impossible, par suite de l'enorme

inflation fiduciaire, de recueillir des sommes suffisantes par un emprunt interieur.
La confiance a completement disparu envers l'Etat ; les experiences faites par les
Autrichiens depuis le debut de la guerre ne sont pas encourageantes, puisque la
fortune des souscripteurs aux precedents emprunts a ete rapidement decimee par la
baisse de la couronne. De plus, le marche de l'argent est extremement resserre ; les
impots eleves et la taxe sur la fortune en sont partiellement la cause. Le public
prefere placer son argent dans des valeurs sur lesquelles la baisse de la couronne est
sans influence et it ne pourrait se procurer les moyens de souscrire que par l'escompte
dans les banques, ce qui augmenterait encore la circulation fiduciaire.
Il apparait donc d'une necessite absolue de retablir d'abord la confiance dans
le budget de l'Etat et dans la monnaie du pays. Mais, pour que cette confiance

revienne it faut, d'apres nos interlocuteurs, que l'aide exterieure soit reellement
suffisante pour couvrir les depenses de l'Etat a l'etranger jusqu'au retablissement
de l'equilibre.

Mais, si cette condition est remplie et si le public peut en meme temps
se rendre compte qu'un effort serieux est fait pour assainir le budget, tout le monde

est d'accord qu'un emprunt interieur important, et suffisant pour faire face aux

besoins interieurs pressants, serait certainement realisable. II nous a ete impossible
d'obtenir une evaluation precise sur les resultats a prevoir, puisque les evaluations
varient entre 3 et 3o milliards de couronnes. En tout etat de cause, on nous a repondu
qu'il ne serait guere necessaire d'avoir recours a un emprunt force car, si la confiance
revient, la tentation d'amasser les devises etrangeres et d'acheter des immeubles
et autres valeurs disparaitra ; on en reviendra au contraire volontiers au placement
normal des capitaux disponibles.

d) Emprunt exterieur. - La raison donnee, par les personnes interrogees, de
l'inefficacite des secours exterieurs accordes jusqu'ici a l'Autriche, est qu'ils etaient
insuffisants pour retablir la situation financiere du pays. Aussi a-t-on insists sur
la necessite de ne pas fixer trop etroitement le montant des credits strangers dont
on a besoin maintenant et qui devraient, en tout etat de cause, suffire pour couvrir les
besoins du pays en devises etrangeres jusqu'a consolidation du budget et reorganisation complete de la vie economique du pays. Tous sont d'accord que si ces conditions ne sont pas remplies, la situation redeviendra critique avec l'epuisement du
credit, si bien qu'aucune amelioration reelle et durable n'aura ete obtenue. Comme
pour les emprunts interieurs, les evaluations ont ete assez imprecises et ont porte sur
des sommes atteignant jusqu'a 250 millions de dollars. Toutefois nos interlocuteurs
ont reconnu que ce montant ne pourrait etre fixe qu'apres un examen plus appro-

fondi de la question.

- 12 The farmers admit that if the Government were to fix requisition prices at a
more reasonable figure, local production could be appreciably increased, and imports
would proportionately diminish. They argue that the present prices are below the
cost of production, and that consequently there is no inducement for the grower to
produce more.
Finally the general opinion is that subsidies intended to prevent the increase in

the price of meat, fat, margarine and condensed milk should also be abolished as
quickly as possible.
Again, there was general agreement as to the necessity of reducing the number
of officials, and the amount of their salaries; whatever difficulty may be encountered
in reducing salaries, as long as the value of the krone is not stabilised, it would be

possible, even then, to accomplish considerable economies by not increasing the
number of officials under any circumstances whatsoever; should it be necessary to
strengthen any particular service, another service, with a superfluous staff, should
be drawn upon. Moreover, officials should be induced to seek employment in
private industry, and given a gratuity for the purpose.
Finally, the application of the 8-hour day must be made less strict in State
concerns, particularly railways, and care must be taken that in all cases the 8-hour
day represents 8-hours' actual work. The result of these measures would be to
increase the output of these enterprises while reducing the staff. Moreover, it is
recognised that it is no longer desirable to allow the State to participate, in the
form of loans, advances and subsidies, in new private enterprises, and that the
existing participation should cease. Finally, the State could doubtless cease to handle
itself, or share in the handling of, a certain number of industrial concerns, and could

thus put an end to the large subsidies which burden the budget.

(c) Internal Loans. - In the opinion of various persons who were interviewed,
the issue of paper money cannot be stopped unless the State obtain the necessary
resources to cover its expenses until a budgetary equilibrium is attained. The
witnesses considered that such resources cannot solely be obtained by the increase
of existing taxes or by imposing fresh taxes; consequently, recourse will have to be
had to a loan, either foreign or internal.
On the other hand, the Delegation was everywhere told that, in consequence of
the enormous fiduciary inflation, it was impossible to collect sufficient sums by an
internal loan.
Confidence in the State has completely disappeared; the experience
gained by the Austrians since the beginning of the War has not been encouraging,
since the wealth of the subscirbers to preceding loans has rapidly been reduced by the
fall in the krone. Moreover, the money market is extremely tight ; the high taxes
and the taxes on wealth are partly the cause of this. The public prefers to place its
money in securities which are not influenced by the fall in the krone, and subscriptions would only be obtained by means of discount in the banks, which would again
increase the fiduciary circulation.
It appears, therefore, to be an absolute necessity to begin by restoring confidence
in the State budget and in the national currency. The witnesses were of opinion
that, if this confidence is to return, foreign help can actually be sufficient to cover
State expenses abroad until the re-establishing of the equilibrium.
But if this condition is fulfilled, and if, at the same time, the public realises that
a serious effort is being made to place the budget on a sound basis,everybody agrees
that a large internal loan, sufficient to meet pressing internal needs, would certainly
be practicable. It was impossible for the Delegation to obtain a precise estimate as

to the anticipated results, since the estimates varied between 3 and 3o milliard
kronen. In any case, we were told that it would scarcely be necessary to have recourse
to a forced loan, as, if confidence returns, the temptation to hoard foreign currency

and to buy real estate and other securities will disappear. On the contrary, a voluntary return will be made to normal investment of available capital.

(d) Foreign Loans. - The reasons urged by the persons interrogated for the
ineffectiveness of foreign help hitherto granted to Austria is that this help was insufficient to re-establish the financial situation of the country. It was therefore
urged that it was necessary not to fix too rigidly the amount of foreign credits at
present needed, which, would, in all eventualities, suffice to cover the needs of the
country in foreign currency until the budget is consolidated and the economic life
of the country is completely reorganised. It is everywhere agreed that if these
conditions are not fulfilled the situation will again become critical when credit is
exhausted, so that no real and durable improvement will be attained. As in the
case of internal loans, estimates have varied considerably, and amounted to as much
as 250 million dollars. At the same time, however, the witnesses admitted that

this amount could be fixed after a more thorough investigation of the question.


- 13 De toutes parts, on a parfaitement compris que l'Autriche devait donner des
garanties, aussi bien que des gages reels pour l'emprunt qu'une garantie pour l'emploi
rationnel du produit de cet emprunt. On se rend de meme compte que la realisation
effective des projets tels que requilibre du budget et l'arr8t de l'inflation, est une

condition essentielle a l'octroi d'un tel emprunt.
e) La Banque d'etnission. - C'est a propos de ces garanties que nous avons ete
amenes a poser des questions pouvant conduire a rid& de la creation d'une nouvelle
Banque d'emission. Il ressort en effet de notre enquete que, jusqu'a present, on s'etait
surtout preoccupe en Autriche de la forme des credits, de leur importance et de
leur influence sur les finances de l'Etat, sans meme chercher a connaitre la meilleure maniere d'arriver a stabiliser la monnaie du pays, a introduire un nouvel
etalon monetaire, ni a creer la nouvelle Banque necessaire a son emission. A peine
ce point avait-il preoccupe les milieux politiques et financiers, si bien que meme
leur opinion sur les methodesh suivre et les moyens a employer etait restee quelque
peu obscure.

Interrogees sur ce point, differentes personnes, appartenant aussi bien aux
milieux financiers que politiques, pretendent que l'introduction d'un nouvel etalon
monetaire vraiment bien garanti, remplacant une monnaie sans prestige et en tout
cas d'une valeur inferieure, serait une mesure importante pour la vie economique du
pays. La majorite pense que ce nouvel etalon devrait etre le franc qui serait appele,
pour des raisons d'ordre pratique, le « franc autrichien »; d'autres ont propose de
l'appeler « couronne or ». Mais tous ont ete amenes a dire qu'il faudrait creer et
organiser une banque speciale autrichienne qui emettrait la nouvelle monnaie et

que, de preference, cette banque ne devrait pas etre une institution d'Etat. Elle
devrait cependant avoir pour base la section speciale autrichienne de la Banque
d'Autriche-Hongrie, qui dispose d'une organisation complete et des moyens techniques necessaires pour l'impression des billets.
Toutefois, la situation embrouillee de la Banque d'Autriche-Hongrie en liquidation est une difficulte dont il faut tenir compte. Par exemple, la Banque a jugs
normal d'inviter les debiteurs qui se trouvent dans les Etats successeurs a rembourser
le montant de leur dette dans leur monnaie actuelle, c'est-h-dire la couronne estampillee ; de cette facon, la Banque gagnerait sur les versements tcheco-slovaques, mais
perdrait sur ceux de la Pologne. Aucun des debiteurs ne devrait pouvoir s'en plaindre
puisqu'ils se trouveraient ainsi rembourses dans la monnaie meme dans laquelle ils
avaient recu leurs avances, et qu'ils profiteraient en plus de la depreciation generale

de la valeur de cette monnaie. Cependant l'Etat tcheco-slovaque, par exemple,
proteste contre ce proj et d'arrangement et reclame le droit d'effectuer ses paiements
en couronnes autrichiennes, ce qui occasionnerait une perte sensible a la Banque.

La question ainsi posse, il a fallu se preoccuper de la garantie a donner a la
nouvelle unite monetaire. Ceci a paru d'autant plus necessaire que la banque aura
certainement une 'Anode critique a traverser, avant que la monnaie autrichienne
ne soit assainie. On a reconnu qu'il etait impossible de se procurer la couverture
or necessaire et que, par suite, il faudrait recourir h des avoirs strangers suffisamment

importants. En consequence, les personnes interrogees ont estime non seulement
desirable, mais encore necessaire, d'obtenir de l' &ranger la majeure partie du capital
de la Banque, ce qui lui donnerait en outre une position plus forte vis-à-vis de l'Etat.

Les privileges de la Banque devraient etre assures pour une longue period e
d'annees et, pour y interesser les capitaux strangers, elle devrait etre autorisee
effectuer toutes les operations ordinaires de Banque. Nos interlocuteurs sont d'accord

pour dire que la creation de la Banque - et par lh, l'introduction d'une nouvelle
unite monetaire - devrait etre realisee seulement apres l'obtention des emprunts
strangers et exterieurs necessaires et apres r equilibre du budget; ce sont deux conditions essentielles pour eviter toutes surprises.
En ce qui concerne le rapport entre le nouvel etalon monetaire et la monnaie
actuelle, de fortes divergences sont apparues. Certains desirent voir les nouveaux billets circuler concurremment avec les anciens et independamment d'eux, d'autres sont
d'avis d'etablir une taxe de conversion fixe, sans que la nouvelle Banque soit obligee
d'honorer les anciens billets a un cours determine. On nous a dit, a l'appui de cette
these, que les billets actuels en couronne ne sont en realite que des billets de l'Etat,
puisque leur garantie consiste surtout en Bons du Tresor : on devrait done maintenir
cette situation sans imposer a la Banque r obligation de les rembourser. Les partisans de cette solution reconnaissent d'ailleurs la difficulte de trouver le cours exact
de conversion ; leur opinion generale semble etre que le change actuel de la couronne

est trop bas et que, s'il etait stabilise a ce taux, un trop grand nombre d'interets
seraient loses. Un cours satisfaisant pour le public pour, ait etre fixe lorsque la
Banque aurait pu se rendre un compte exact du rapport existant entre les deux
monnaies. Mais, en tout etat de cause, les nouveaux billets ne devraient etre anis
que pour faire face aux necessites des transactions commerciales et saines ; de cette
facon la circulation serait moins elevee et la garantie plus grande. D'autres, et ils
sont la grande majorite, soutiennent par contre, avec force, que remission de nou-





entation generale que la Delegation s'est efforcee d'obtenir par les
it est donne dans l'Annexe II, un résumé succinct, mais a notre avis
omplet, la Delegation a etudie la documentation existante, sous
rts ou autres documents semblables. Il est toutefois apparu assez
ite du developpement rapide de la situation, la plus grande partie
déjà plus a la realite et on a ainsi ete oblige d'essayer, d'une part, de
s documents a jour et, d'autre part, de s'en procurer d'autres pour
ne exactitude relative, se former une opinion sur la situation finanique actuelle de l'Autriche et pour voir en meme temps de quelle
ossible de relever le pays.
a ainsi ete soumis a la Delegation comme renseignements et appreractere fres general, en ce qui concerne la situation actuelle en Audoute etre succinctement résumé comme suit :
omique autrichienne s'est bien developpee - et le dernier semestre
ins favorable a ce developpement - quoique la situation des finanait cesse d'empirer et que la production ait ete, et reste soumise de
a differentes restrictions et reglements nuisibles.

es cas, l'agriculture a ete influencee par ces mesures et cette influence

ment pas heureuse pour l'augmentation de la production agricole.
les libres transactions des produits agricoles a l'interieur des fronnes ont touj ours ete rendues difficiles par les reglementations des
s, mais encore -et ceci est specialement important, l'agriculture

meure obligee de ceder une partie de ses produits a des prix inferieurs

he mondial et meme, pour certains - d'apres les renseignements
fournis - au-dessous des prix de revient. Depuis quelque temps, it
efforts sont faits en vue d'une liquidation de ces mesures; mais ils
contrebattus par le rencherissement de plus en plus sensible du cart
onne par la depreciation touj ours plus grande de la couronne autria rendu la liquidation des anciennes mesures contre la vie chere
point de vue social et irrealisable au point de vue politique. Malgre
pement de la production agricole a ete, ces derniers temps, plein de

de 1919 a ete faible, a cause des nombreux obstacles rendant la proficile, et du manque d'engrais chimiques; elle n'est evaluee qu'a la
ment normal d'avant-guerre. Pour 1920, le rendement a ete, dans

esure, superieur et on pourra probablement compter atteindre la
ongtemps. Le betail a augmente numeriquement depuis la fin de la
ere qu'il arrivera avant longtemps au niveau d'avant-guerre. Mais,
ualite laisse beaucoup a desirer, par suite du manque de fourrage;
e Mail sera revenu - aussi bien au point de vue de la qualite que
au niveau d'avant-guerre, l'Autriche ne sera pas encore en mesure

le-meme pour sa consommation en viande.
es, par contre, on aura touj ours besoin d'importer approximativequantite que celle produite dans le pays. Bien entendu, it sera sans
'arriver successivement a la pleine capacite de production, et, sous
ut se fier a la puissance meme de developpement de l'agriculture
ais ce but pourrait aussi probablement titre atteint si l'on pouvait
sition de l'agriculture les moyens necessaires pour donner un rendese et supprimer les obstacles et les restrictions qui genent actuellections interieures.
oncerne l'industrie, dont a peu pros la moitie de la population est
, son developpement a ete encore plus grand et ceci est d'une impore pour l'independance economique du pays vis-à-vis de l'etranger
ir de l'industrie doit necessairement etre, a un degre plus eleve, de
ises etrangeres dont le pays a besoin pour couvrir les achats indisoduits alimentaires.



Over and above the general perspective which the Delegation has tried to obtain
by means of the interviews referred to in Annex II, the Delegation has further studied
such material as existed in the form of reports or other similar documents. Nevertheless, it very soon became evident that, in consequence of the rapid development of

the situation, the greater part of this material had already ceased to correspond to
the facts, and it was therefore necessary to try, on the one hand, to have these documents published, and, on the other hand, to obtain further information, so as to be
able with comparative exactness to form a judgment on the existing financial and
economic situation of Austria, and to see at the same time on what lines the restoration of the country would be possible.
The whole of what has been submitted in this way to the Delegation, both as
information and as impressions of a very general nature, may be briefly summarised as follows:
The economic life of Austria has developed considerably, particularly in the last
six months, in spite of the fact that the condition of the Government's finances has
grown steadily worse, and that the production of the country has been, and in many
ways still is, subject to various restrictions and harmful regulations.

Agriculture has at every turn been influenced by such restrictions, and this

influence has not, in general, been favourable to the increase of agricultural production. Not only have free transactions in agricultural products within the borders of
Austria been constantly rendered difficult by the measures taken by the local autho-

rities, but also - and this is of special importance - Austrian agriculture is under
a permanent obligation to deliver a part of its products at prices which are below
those of the world markets and even, in the case of certain products (according to the
information furnished to the Delegation) below cost price. It is true that for some
time past efforts have been directed towards removing these measures, but they have
always been counteracted by the more and more serious advances in the cost of living
caused by the ever increasing depreciation of the Austrian krone, which has rendered

the abolition of the former regulations for diminishing the cost of living socially
dangerous, and politically unrealisable. In spite of this, the development of agricultural production has, in recent months, been full of promise.

The harvest of 1919 was small, on account of a number of obstacles which hindered production, and also on account of the absence of chemical manures; it is
estimated at only half the normal pre-War yield. For 192o, the yield was in some
degree greater, and the normal harvest may probably be expected before long.
Stocks of cattle have increased considerably since the end of the War, and may
shortly be expected to reach their pre-War level. On the other hand, on account of
the lack of fodder, their quality leaves much to be desired. Even when stocks are
restored both in quality and quantity to their pre-War level, Austria will not be able
to supply her own meat requirements.
For grain, on the other hand, it will always be necessary to import approximately
the same amount as is produced at home. It will, of course, be possible to reach by
degrees the full productive capacity of the country, and for this one must trust to the
power of development of Austrian agriculture. This object might also be attained,
if it were possible to enable agriculture to attain a greater output, and also to remove
the obstacles and restrictions which at present hinder business at home.

As for industry, on which about half the population depends for its livelihood,
its development has been still greater, and this is of essential importance for the
economic independence of the country in its relations with foreign countries, since
it will necessarily fall to industry, to a much greater degree than at present, to obtain
the foreign currency which the country needs in order to pay for its indispensable
purchases of foodstuffs.


- 16Le ch6mage, qui etait encore assez considerable dans les premiers mois de 192o,

etait tombs en decembre au tiers de ce qu'il etait en janvier, et plus tard it a diminue davantage encore, de sorte qu'il est actuellement sans grande importance,
ceci est egalement corrobore par le fait que le degre d'activite de l'industrie a tres
fortement augment& En automne 1920, la moyenne de l'activite de l'industrie a
ete evaluee a environ 25 ou 3o % seulement, tandis que maintenant, d'apres les
renseignements que la Delegation a pu se procurer, elle peut etre eva.luee en moyenne
au double, et meme encore plus haut pour certaines industries.
Les' difficult& considerables rencontrees dans l'obtention des quantite's necessaires de charbon et de matieres premieres sont maintenant considerablement amoin-

dries, par suite de la forte baisse des prix qui s'est produite depuis sur le marche
mondial et par la plethore relative qui en resulte. L'industrie peut maintenant, etant
donnees ces modifications dans les circonstances, obtenir, dans une mesure raisonnable, par les banques autrichiennes, les credits strangers qui lui sont necessaires
pour l'achat de charbon et de matieres premieres. Une partie importante des gros
benefices que les bilans de l'industrie accusent actuellement, provient de la depreciation de la couronne, qui continue a baisser. Mais, meme si l'on fait abstraction
de ce point, la Delegation croit, d'apres les renseignements qu'elle a pu recueillir,
que l'industrie autrichienne est susceptible de pouvoir continuer a se maintenir,
meme si l'instabilite actuelle des changes disparait entierement. Grace a son niveau
technique eleve, a son organisation bien etablie, au salaire relativement bas des
ouvriers, elle sera .a meme, non seulement de regagner sa position dominante dans
les Etats successeurs et sur les marches plus eloignes de l'Est et du Sud, mais elle
trouvera partout un marche interessant pour des articles dont elle a la specialite.
D'ailleurs l'industrie elle-meme, a la suite dune enqu8te a laquelle elle a procede
a la demande de la Delegation, se montre generalement pleine d'espoir sur la question
des possibilites de l'avenir. Il sera toutefois indispensable, pour assurer a, l'in-

dustrie un developpement continu et satisfaisant, de ne pas l'empecher de se
tenir en rapports avec ses marches naturels. Il y a donc un inter& capital a arriver a un arrangement politique et commercial avec les Etats successeurs, qui
limitera le plus possible les entraves qui genent actuellement le libre echange des
produits et qui ont ete principalement &eves pour des raisons politiques.
En outre, la situation absolument anormale des changes rend plus difficile
encore le developpement rationnel de l'industrie autrichienne. Il est vrai que

cette situation permet a differentes industries de realiser de gros benefices par
la speculation ; d'autre part, cette speculation fait courir de gros risques a l'industrie.

La base sur laquelle on travaille est absolument incertaine ; tout calcul etabli est
immediatement bouleverse par les circonstances, et bien que les ventes paraissent
devoir donner des benefices appreciables, la baisse de la couronne autrichienne les
reduit rapidement dans une mesure telle que les capitaux se trouvent de plus en plus
difficilement pour financer les nouveaux achats de matieres premieres indispensables
a la continuation de l'exploitation. L'industrie est ainsi obligee de chercher de plus
en plus une aide aupres des capitalistes strangers.
De meme pour le commerce, un essor sensible a pris naissance ces derniers temps,
et en toute apparence it semble qu'il soit etabli sur une base naturelle et saine, grace
notamment a la situation geographique de Vienne, A ses bases nouvelles d'affaires
et a ses excellentes organisations commerciales. Cette opinion est celle de tous les

representants de la vie economique avec qui la Delegation a pu s'entretenir (voir
Annexe II), et la delegation elle-meme estime qu'elle est probablement justifiee.
Malgre toutes les mauvaises volontes et toutes les oppositions, la necessite economique s'est frays un chemin a travers tous les obstacles actuellement accumules
et it parait peu probable que la direction prise vers le Sud et l'Est par le commerce
puisse etre modifiee dans un avenir prochain. Au contraire, la position de Vienne
comme centre commercial pour le Sud-est de l'Eutope sera certainement fortifiee
davantage encore lorsque les obstacles aux transactions qui continuent a exister dans

une fres large mesure auront ete supprimes, ce qui favoriserait evidemment le
developpement economique de tous les Etats successeurs.
Tout ce developpement si plein de promesses s'est produit malgre toutes les
difficultes au milieu desquelles le commerce a du se &bathe, mais en meme temps
s'est produit dans des conditions qui offraient sans doute un excellent terrain a la
speculation, par suite de l'instabilite des changes, tandis qu'elles presentaient pour

le commerce normal des marchandises, un risque enorme qui n'a pas pu ne pas influen-

cer et getter fortement les initiatives du commerce. Au cas ou l'on reussirait a remettre sur pied la situation monetaire de l'Autriche, it ne peut etre douteux que la
position de Vienne ne soit fortifiee pour longtemps comme centre commercial impor-

tant et qu'on aura ainsi donne a une vine de l'importance actuelle de Vienne la

possibilite de vivre ; une base solide aura ete dorm& a toutes les transactions financieres qui se font des maintenant par l'intermediaire des grandes banques viennoises
pour le compte des Etats successeurs, si bien que Vienne deviendra le centre oil
non seulement les affaires devront rester, mais encore vers lequel se dirigeront les
capitaux disponibles puisqu'ils y seront liberes des risques du change et resteront
en meme temps a la port& de la main pour etre utilises selon les besoins.
Federal Reserve Bank of St. Louis

- 16 which was still fairly considerable in the first months

of 192o, had fallen in December to one third of the figure for January, and


- 17 Pour pouvoir analyser correctement l'avenir de l'Autriche en temps qu'entite
economkfue independante, it faut encore considerer specialement les grandes richesses
du pays en forks et ses ressources considerables en force hydrau.lique. Le territoire

couvert de forks represente environ les deux cinquiemes de la superficie totale du
pays et, bien que certaines parties, soit parce qu'elles ont le caractere de forks reservees, soit parce que leur situation les rend difficilement accessibles, ne puissent faire
l'objet d'une production intensive de bois, specialement des coniferes, qui pourront
etre employes par une industrie interieure tres developpee ou qui pourront etre
exportes. Etant dorm& la situation &favorable du pays, puisquau moins les quatre
cinquiemes de sa consommation de charbon doivent etre importes, it faut prendre en
consideration les forces hydrauliques du pays, dont 2'/4 millions de H. P. peuvent etre
utilises tandis qu'on n'en exploite jusqu'a present pas meme le dixieme. Apres un
examen tres circonstancie de la question, on croit pouvoir affirmer que l'exploitation des forces hydrauliques disponibles permettrait de couvrir a peu press la moitie
de la consommation totale du pays en charbon.

On ne peut s'attendre a ce que l'Autriche puisse, dans un avenir prochain,
tirer profit de ses forces hydrauliques par ses propres moyens ; ceci necessiterait
l'aide de capitaux strangers, mais comme les previsions de rendement sont favorables, on pourra certainement compter sur eux des que la situation economique de
l'Autriche aura ete stabilisee, c'est-h-dire qu'aura ete restauree la confiance en la
vie economique du pays, confiance qui fait actuellement defaut completement par
suite de la situation miserable des finances publiques et du change autrichien.
Les conditions vraiment excellentes qui existent dans le pays pour le developpement
d'une vie productive reelle et active ne peuvent plus etre mises simplement en lumiere par les faits economiques existants dont on peut facilement se rendre compte et,
comme it est dit plus haut, ils ont deja fourni leurs preuves indiscutables et pleines
de promesses, bien que l'Etat autrichien souffre actuellement de maux graves qui
meneront, sans aucun doute, a bref delai, le pays a la dissolution et a l'anarchie, si
le remede n'est pas trouve tres rapidement. Le budget public se trouve en presence
de la debacle complete, la vie productive est menacee de ruine economique et d'explosion sociale, par suite de l'etat de plus en plus mauvais de la situation monetaire,
et la population tout entiere est atteinte de demoralisation etendue et de plus en plus
visible. Pour Farm& budgetaire 1919-1920, le budget de l'Etat accusait un deficit de
1o,6 milliards de couronnes (recettes 6,3, depenses 16,9 milliards) et pour 1920 -1921
la loi budgetaire, telle qu'elle est votee, accuse un deficit de 41, 'milliards de cou-

ronnes (recettes 29,5, depenses 70,6 milliards) montant auquel it y a encore lieu
d'ajouter 11,9 milliards resultant de nouvelles augmentations déjà adoptees des
traitements des fonctionnaires et des salaires des ouvriers de l'Etat et d'augmentations des depenses par suite de la nouvelle baisse du change, ce qui porte le deficit
au total de 53 milliards de couronnes. Ce deficit enorme et toujours croissant est
couvert par une emission ininterrompue de billets. Au debut de septembre 1920,
la circulation fiduciaire ne depassait guerre 20 milliards; l'Etat devait en outre, en
compte courant, un peu plus de 4 milliards, soit en tout environ 25 milliards de couronnes. Mais, depuis cette époque, la dette a la charge de l'Etat a ete en augmentant
rapidement. A la fin de l'annee, elle avait atteint 34,5 milliards, ce qui correspond a
une augmentation moyenne de 2,4 milliards par mois, mais pendant les quatre mois sui-

vants, elle a augments de 3,9, 3,8, 4,8 et 6 milliards de couronnes respectivement,
si bien qu'a la fin d'avril, elle atteint le chiffre vertigineux de 53 milliards de couronnes. Pour l'avenir, on s'attend a une augmentation plus forte encore, qu'on ne peut

estimer pour les trois mois a moins de 6 1/2 a 7 milliards de couronnes par mois.
Les depenses qui pesent le plus lourdement sur le budget sont celles faites pour
diminuer le prix des produits alimentaires necessaires a la population (principalement

le pain, mais aussi la viande, la graisse et le lait) qui figurent au budget de 19201921 pour 21,7 milliards de couronnes, mais qui doivent maintenant etre estimees
a plus de 27 milliards; la perte au change sur les achats de produits alimentaires
(I' milliards dans le budget, mais actuellement plus de 13 milliards) ; les traitements des fonctionnaires et les salaires des ouvriers (22 milliards).
Il est vrai que les recettes ont egalement augments sensiblement par comparaison
avec l'annee derniere (de 6,3 a 29,5 milliards de couronnes). Mais cette augmentation est
hors de proportion avec celle des depenses ou avec celle de la depreciation de la couronne. L'augmentation des recettes est particulierement faible pour les Chemins de fer

et les postes et telegraphes ou elles n'ont pas beaucoup plus que triple. Si donc les
recettes n'ont pu atteindre le niveau des depenses croissantes, cela peut etre en partie
explique par le fait qu'il est Presque impossible pratiquement, avec une depreciation aussi subite de la couronne, de faire monter les recettes dans une mesure considerable, puisque cela necessiterait, dans le courant meme d'une armee fiscale, des
augmentations continuelles d'un grand nombre de taxes publiques et du prix des
choses. Mais c'est aussi une consequence de ce qu'une telle procedure rencontrera
toujours de grands obstacles dfis aux compromis politiques inevitables dans un
pays gouverne democratiquement. En ce qui concerne l'Autriche, cette derniere
consideration a sans doute eu une influence assez forte. Sous ce rapport it a nui
l'Autriche d'etre, au point de vue politique, une Societe relativement neuve, dont

- 13 -

It was definitely understood everywhere that Austria would have to give gua securities for this loan, and also an undertaking that the results
rantees, both of real




- 18 le parti politique le plus influent (le parti chretien-social), ainsi que le Gouvernement qui s'appuie sur lui, n'ont pas une majorite solide dans l'Assemblee Legislative, si bien qu'ils se sont toujours crus obliges de ne pas aller trop loin, pour ne pas
fournir a l'opposition social-democrate des arguments permettant de crier une
agitation dans la population.
Allant de pair avec l'emission toujours croissante de billets et les demandes
intenses de devises etrangeres pour couvrir les achats de produits alimentaires
l'etranger, la depreciation de la couronne s'est constamment accentuee, ce qui a eu
de son cote une influence sur le budget, et occasionne un deficit toujours plus considerable. Une pareille situation ne peut naturellement pas continuer, on peut se
rendre compte que le moment de la debacle complete n'est pas eloigne. Le resultat
immediat sera la penurie de produits alimentaires necessaires a l'approvisionnement
de la population, et dont l'achat continue a se faire pour le compte de l'Etat. Il est
clair pour tout le monde que la dissolution politique suivra de pres.
Le cours de la devise autrichienne, bien qu'interrompu naturellement par des
artets prolonges, et des ameliorations sans duree, a ete constamment en baisse. En
octobre 1919, les billets de banque de cent couronnes autrichiennes etaient comptes
a Zurich a 6,02 francs suisses. Its ont ensuite baisse jusqu'en fevrier 1920, époque a
laquelle le cours moyen etait de 2,29. Pendant les mois suivants le cours s'est ame'lore pour atteindre 3,78 en juillet. Mais apres la baisse s'est accentuee. En decembre,
la moyenne etait de 1,15 pour atteindre mettle 0,94 en mars. Le cours moyen d'avril
est un peu meilleur, soit 0,97.

Cette baisse constante du cours de la couronne autrichienne a provoque une
cherte de vie de plus en plus considerable qui a meme ete particulierement sensible
ces temps derniers, tandis que les autres pays ont pu profiter de la baisse generale
des prix sur le marche mondial. De plus, elle a completement mine le budget de
l'Etat. Cette baisse, ainsi que ces continuelles fluctuations, tendent egalement a faire
disparaitre la difference existant entre les forces productives que supporte effective-

ment l'Etat, et la speculation, improductive et sans valeur reelle. L'initiative, et
par la meme les capitaux disponibles, passent de plus en plus du travail productif

a la speculation, ce qui empoissonne lentement la population tout entiere. La population est ainsi soumise a une influence nefaste, persistante, dont les resultats sautent déja aux yeux. Elle est demoralisee par la participation trop facile a une speculation malsaine. D'un cote on constate un luxe de plus en plus grand dans les classes
oil se concentrent les benefices des speculations, et de l'autre la classe moyenne,
honnete et laborieuse, qui a toujours ete le pivot de la culture en Autriche, s'enlise
dans la detresse et la misere, ecrasee qu'elle est par la cherte croissante de la vie.
Tout ce qui peut inciter a l'economie a disparu; les couronnes qu'on peut economiser aujourd'hui sont en peu de temps reduites a une simple fraction de leur valeur
reelle primitive. C'est courir un risque que de posseder des ressources en especes,
aussi les depense-t-on au plus tot ou les place-t-on dans des valeurs reelles telles que
les immeubles ou les devises etrangeres, mais aussi en bijoux, antiquites, pousse que
Fon est par les reglements actuels sur les impots. Quelquefois aussi le moral de la
population souffre. Le commerce frauduleux auquel les nombreuses restrictions
ouvrent un vaste champ d'action, fleurit du haut en bas de l'echelle. La difference
entre le travail honnete et malhonnete disparait.
Si malgre ces circonstances la vie economique autrichienne a pu progresser,
comme c'est le cas, i1 faut reconnaitre qu'elle repose sur une base solide et saine et

qu'elle doit compter sur un developpement persistant lorsque les conditions se
seront ameliorees et stabilisees. L'Autriche se trouve donc dans de bonnes conditions naturelles pour atteindre une independance economique complete. D'autre
part, it ne faut pas oublier que les principaux métiers aussi bien que la population ont beaucoup souffert, tant economiquement que moralement, et que l'Autr;che ne pourra plus supporter longtemps, sans en etre ecrasee, la pression qu'elle

Le budget de l'Etat est en fait deja detraque, neanmoins les exigences vis-avis de la caisse de l'Etat continuent a croitre. Les fonctionnaires reclament de nouvelles augmentations de traitement representant un total considerable, et l'Etat est
impuissant devant ces demandes. Les depenses pour l'achat de produits alimentaires
augmentent constamment dans la meme proportion que la baisse du change, et ceci
s'applique egalement au paiement des interets, et aux autres perceptions au profit
d'etrangers. D'autre part, il est impossible, partie pour des motifs purement pratiques
et partie par suite des difficultes politiques, d'accroitre les recettes dans la meme
mesure que les depenses. Il s'ensuit que l'emission de billets doit etre continue et
qu'elle se produit avec une progression correspondant a la baisse de leur valeur. II
sera evidemment impossible, en fin de compte, de se procurer plus longtemps les
ressources necessaires a la continuation de la vie publique, et de trouver les moyens
indispensables au paiement des achats de produits alimentaires a l'etranger. A ce
point, c'est la voie ouverte a la dissolution sociale et politique. La misere et l'exasperation generales qui en resulteront amt neront avec elles la fin de l'ordre. L'Autriche
sera alors la proie sure pour quiconque se croira en mesure de lui montrer le chemin


ment which depends upon it, have not a solid majority in the Legislative Assembly,
but have always felt themselves compelled to restrain their actions, so as riot to give
to the opposition (the Social Democrats) an opportunity to work up popular agitations.

Keeping pace with the steadily-growing issue of notes and the heavy demands
for foreign money to provide for purchases of foodstuffs abroad, the depreciation of

the crown has continued at an ever-quickening rate. This in turn depresses the
budget, and creates in it a steadily increasing deficit. Such a developmeht can, of
course, not continue, and even now it is clear that the moment of complete catastrophe
is not distant. The immediate result of such a catastrophe would be a breakdown in
the supply of food necessary for the maintenance of the people ; the purchase of these
supplies is always made on the Government account. It is clear to everyone that
political dissolution will rapidly follow.
The fall in the Austrian rate of exchange has also been continuous, though it has
naturally been interrupted by occasional checks and temporary recoveries. In
October, 1919, Austrian bank-notes of too kronen were quoted at Zurich at 6,02
Swiss francs but they then fell up to February 1920, for which month the average rate
was 2,29. During the following month the rate improved, and in July touched 3,78,
but after this date followed a pronounced fall. In December, the average was 1,15,
and for March, 1921, only 0,94. For the month of April, the mean rate was a little
better (0,97).
This constant fall in the value of the Austrian crown has increased the cost of
living more and more, and this has been especially felt in recent months, when the
populations of other countries have been able to take advantage of the general fall
in the level of world-prices. Further, it has completely undermined the national
budget. This persistent fall, and especially the continual fluctuations by which its
progress is marked, tend to abolish the difference between those productive forces
which effectively uphold the State and unproductive speculation which has no real
value. Initiative, and therefore available capital, turns more and more from productive work to speculation, which is slowly poisoning the whole of society. The
population is thus exposed to a persistent evil influence, the results of which are
already unmistakable. It is being progressively demoralised by facility of access
to unhealthy speculation. Side by side with the great and ever-eowing luxury of
those sections of the population in whose hands the profits of speculation accumulate,
there is the spectacle of the middle classes-honest, hard-working, and hitherto the
permanent home of Austrian culture, plunged into distress and misery, and crushed
beneath the growing cost of existence. All that could induce thrift has disappeared.
Such kronen as may be saved to-day and put aside are reduced in a short time to
but a fraction of their original value. The possession of cash is thus a risky matter.
For this reason money is spent as rapidly as possible, or turned into real securities
such as buildings, foreign money, and also, under the special pressure of existing
taxes, into jewels, antiques, etc.
Public morale also suffers from time to time.
Illicit dealings - for which a wide field is opened by the numerous Government
restrictions - fraud and systematic bribery amongst high and low are rife; the difference between honest and dishonest work is disappearing.
In spite of these circumstances the economic life of Austria has been able to
progress. It clearly follows, therefore, that this life must rest upon a solid and healthy

basis; that, when its environment is improved and stabilised, it can count on a
steady development ; and that Austria therefore possesses such a good natural
situation as will enable her to attain complete economic independence.
hand, it is impossible to conceal the fact that the chief trades, as well as the people
at large, have greatly suffered both economically and morally, and that Austria can
no longer support the pressure to which she is being submitted without being crushed
under it.
The national finances have, indeed, already become chaotic ; but the demands on
the State Treasury continue, nevertheless, to grow. The officials demand further
increases, which represent a considerable total, and the State is practically powerless
in face of these demands. The expenditure on the purchase of foodstuffs increases

On the other

in exactly the same proportion as the exchange falls, and this applies equally to
interest and other sums in favour of foreign countries.
Revenue cannot, both on
purely practical grounds and in consequence of political difficulties, be increased to
the same degree as expenditure. It follows that the printing-press must be continually kept at work printing notes, and its speed increased at the same rate as the
value of the note falls. The natural end of this process will be an inability to obtain
any longer the funds required for the continuance of public administration and, even
more, the utter impossibility of obtaining the funds required for purchase of foodstuffs abroad. When this point is reached, the road is clear for social and political
disintegration. The resultant misery and widespread resentment will bring with
them the suspension of all law and order.
Austria will thus become the easy prey
of any one who considers himself able to point the way out of this chaos. The door


- 19 _
to the East will be wide open.


There can be no need to dwell upon what an economic

catastrophe in Austria would signify for Europe. It is not only that an ancient
centre of culture and an age-long barrier is collapsing, but the mortal fever from
which the times suffer draws still nearer the heart of Europe. Seen from this point
of view, the catastrophe which threatens Austria assumes a menacing aspect. It
is not merely a domestic Austrian problem, but a European question.
character which it has assumed in the eyes of the Delegation as a result of serious
consideration on their part.
The most imminent danger for Austria lies in the fact that, in a relatively short
time, she will no longer be able to obtain bread for her people; nevertheless, in the
opinion of the Delegation, it would be of little use if efforts were limited to avoiding
this danger. The adoption of such a plan would obviously harmonise with the policy
which has hitherto been followed in regard to Austria, but it is precisely this which
appears to the Delegation to prove that a change should not be made. In fact, the
help which has hitherto been given so generously to Austria has hardly produced the
desired results; in any case Austria is to-day, in the opinion of the Delegation, nearer
to the abyss than ever.
The Delegation therefore thinks it necessary to bring to an end at once the sys-

tem of giving such aid to Austria that the catastrophe is merely postponed. More
compirehensive steps are required, until the primary causes of the country's desperate
situation are reached, In what way can Austria find not only help but permanent
help ? A foreign loan to the Austrian Government of greater or less amount for
purchases of foodstuffs would be merely a palliative. What is demanded is an effective re-establishment, the reconstitution of a firm and compact situation and of a

healthy business activity, together with the full and complete utilisation of the
resources of Austria. To reach this goal, confidence abroad which has disappeared

must be revived; conditions attractive to foreign capital must be created, thus
allowing the productive activity of Austria to develop to its full capacity. But
effectively to succeed in re-establishing confidence in Austria's economic activity,
two conditions must be fulfilled. The national budget must balance so that the
steady issue of notes to meet the needs of the Government may cease, and the basis
of the national currency must be consolidated.

This is the




i. La source commune de tout ce qui a provoque l'etat malheureux actuel de
l'Autriche est la baisse constante du change et ses fluctuations considerables, specialement depuis qu'il a atteint un niveau deraisonnablement bas.
2. Il s'ensuit que le seul vrai remede est l'assainissement du change autrichien,
thultat qui ne pourra etre atteint que par une reduction de sa valeur interieure et
ensuite par l'etablissement d'un rapport solide avec l'or, ou, ce qui revient au meme,
avec la devise americaine.
3. Pour des raisons pratiques, it est necessaire de modifier en meme temps que
la reduction, le nom de la monnaie. Si l'on choisit « francs autrichiens » et si la valeur
interieure de la couronne est calculee a I ou 2 centimes, on obtiendra le cours de
conversion pratique de zoo ou 5o couronnes-papier respectivement pour I « franc
autrichien » et un rapport pourra etre pratiquement etabli entre ce dernier et l'or,
en calculant 5 « francs autrichiens », i dollar..
4. Si le cours de conversion du « franc autrichien » est par exemple, fixe a 5o pour
i, it representera une valeur de la couronne superieure de 26 % a la cote actuelle de
la devise autrichienne a Zurich (en calculant ioo couronnes = 1,7 francs suisses et
dollars = 5.76 francs suisses). Si la valeur interieure de la couronne est plus elevee

par rapport a un budget d'ouvrier, la proportion choisie signifie une reduction
reelle du salaire, ce qui, si la reduction est d'une importance notable, aurait une
moins bonne influence au point de vue social. Par contre, si la valeur interieure de la
couronne est plus basse, le cours choisi signifiera une augmentation reelle du salaire ouvrier, mais ceci sera facile a contrebalancer en augmentant les loyers ou le
prix du pain, en meme temps que la mise en vigueur du regime.

5. Pour maintenir la valeur or ainsi fixee du « franc autrichien » on ne dispose

que de la quote-part de l'Autriche dans l'encaisse or de la Banque d'Autriche-

Hongrie, probablement environ 4o millions de francs, ce qui, bien entendu, est absolument insuffisant, surtout si l'on prend en consideration la balance commerciale &favorable avec laquelle it faut touj ours compter pendant les premiers temps.
6. On peut laisser de cote la question d'une augmentation de l'encaisse or, ce
qui exclut la possibilite de declarer les billets en francs remboursables en or. Pour
maintenir la valeur du « franc autrichien » telle qu'elle sera fixee, it ne sera pas toutefois indispensable d'avoir une possibilite de remboursement. Il sera suffisant d'avoir
touj ours a sa disposition les moyens de paiement strangers necessaires pour faire

face a toute demande a ce sujet, ou ce qui revient au meme, de pouvoir toujours
recevoir des dollars a la parite fixee.
7. On ne peut compter pouvoir se procurer de fawn normale les credits necessaires pour ce faire, et dans tous les cas, la mise en vigueur du plan Ter Meulen ne
pourra que contribuer partiellement a la realisation de ce probleme. Par consequent,
it n'y a d'autre voie actuellement que la realisation d'un emprunt stranger, dont les

tranches pourront etre ernises selon les besoins s'il n'est pas possible d'obtenir les
credits strangers par d'autres moyens et a des conditions equitables et suffisamment
sores. Cet emprunt doit pouvoir couvrir d'une part l'importation ordinaire des produits alimentaires pendant deux annees, et d'autre part, former une reserve.
8. L'achat dans une large mesure de devises au dela de celles qui sont necessaires pour la couverture des achats a l'etranger et dans le simple but d'amasser des
dollars, serait susceptible de faire echouer le projet. Ceci serait plus facile dans le
cas ou la circulation fiduciaire depasserait les besoins, mais elle devrait alors etre
reduite par un emprunt interieur qui procurerait les moyens necessaires.
Toutefois, it est possible que la circulation puisse, sans difficulte, digerer la circu-

lation fiduciaire telle qu'elle aura ete reduite par la conversion.
9. Une Banque d'emission, societe privee par actions et absolument independante

de l'Etat, sera creee pour l'emission de -nouveaux billets en « francs autrichiens».
La banque recevra pour 25 ans le privilege exclusif de l'emission des billets. Elle prendra en charge l'actif revenant a l'Autriche dans la liquidation de la banque d'Autriche-

Hongrie et dont l'evaluation devra etre approuvee par la nouvelle banque - ainsi



i. The origin generally of the present unfortunate condition of Austria is to be
found in the constant fall in the country's exchange and the considerable fluctuations
to which this has been liable, more especially since an unreasonably low level has
been reached.
2. The result is that the only genuine remedy is a reconstruction of the Austrian
exchange, which can only be arrived at by a reduction of its internal value, followed
by the setting up of a constant ratio with gold, or, which is the same thing, with the
American currency.
3. For practical reasons it is necessary that the name of the Austrian currency
should be altered when this reduction takes place. Should the name of " Austrian

francs " be chosen, and should the internal value of the krone be calculated at the
rate of one or two centimes, the actual rate of conversion will be approximately ioo
or 5o paper kronen to i " Austrian franc, " and a practical rate can be established
between the latter and gold, taking 5 Austrian francs as being i dollar.
4. Should the rate of conversion for " Austrian francs be, for instance, fixed
at 5o to i, this would represent a value for the krone 26% higher than the present
rate for Austrian currency in Zurich. (For the purpose of this calculation, ioo kronen
are taken as = 1.7 Swiss francs and i dollar = 5.76 Swiss francs). If the internal
value of the krone is higher when considered in relation to a workman's living
expenses, the rate chosen implies a virtual reduction of salary. Wherefore, if the
reduction is really considerable, less favourable results will be attained from the
social standpoint. On the other hand, if the internal value of the krone is lower, the
rate chosen will imply a rise in the workman's actual salary; this may easily be
compensated for by raising the rents and the price of bread when the new system
comes into force.

5. For the purpose of stabilising the gold value thus given to the " Austrian
franc, " only Austria's share of the gold reserve at the of Austria-Hungary Bank
(probably about 4o million francs) is available. This, of course, is absolutely insufficient, especially considering that, at first, an unfavour able commercial balance
must always be reckoned with.
6. The possibility of increasing the gold reserve is out of the question ; there is,
therefore, no possibility of making the paper franc redeemable in gold. In order,

however, to stabilise the value of the " Austrian franc " at the rate fixed, it is not
indispensable that there should be a possibility of redemption. It will be sufficient
if the requisite foreign means of payment are always available to meet any demand
of this nature, or, which amounts to the same thing, if dollars can always be obtained

at the parity fixed.
7. It cannot be expected that the credits necessary for this purpose will be obtainable in the ordinary way; in any case, the working of the ter Meulen Scheme can
only partly help to solve the problem. Consequently, the only plan possible to-day
is the effecting of a foreign loan, portions of which can be floated according to immediate requirements, if foreign credits cannot be obtained by other means on conditions which are both reasonable and adequately safe.
Such a loan should cover the
normal import of foodstuffs during two years and should also go to form a reserve

8. The purchase of large quantities of foreign means of payment, in excess of
those necessary to meet purchases abroad, and for the mere purpose of hoarding
dollars, is a grave danger to the scheme.

This practice would be comparatively easy

if the paper circulation were greater than the requirements.
that case be reduced by an internal loan which would furnish the necessary means.

It is, however, possible that the paper currency as reduced by the conversion
will be absorbed without difficulty by the circulation..
9. A Bank of Issue (a private limited liability company, absolutely independent
of the State) will be established in order to issue the new " Austrian franc notes.
This Bank shall for twenty-five years be granted the sole right to issue these
notes. The Bank shall take over (a) the assets reverting to Austria from the windingup of the Bank of Austria-Hungary at a valuation approved by the new Bank, and (b) a
corresponding amount of the liabilities of the Bank of Austria-Hungary. Should the
assets be greater than the liabilities, the shareholders of the Bank Austria-Hungary

The latter should in


- 21 que du passif pour un montant correspondant. Si l'actif &passe le passif, les actionnaires de la Banque d'Autriche-Hongrie recevront, pour la difference, des actions
de la nouvelle Banque. Le capital-action est fixe a zoo millions de francs autrichiens,
dont au moins la moitie sera offerte a retranger. Le capital sera verse en quatre termes
dans un Mai de six mois. On pourra toutefois decider que provisoirement, pour le

montant souscrit a l'etranger, 25 % seulement devront etre verses, de telle fawn
que le solde puisse etre appele successivement, apres preavis et a condition que
des obligations facilement realisables soient deposees en nantissement des montants

restant dus, a n'importe quelle date a la banque principale du pays dans lequel la
souscription est faite. Ces depots seront soumis a l'approbation de la nouvelle

Sur le benefice actuel de la Banque d'emission, il est attribue tout d'abord
aux actionnaires 8 % du capital verse; sur le solde, 1/8 aux reserves jusqu'a ce qu'elles
aient atteint 50 % du capital action, et le reste est report& ' s comme bonus aux porteurs des obligations en dollars mentionnees au par. 7, ',I4 est pays aux actionnaires
comme dividende complementaire avec, toutefois, une limite maximum de 15 % et
le reste est verse dans la caisse de l'Etat.

En plus d'un Conseil d'Administration elu par les actionnaires, on nommera une
Commission de Controle compose de trois membres design& par le Comite Financier de
la Societe des Nations. Tant que la dette de l'Etat autrichien envers la Banque ne sera

pas reglee, aucun nouvel emprunt d'Etat, de quelque categorie que ce soit, ne pourra
etre emis sans la sanction de la Commission de Controle. Lors de l'etablissement de la
Banque cette derniere pourra de plus etre chargee de controler si certaines mesures
necessaires pour l'amelioration des finances de l'Etat sont effectivement realisees
en conformite absolue avec les previsions.

10. En garantie de l'emprunt en dollars, les proprietes immobilieres de l'Autriche (terres et immeubles) sont frappees d'une hypotheque de 4 % de leur valeur,
laquelle peut etre estimee au total a 20 milliards de francs-or. Ceci donnerait une
garantie de 800 millions de francs-or, ou i6o millions de dollars. Cette garantie
jouit d'une priorite sur toutes les autres dettes, mais elle ne sera utilisee que dans
le cas ou la Banque d'emission ayant contracts un emprunt en dollars ne pourrait
satisfaire ses creanciers. Comme garantie complementaire, sont hypotheques les
revenus des monopoles qui sont cedes par l'Etat a la Banque comme garantie de sa
dette envers laBanque. Le revenu net de ces monopoles figure au budget de 1920-1921
pour 2 milliards de couronnes ou 4o millions de francs (8 millions de dollars), mais it
sera sans doute possible, lorsque la conversion monetaire aura ete etablie et que la
situation economique du pays se developpera d'une maniere satisfaisante, de faire
rendre aux monopoles des revenus sensiblement superieurs. Il sera peut-etre possible
de comprendre encore d'autres actifs dans les garanties.

11. A part l'obtention du credit stranger necessaire qui est le moyen d'arriver
a la stabilisation de la devise du pays, il sera necessaire de trouver le moyen: 1) de
couvrir le deficit du budget de l'Etat, en plus de ce qui est necessaire a l'achat par
l'Etat de produits alimentaires a l'etranger, 2) de reduire eventuellement la circulation fiduciaire a un montant qui correspond aux besoins du pays, et 3) de remedier
aux principaux inconvenients inherents a la fixation de la valeur basse actuelle de
la couronne. Ces moyens seront obtenus par un emprunt force impose aux proprietes
immobilieres du pays, payable d'une fawn a determiner plus exactement et de telle
sorte que les proprietaires doivent par exemple payer 7 % d'interets jusqu'a ce que
le versement soit effectue, tandis que l'emprunt ne sera productif que de 5 % d'in-

terets. L'Etat est l'emprunteur et l'emprunt est exempt d'amortissement durant
un certain nombre d'annees. L'emprunt est fixe a 2 % de la valeur des proprietes.
L'hypotheque prend rang apres les 4 % reserves en garantie de l'emprunt stranger,

mais avant toute autre creance.
12. La conversion de la couronne en francs sera effectuee de fawn generale et
comprendra donc toute la dette publique interieure, les prets hypothecaires et toute
autre dette privee, sans egard a l'epoque a laquelle ceux-ci ont ete accordes, ainsi que
traitements, salaires et redevances de n'importe quel genre, en general. II ne pourra

pas en resulter de modifications injustes a un degre important, si la conversion a

lieu en rapport avec la valeur intrinseque de la couronne, mais les injustices
deja existantes seront ainsi fixees definitivement. Il peut faire paraitre equitable
de prendre des dispositions speciales pour remedier aux consequences graves
qui frapperaient les retraites et les petits capitalistes hors d'kat de travailler.
En fixant la bonification a accorder, laquelle devra etre individuelle, on devra
prendre en consideration le fait que ces personnes sont encore touchees davantage
par la suppression des mesures contre la vie chere, et la regularisation des loyers.

13. Les mesures contre la vie chere, actuellement en vigueur, devront etre
supprimees le plus vite possible, au plus tard apres la recolte de 1922. Pour les fonctionnaires, l'augmentation des traitements qui deviendra ainsi equitable, se fera par
une simple conversion, tandis que pour les ouvriers la question devra etre reglee de

shall be paid difference in shares of the new Bank.
The share capital
Federal Reserve Bank of St. Louis
ioo million " Austrian francs, " half at least to be offered for subscription

shall be


- 22 la facon habituelle, par des ententes avec les patrons. Une certaine augmentation
du prix du pain en vigueur pourra peut-etre intervenir en meme temps que la conver-

sion, sans qu'elle ait necessairement comme consequence une augmentation des

14. La reglementation des loyers sera rapportee le plus rapidement possible,
ce qui toutefois exigera probablement une periode assez longue pour ne pas retarder
la suppression des contributions publiques aux mesures contre la vie chere. En meme

temps qu'on autorisera successivement l'augmentation necessaire des loyers, on
imposera aux proprietaires d'immeubles une taxe correspondant a deux tiers de la
valeur de l'augmentation approuvee. La taxe ne touchera par consequent pas les
nouvelles constructions.
15. Aussitot que faire se pourra, et en sauvegardant les droits des fonctionnaires,
le nombre actuel de ces fonctionnaires devra, dans la mesure du possible, etre reduit
successivement a un nombre qui corresponde a l'importance du pays. On devra en
outre essayer de simplifier davantage la machine administrative, et de supprimer
toutes entraves aux transferts et modifications juges necessaires.

i6. Les impots d'Etat seront modifies par une reforme de l'impOt sur le revenu,
de sorte qu'il devienne pratiquement realisable en partie par une meilleure organisation, correspondant mieux a la valeur en baisse de la couronne, des impOts indirects.
De meme les revenus des entreprises de l'Etat (chemins de fer, postes et telegraphes), devront etre sensiblement augmentes.

- 22 agreements with the employers. There may be a certain increase in the ruling price


of bread at the time of conversion, but this will not necessarily imply an increase
of salaries.

14. The State control of rent will be abolished as rapidly as possible, but this
will probably require a fairly long interval, in order not to retard the suppression of
State doles, in connection with measures against the high cost of living. As, step
by step, the necessary increase in rents is authorised, the house owners will be made

to pay a tax equal to two-thirds of the amount of the increase in rent approved.

The tax will therefore not affect newly-built houses.

15. As soon as feasible, and with due regard to their rights, the present number
of officials will be reduced to a number which is in accordance with the importance

of the country. Endeavours must also be made to simplify the administrative
machinery, and to remove all difficulties which may hamper machinery and suppress all difficulties which may hamper any transfers and alterations which may be
considered necessary.
i6. State taxation will be modified by a change in the income-tax, to be brought

about partly by a sounder organisation of indirect taxation corresponding more
exactly with the low value of the krone. Similarly, the revenue from State enterprises (railways, post, telegraphs) must be considerably increased.




31 dec. 1919


Bureaux de Poste
Caisse d'Epargne Principale d'Autriche .
Caisse d'Epargne Centrale de Vienne
Caisse d'Epargne Nouvelle de Vienne
Anglo Bank









Niederoesterr. Escompte-Gesellschaft








« Mercur»

Unionbank .
Banque Centr. de la Caisse d'Epargne Allem"




31 dec. 1920.



des Depots le



-- 183.576

+ 93 023

+ 9.959

+ 118.351

+ 49.185

86.671 + 20.457
233.775 4- 55.705
153.432 + 42.977


+ 457.798

(Neue Freie, Presse du 23 janvier 1921.)


Dec. 31st, 1919.

Million Kronen.

Post Office
First Austrian Savings Bank .
Central Vienna Savings Bank
New Vienna Savings Bank
Anglo Bank
Niedercesterr. Escompte-Gesellschaft

...... .

" Mercur"
Central Bank of German Savings Bank.


Amount on

Dec. 31st, 1920.



+ 32.362

- 183.576
+ 93.023
+ 9.959
- 117.774
+ 118.351

+ 49.185


- 3.328


+ 457.798



+ 20.457
+ 55.705
+ 42.977

(Neue Freie Presse, January 23rd, 1921.)


iI r:





a ,









I have so far only dealt with the broad aspect of the food supply to
those thickly populated industrial regions of Furope.
production of industrial goods.
in this respect.

I now come to their

None of these countries are self-supporting

They all need to exchange the goods in the production of

which they are best fitted for those in which others excel.

There are no

countries, except those in the most primitive state of civilization, which
can be called self-contained.

This highly complex economic organization of the world has been built
up by a gradual and almost imperceptible process of evolution.


had in that process adjusted itself to the progress as it was gradually

achieved, so that today that organization cannot exist without the essential
elements which have built it up, namely, the possibility of a free and
unhindered exchange of goods and services the world over.

The lack of this freedom of exchange is one of the root causes of
the present disjointed condition of the world, and one of the outstanding
causes of the instability of the exchanges.

And yet there are people who

doubt the necessity of international co-operation, and who taunt the supporters of the League as being visionaries and idealists, when, as I have tried
to show, the very life of a vast proportion of the population of this globe
could not be sustained for any length of time without the closest
international co-operation.

I have enumerated some of the most important basic conditions which
are essential for the re-establishment of a normal economic life, and there-


fore for the stabilisation of the exchanges.

Only when these conditions

have been put into practice in the various countries by their own efforts
will a sufficient degree of equilibrium have been reached, to apply the
final adjustment to the monetary systems which will give adequate stability
to the exchanges.

Any idea, therefore, that it is possible to stabilise

the exchanges by a process of devaluation of money in terms of gold - that
is to say, by giving to the currencies a new and inferior gold value - has
to be dismissed, as long as an equilibrium has not been established in
fundamental economic conditions and in finance.


I should draw attention to the question of international
The sums involved are huge, and the settlement is boujod to have

a serious effect upon the stability of exchanges, unless a carefully devised
and sober plan can be found.

It seems almost unnecessary to dwell upon the

fact that, in view of the magnitude of the sums involved, these obligations
can only be met out of future surplus production, and not out of any form
of wealth already existing.

One of the great questions that still remain

to be solved is how these obligations can be discharged without causing undue injury to both the debtor and creditor countries."



International Economic Conference
of Genoa

OF 71-IE



April, 1922




Com. II


International Economic Conference
of Genoa




April, 1922





The Second Commission, which was appointed by the Conference to deal
with financial subjects, met on the 11th April 1922 at 4 p.m., and appointed a
Sub - Commission to consider the proposals in regard to Currency. At the second
meeting, held on the 13th April, a second Sub-Commission was appointed on
Credits, and a third Sub-Commission on Exchange.
The Currency Sub-Commission held a preliminary meeting on the 12th
April, and at a second meeting on the 13th April decided to constitute a Committee of Experts to consider the matters referred to it.
The Report of the Committee of Experts (Annex A) was received on the
17th April.
The Exchange Sub-Commission met on the 17 th April, and decided to
refer the proposals before it to the Committee of Experts which had been dealing
with Currency.

The further Report of the Committee of Experts in regard to Exchange

(Annex B) was received on the 19th April and the two reports were then
considered at a joint meeting of the Sub-Commissions on Currency and Exchange.
The reports were adopted, and the resolutions framed by the Committee
of Experts were recommended by the Sub-Commissions, with modifications, for
adoption. (Resolutions 1 to 11, and 14 to 15 below).

A further resolution (Resolution 12), relative to the steps to be taken to
call a meeting of central banks and banks regulating credit policy in the several
countries, was recommended by the Sub-Commission on Currency.
The recommendations of the Sub-Commissions on Currency and Exchange
were adopted by the Commission at a meeting held on the 20th April.
The Sub-Commission on Credits held meetings on the 24th April and 26th
April, and recommended four resolutions (Resolutions 16 to 19), which were
adopted by the Commission at a meeting on the 29 th April.
The 19 resolutions there adopted are now recommended to the Conference
for adoption.



The ess

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Resolution 4.

It is desirable that all European currencies should be
based upon a common standard.
Resolution 5.

Gold is the only common standard which all European

countries could at *sent agree to adopt.
Resolution 6.

It is in the general interest that European Governments should declare now that the establishment of a gold
standard is their ultimate object, and should agree on the
programme by way of which they intend to achieve it.
Resolution 7.

So long as there is a deficiency in the annual budget

of the State which is met by the creation of fiduciary
money or bank credits, no currency reform is possible, and
no approach to the establishment of the gold standard can
be made. The most important reform of all must therefore

b° the balancing of the annual expenditure of the State
without the creation of fresh credits unrepresented by new
assets. The balancing of the budget requires adequate taxation, but if Government expenditure is so high as to drive

taxation to a point beyond what can be paid out of the



income of the country, the taxation itself may still lead to
inflation. Reduction of Government expenditure is the true
remedy. The balancing of the budget will go far to remedy
an adverse balance of external payment, by reducing internal
consumption. But it is recognised that in the case of some

countries the adverse balance is such as to render the
attainment of equilibrium in the budget difficult without
the assistance in addition of an external loan. Without such
a loan, that comparative stability in the currency upon
which balancing of the budget by the means indicated
above largely depends may be unattainable.
Resolution 8.

The next step will be to determine
value of the monetary unit. This step can only be taken in
each country when the economic circumstances permit; for
the country will then have to decide the question, whether
to adopt the old gold parity or a new parity approximating
to the exchange value of the monetary unit at the time.
Resolution 9.

These steps might by themselves suffice to establish
a gold standard, but its successful maintenance would be
materially promoted, not only by the proposed collaboration
of central banks, but by an international Convention to be
adopted at a suitable time. The purpose of the Convention
would be to centralise and co-ordinate the demand for gold,


and so to avoid those wide fluctuations in the purchasing
power of gold, wfiich might otherwise result from the
simultaneous and competitive efforts of a number of countries to secure metallic reserves. The Convention should
embody some means of economising the use of gold by
maintaining reserves in the form of foreign balances, such,
for example, as the gold exchange standard, or an international clearing system.
Resolution 10.

It is not essential that the membership of the international Convention contemplated in the preceding resolution
should be universal, even in Europe, but the wider it is, the
greater will be the prospect of success.
Nevertheless, if the participating countries and the

United States are to use the same monetary standard, no
scheme for stabilising the purchasing power of the monetary
unit can be fully effective without co-ordination of policy
between Europe and the United States, whose co-operation
therefore should be invited.
Resolution. 11.

It is desirable that the following proposals to form the
basis of the international Convention contemplated in Resolution 9 be submitted for the consideration of the meeting
of central banks suggested in Resolution 3 :


1. - The Governments of the participating countries
declare that the restoration of a gold standard is their ultimate object, and they agree to carry out, as rapidly as
may be in their power, the following programme:
a) In order to gain effective control of its own currency, each Government must meet its annual expenditure
without resorting to the creation of fiduciary money or
credits for the purpose.
b) The next step will be, as soon as the economic
circumstances permit, to determine and fix the gold value
of the monetary unit. This will not necessarily be at the
former gold par.
c) The gold value so fixed must then be made effective in a free exchange market.

d) The maintenance of the currency at its gold
value must be assured by the provision of an adequate
reserve of approved assets, not necessarily gold.
2. - When progress permits, certain of the participating countries will establish a free market in gold and thus
become gold centres.

3. -A participating country, in addition to any gold
reserves held at home, may maintain in any other participating country reserves of approved assets in the form of
bank balances, bills, short term securities or other suitable
liquid resources.

4. - The ordinary practice of a participating country
will be to buy and sell exchange on other participating



countries within a prescribed fraction of parity, in exchange
for its own currency on demand.

5. -- The Convention will thus be based on a gold
exchange standard. The condition of continuing membership

will be the maintenance of the national currency unit at
the prescribed value. Failure in this respect will entail
suspension of the right to hold the reserve balances of other
participating countries.

6. - Each country will be responsible for the necessary legislative and other measures required to maintain
the international value of its currency at par, and will be
left entirely free to devise and apply the means, whether
through regulation of credit by central banks or otherwise.
7. - Credit will be regulated, not only with a view
to maintaining the currencies at par with one another, but
also with a view to preventing undue fluctuations in the
purchasing power of gold. It is not contemplated, however,
that the discretion of the central banks should be fettered
by any definite rules framed for this purpose, but that their
collaboration will have been assured in matters outside the
province of the participating countries.
Resolution 12.





Resolution 14.

All artificial control of operations in exchange, whether by requiring a licence for transactions in exchange, or
by limiting the rates at which transactions may be effected,
or by discriminating between the different purposes for which
the exchange may be required, or by preventing free dealings in forward exchange is futile and mischievous, and should

be abolished at the earliest possible date.
Resolution 15.

It is desirable that, where no adequately organised

pie 11.4 itialuti



market in forward exchange exists, such a market should be
established. It has been suggested that, in any country where
private enterprise is found to be unable to organise such a
market, the central bank, without itself incurring any uncovered exchange risk, should provide facilities. It might, for
example, give facilities to approved banks and financial houses to convert spot transactions in foreign exchange into
transactions for forward delivery by a system of " contango ",
or " reports " of foreign exchange, their quotations being for
the double transaction of a spot deal one way and a simultaneous forward deal the other.




rantees satisfactory to lenders. Special machinery is necessary

during the present transitional period to start the flow and
to enable the co-operation of the financially stronger countries
to begin to be immediately effective.
Resolution 17.

It is essential that countries in need of credits should
undertake to give effect to the best of their ability to the
resolutions regarding currency and exchanges already adopted.

Proof of serious efforts to improve the condition of its
public finances will be the best guarentee which a borrowing country can offer to prospective lenders. The steps required for reestablishing the disordered currencies of Europe
have already been set out. In arriving at a balanced budget
attention should be concentrated on the following main
points :

a) Ordinary revenue and expenditure should be equal-

ised by reducing expenditure and, in so far as this is not
possible, by increasing revenue.
b) All expenditure of an extraordinary character
should be progressively reduced until it is entirely abolished,

and should not be met out of borrowed money unless it is
clearly of the nature of new capital expenditure for productive purposes. In so far as borrowing is resorted to, long
term loans are preferable to short terms, and in no case should

methods be adopted which lead directly or indirectly to



Resolution 18.

Full information is essential to the creation and maintenance of confidence. Each country should undertake the
publication of frequent and complete statements of the condition of its public finances. It will be useful that such statements should be regularly supplied to the League of Na-

tions and that the League of Nations should continue to
compile and issue periodical volumes based on returns from
as many countries as possible, whether members of the
League or not.
Resolution 19.

In order to facilitate the immediate co-operation of
the nationals of the economically stronger countries for purposes of reconstruction, it is recommended that as many as
possible of the Governments represented at the Genoa Conference should agree to support the establishment and
facilitate the operations of an International Corporation and
of national corporations affiliated to it in countries where
adequate security offers, whether by the provision of private
loans or credits or, where necessary, in the form of loans to
Governments, whose main object would be to examine the
opportunities for undertaking work in connection with European
reconstruction, to assist in the financing of such undertakings, and to co-operate withother agencies and undertakings,

without attempting to create any monopoly.



appointed by the Currency and Exchange Sub-Commissions of the
financial commission

We have carefully examined the documents referred
to us by the Currency Sub-Commission, and in doing so, we
have surveyed the existing currency situation throughout
Europe. Our conclusions follow to a considerable extent those

of the experts assembled in London. The interesting suggestions made by the various delegations have also been fully
weighed, and we believe that the main points raised by them
are covered by our report.
In presenting our report we desire to make the following general observations :
1. We recognise that we have to deal with two different classes of countries :
Class I. Countries where inflation has taken place, but

has already been stopped, and where a certain amount of
deflation has already been effected.
Class 2. Countries where inflation is still going on.
In countries of Class 2 it is essential, in order to
establish a sound currency, that inflation should be stopped,




3. Finally, we cannot in fairness to the Currency SubCommission present a series of recommendations designed to
secure practical results, as if they were immediately attainable,

without reference to certain other features of the existing
economic and financial position of Europe. The industry of
Europe cannot hope for a permanent return to prosperity so
long as it has to bear, either directly in the form of taxation, or indirectly in the form of inflation of currencies, the
most insidious and objectionable of all forms of taxation, a
burden of Government expenditure which is beyond its capacity. In this connection we cannot do better than refer
to the memorial on International Finance and Currency submitted to the Governments of certain countries, dated January 16th, 1920, which was among the documents laid
before the International Financial Conference at Brussels of
September, 1920. The whole of this memorial, though now
more than two years old, is as apposite to-day as when it
was written, and until the subjects to which it refers, and
in particular the problem of Inter-Governmental indebtedness,

have been resolutely tackled, there can be no hope of final
success in restoring the currencies or the economic welfare
of Europe. Foreign obligations by one country must be bal
anted by a capacity in other countries to absorb the surplus
production with which alone those obligations can be met.
If the burden of any country's external obligations is beyond
its capacity to pay, and it cannot be assisted by foreign
loans, the effort to meet those obligations must accordingly
result on the one hand in dislocation of markets in other
countries, and on the other hand in a continuous depreciation of the currency of the debtor country, which will entirely prevent it from making any start whatever in the direction of stabilisation.



4. With these preliminary observations, we present the
following resolutions (1), which we suggest as suitable to be
recommended by the Currency Sub-Commission, for adoption
by the Governments represented at this Conference. It will
be observed that the recommendations include a plan for an
International Monetary Convention.



We present the following resolutions (2) as suitable to
be recommended by the Exchange Sub-Commission for adoption by the Governments represented at this Conference. Our
main recommendation is that there should be complete free-

dom for exchange dealings. We have not attempted to set
out the deep-seated causes of the existing dislocation of the
European exchanges. Some of these causes are referred to
in the introduction to our Report to the Currency Sub-Commission. Any attempt at a complete survey would carry us
far beyond the proper limits of the present report. As with
currency, so with exchange, complete restoration depends
on the settlement of questions which are not now within our

We considered carefully the amendment proposed by
the German Delegation with regard to measures for preventing the flight of capital for the purpose of evading taxation.

We came to the conclusion that this question should be
(1) The resolutions submitted were those which, with modifications, have

been adopted above by the Financial Commission. See resolutions I- 11.


See resolutions 14-15.



regarded as falling within the province of the Currency
Sub-Commission. We have therefore reported to the Currency
Sub-Commission as follows :

Any proposals to interfere with the freedom of the
market for exchange or to violate the secrecy of bankers'
relations with their customers are, in our opinion, absolutely
to be condemned. Subject to this proviso, we are of opinion
that the question of measures for international co-operation
to prevent tax evasion might be usefully studied in connec-

tion with the problem of double taxation, which is now
being studied by a Committee of Experts on behalf of the
League of Nations. We therefore suggest that the League
should be invited to consider it.

Signed by:

Hon. R. H. BRAND

M. CATTIER and Dr. POSPISIL were unable to
attend the experts' meetings.


E. F. S. 270.
A. 158.




Note on the Plan for an International Clearing House.
By M. A. E. JANSSEN, Director of the National Bank of Belgium.

The International Financial Conference held at Brussels in 1920 was unanimously of opinion that the League of Nations might usefully exert its influence
with a view to promoting certain reforms; amongst others it mentioned the desirability of making some progress as regards the question of the creation of an International Clearing House.

This question is not a new one, and had been the subject of various detailed
proposals even before the world-war of 1914.
In 1908, M. Luzzati, the Italian statesman, who has brought so much renown
to his country, made a most interesting statement on this subject to the Institute
of France.

Certain persons of different nationalities, amongst whom I may mention
M. Wolff, Professor at the University of Breslau, and Mr. Cortelyou, Secretary
of the United States Treasury, also proposed the co-operation of Banks of Issue

at times of crisis.
The question was fully examined at a Congress held at Brussels in 1912 by the
International Economic Union, and the conclusions reached were embodied in a
resolution which may be recalled here.

"The International Economic Union expresses the desire that European Banks
of Issue should hold international conferences.
"The object of these conferences would be to examine all proposals for improving

and perfecting the present system of international payments, and to make preparations for the carrying out of plans recognised as expedient and feasible.
"Moreover, conferences of this kind are essential in order to render possible
the effective co-operation of Banks of Issue in exceptional circumstances.
"Amongst the projects which could be put into practice at once by a Conference which included delegates of the Central Banks, the International Economic
Union calls attention to the following:

" 1. The establishment of a system of international transfers for the benefit
of holders of current accounts in Banks of Issue.

" 2. An International Clearing House which would adjust the debits and

credits of all adhering banks by the clearing system.
" 3. The reciprocal collecting of any foreign bills which they may hold.
" 4. The issue, at the request of the public, of international letters of credit
or cheques by one bank on another.

" In their present isolated position it would be difficult for Banks of Issue to
take up the above proposals. Hitherto all kinds of considerations have caused
them to hesitate to take any action abroad in connection with the development
of the system of international accountancy. The holding of conferences will
necessarily lead Banks of Issue to co-operate with a view to ascertaining what
improvements it may be possible to introduce into the organisation of international
credit and methods of payments. As regards the difficulties of application, whether
of an objective or personal nature, they would become clearly apparent, and the
discussion of them would not be merely theoretical. "
In order to appreciate the purport of these proposals, it is desirable to recall
briefly how international payments are made.
S. d. N. - 375 - 5/22. - Imp. Atar.


In practice, settlements between one country and another are generally effected
by clearings ; that is to say, by an exchange of drafts and cheques and by direct or
indirect remittances. These operations are settled by means of the current
accounts which the banks, which in each financial centre specialise in exchange
operations, carry with one another. In some circumstances these international
clearings are more difficult ; they are effected, however, by means of a series of reciprocal actions and reactions, by the movement of goods and, above all, of securities
rather than of specie. Further, in accepting bills of exchange against cheques -

that is to say, bills payable at maturity against other bills payable at sight - the
banks also alter the balance of accounts; this amounts to a credit operation in that
the term of maturity is postponed. Before the war, however, whenever for various
reasons the system of clearing was not employed and payment was demanded, it
was found that the system which often operated with considerable success was an
adjustment of the bank rate by the central Banks of Issue.
When the balance of payments was momentarily upset, the rates of foreign
exchanges were immediately affected 133i it. The balance standing to the credit
of foreign countries had to be paid and the metal reserves of the Banks of Issue
were drawn upon. In order to arrest the outflow of gold, the usual remedy was
rapidly to raise the official bank rate; but even this was not effective unless the
Central Bank controlled the money market sufficiently to have an effect on the
qpen market rate. This procedure induced foreign creditors to take advantage
of the increased interest on the debtor exchange; for this reason they postponed
the time for demanding payment of the balance, and consequently the gold reserve
remained at the Central Bank as the covering for payments at sight, banknotes
and balances standing to the credit of current accounts.
In addition to the system of the adjustment of the bank rate, properly so-called,
various Banks of Issue had recourse to fiduciary currency in order to avoid inroads
upon their holdings. Banks thus succeeded in avoiding purely temporary increases
in the bank rate.
Sometimes the rise in the bank rate did not produce the expected result. In
spite of the bait offered by a high rate of interest, capital nevertheless left the country
either because there was no longer any confidence in the credit of the debtor market
or because of an urgent need of specie in foreign countries. Thus, in November
1907, the Bank of England raised the official rate to 7 per cent., but did not succeed
in checking the export of gold to the United States, where an acute financial crisis
was raging. But for a timely intervention on the part of the Bank of France,
in the form of a direct consignment of gold to the Bank of England, it would not
have been surprising if the bank rate in London had risen to ro per cent., at the
risk of causing profound disturbance in English trade, and, as a result, in Continental trade. Similar situations also arose in 1890 and 1906.

In these circumstances, M. Luzzati would have liked, by an international
arrangement - the basis of which would be discussed and fixed by a Conference
composed of delegates from the Banks of Issue - to ensure a more satisfactory
division of the amounts of gold required to prevent excessive rises in the bank rate.
He suggested in particular: " France, Italy and Russia might make loans to England;
Austria to Germany; and thus England could render greater help to the United
States. That, at least is how matters stand to-day; to-morrow they may be the
reverse. Who knows whether the helping countries may not become the countries
in need of assistance ?"
This is what has actually happened !
This plan had much to commend it; it was based on the fact that, as the result
-of the interdependence of the great financial markets, any national financial crisis
reacted internationally by obliging foreign banks to intervene by sending consignments of gold. The bank rate policy then practised by Banks of Issue merely
tended to aggravate a crisis. This struggle for gold, represented by the reciprocal
raising of the bank rates, was allayed by the furnishing of gold credits.
We must recall the circumstances in which the intervention of the Bank of
France took place.
In 1890, one of the greatest banking houses in London - the House of Baring was on the point of suspending payment. As a result, there was a great disturbance
in the London market. The official bank rate was already 6 per cent, and as the
Bank of England is not empowered to pay its notes in silver, and as, moreover,
its charter limits the possible margin between its notes and its gold reserve, it had
no other means at its disposal but further to increase its bank rate. But if the
Bank of England increased its rate still further at that moment, when there was
already a difference of 3 per cent. between the London and the Paris rates, the Bank
of France would almost certainly have been obliged to imitate its neighbour and
to raise its own bank rate, to the detriment of French trade.



In these circumstances, the Bank of England approached the Bank of France,
asking it for help in order to maintain its gold reserve at a level which would enable
it to avoid the necessity of raising its rate above 6 per cent. The Bank of France

did not hesitate to send a favourable reply to this proposal, in the interest of the
commercial relations of the two countries, and still more in that of French trade,
and, most of all, in the interest of the Parisian money market. It thereby avoided
a financial crisis which was threatening in England and which would have reacted
acutely upon the French market. An advance of seventy-five millions in gold
was granted to the Bank of England for a period of three or six months at its own
option against the discount at 3 per cent. of English Treasury Bonds, and on the
express condition that this sum would be returned in the same metal to the reserves
at Paris. The Bank of England thus succeeded in carrying out its functions without
contravening the Act of 1844, in spite of the disturbance of credit on the London
market caused by the fall of the House of Baring. This action on the part of the
Bank of France was the subject of a question by M. Francis Laur in the French
Chamber on January 17th 1891, and M. Rouvier, who was then Financial Minister,
replied that the Bank had acted on this occasion with the authorisation of the
Minister responsible. On several occasions since then the Bank of France has thought

fit to take similar action. We quote below two extracts from the records of the
Bank of France, making clear the conditions under which this course was adopted.
In the first place, we find the following in the report on the operations of the
Bank of France for the year 1906:
" The tightness of money, which accompanies a development of business such

as that which we are witnessing at the present moment throughout the world,

has not failed to arise, without, however, causing any prejudicial effects in France.

" The European markets have been affected to a very large extent because
unaccustomed demands have been made upon them from all parts of the world,
and particularly from the United States. The bank rate has rapidly risen. It
reached 6 per cent. in London, and even this increase proved insufficient to check
the outflow of money, and there was reason to fear that the financial tension,
if not relieved, would be felt in France and would compel us in our turn to raise
our bank rate.
" In these circumstances we had a double duty. We had, on the one hand,
to provide the market both at home and abroad with the necessary reserves to
prevent the rise in the exchange, which would inevitably have reacted on our country.

On the other hand it was our duty to avoid encouraging speculation, which would
have been bound to cause a great rush of business, and might have resulted, if
not averted in time, in a crisis. The Bank of England has fulfilled this double
role as far as it was permitted to do so.
" In pursuance of a financial policy which has hitherto been justified by events,
we have discounted English paper and provided the London market with the funds
necessary to enable it to emerge from this difficult position.
" We did not part with our gold without due consideration, and without being
certain that it was directed to centres where it would prove of real service and where

we had a real interest in preventing a possible crisis, from the point of view of
French trade.
"The Bank of France has, therefore, fulfilled its essential function of controlling

and adjusting the bank rate in the national market; it has secured this result by
various means, but in particular, and above all, by a procedure which has, moreover,
met with general approval. The extent of its reserves has enabled it not to limit its
action to the French market alone. The difficulties came from abroad, and the Bank
went to the actual source of these difficulties in order to allay them and to assure, by
action in the London market, the stability and moderation of the bank rate in Paris.

"By utilising the power granted by our statutes to discount bills on foreign

exchanges, we substituted for these bills an equal quantity of gold, which was sent

to those centres which at the moment had real need of our assistance, with the
certainty of seeing our gold returned.
" The formation of a holding in foreign bonds, which had, moreover, already
been provided for in our balance-sheet, had hitherto only been regarded by Banks of

Issue as a means of protecting the reserves of metal in the event of a rise in the
exchange. Our gold reserve was so great as to enable us to place at the disposal
of a neighbouring friendly country the bullion reserves necessary to avoid a financial
tension which might soon have obliged us to take defensive measures ourselves.

" At the same time we refused to discount paper presented with the obvious
purpose of obtaining means for excessive speculation abroad.
" Owing to these various measures, which were rendered possible by our large
national reserves, we were able to maintain the trade rate of discount for the year
1906 at 3 per cent. "


Similar action was taken in the following year.
The Governor of the Bank
of France, in his report on the financial year of 1907, referred in the first place to


"the crisis - much more acute (than that of the preceding year) - which began
at New York in the second half of October (1907), threatening the European
exchanges with sudden and violent effects," and he continued as follows:
"The first market to be seriously affected was the London market, which,
owing to the wide field of its business and the intricate nature of its relations, is
more closely bound up than any other with the American market, where the
scarcity of gold, which had disappeared from circulation under the influence of a
want of confidence which drove everyone to realise, neutralised the effect of consign-

ments and arrivals of gold from abroad.
" The increase of the Bank of England rate to 51/2 per cent. did not succeed
in checking the drainage of gold, which was in demand, owing to the considerable
premium to which it rose within a few hours in the principal towns of the United
" We could not hide the fact that, in face of such a panic (specie was only lacking
in circulation because it was being hidden away), no practical result would be obtained

by having recourse to successive increases in the bank rate; such measures would
only prove a drain on the circulation and would compel us, like our neighbours, to
fix an exorbitant bank rate.
" Instead of adopting this course, which would have been entirely fruitless,
what had to be done was to place at the disposal of the Bank of England, as rapidly
as possible, resources still greater than in the preceding year, in order that it might
forward them to the New York Exchange without weakening its legal reserve.
" We were thus contributing to the preservation of the controlling markets,
and it was, of course, to our own interest to send reinforcements to points where
the critical conditions threatened to involve us in the general crisis.
" The recourse to this efficacious operation, for the second time, in 1907, was
nothing more than the regular application of our constitutional statutes.
" You are aware that the Bank of France should never under any circumstances
make any use of funds reserved to cover those of its notes which are not represented
by available securities maturing within periods determined by its regulations.
" Moreover, we did not hinder the dispatch of direct consignments of gold to
New York, occasioned by the normal discount of French commercial bills; and
in the same spirit of friendly solidarity as in the preceding year, in the same form
and with the promptitude required by the circumstances (but avoiding implication
in the crisis), we guaranteed to the London market available funds to the amount
of more than 8o million francs in American gold currency.
" Our balance sheet thus contains, for the second time and for a short period,
foreign bills, all the amounts of which are to be repaid to us entirely in gold by the

various drawees and which only temporarily - but in a very profitable form -

take the place of the sums which we have been able, without any difficulty, to raise
on our extensive reserves, in order to preserve the French market from a financial
panic the intensity of which is almost without precedent.
"Though, as a result of exceptionally serious circumstances, this friendly support was not sufficient to enable London to avoid fixing a rate of 7 per cent. - which
obliged us to raise our own rate of discount by 1/2 per cent. and to raise the rate
for advances from 4 to 41/2 per cent. - it is only too certain that if we had not come

to the aid of the great and friendly neighbouring market, we ourselves should
certainly have been driven to take measures which would have been still more
harmful to our commerce and our industry.
" The measures which we took have thus enabled us to preserve for our own
nationals the inestimable advantage of a discount rate which is still lower than
in all other countries and is free from sudden fluctuations.
"At the end of December the margin between the official rate at Paris and the
official rate in London and Berlin was still from 3 to 31/2 per cent."

It should be pointed out that the Bank of France was not the only one which
carried out this policy of direct intervention in the foreign markets. The AustroHungarian Bank also sent gold to Berlin in 1907 with the object of avoiding an
excessive monetary tension there and preventing a rise in the bank rate, which
would have reacted on the price of money at Vienna.
This occasional mutual aid of Central Banks by means of reciprocal gold loans
has proved so successful that there is no need to demonstrate its utility; it is sufficiently proved by the preceding statement.
It is doubtless impossible to transform into diplomatic agreements or permanent
arrangements the spontaneous good offices and wise co-operation of which the
Bank of France gave an example, but it is desirable that this far-sighted policy

I. Wrap


should be imitated by the Banks of Issue, which present circumstances have placed
in possession of great financial wealth.

Before the war the objections to this course were principally of a political
nature, but to-day rich and poor alike are suffering so greatly from the state of
financial instability that it is being realised that co-operation is becoming more
and more indispensable in the interests of the nations.
Such was the situation before 1914. During the war and until the first months
of the year 1919, international payments between allies took the form chiefly of
advances from one State Treasury to another, the heavy burden of which impoverished Europe is now bearing. The financial disturbances caused by the worldwar have seriously hindered the working of the delicate mechanism to which, before
1914, the Banks of Issue held the key.
But it is none the less true that clearing still plays a predominant part in the
liquidation of international accounts.

To be convinced of this, one need only read the able study of the foreign
exchanges which has just been published by M. Jules Decamps, Director of the
Economics Department of the Bank of France. But when we speak of clearing,
we pre-suppose that there is something to clear, and, unfortunately, as a result
of the economic instability prevailing in Europe at the present time, too many
countries have many debts and few assets.
A constantly unfavourable commercial balance, combined with large issues
of unconvertible paper money, have brought about a loss of equilibrium, of which
the present rates of exchange are merely the reflection.

Thus the favourable influence which the establishment of an international

clearing-house may exercise must not be exaggerated.
The present situation of the foreign exchanges is the result of causes so deep
and so well known that it cannot be effectively remedied by a mere improvement
in the methods of international payments.

Having regard to the preceding considerations, a system of international

transfers for the benefit of holders of current accounts in Central Banks of Issue,
supplemented by a clearing house, could, with a little mutual good-will, be established within a short period.

In this connection, mention should be made of the Convention concluded
in 1885 between the Banks of Issue of the three Scandinavian Kingdoms - the
Royal Bank of Sweden, the Bank of Norway and the National Bank of Copenhagen.

In accordance with the charters of these banks, each of them is authorised

to make current account deposits up to a specified amount in the Central Banks of

the two other countries, and the credit balance of these current accounts may
be considered as forming part of the metal reserve on which the issue of notes is
based. The three Central Banks utilised this power to conclude the Convention,
the purport of which we reproduce below :

1. Each of these three banks shall open a current account with each of the
others; on this account they may issue cheques payable at sight, even if
this involves an overdraft; all sums may be paid in to their respective

2. No interest will be charged on credit or debit balances, nor will any commission be charged on transfers.
3. Cheques may also be drawn on the head offices of the three banks or on the
branch of the Bank of Norway at Christiania or Bergen.

4. None of the banks is authorised to draw on the others for the purpose

of profit.
5. No cheque may be issued for an amount less than five thousand crowns.
6. No commission is charged on the issue or collection of cheques.
7. Notice must in all cases be given of the issue of cheques.
8. Debit balances must be paid up at the request of the creditor bank.
9. When the balance of an account is drawn in specie, the creditor will assume
the risks and defray the costs of consignment.
Io. If the bank from whom the debt is claimed has a credit balance with the
third bank, it may settle the debt by delivery of a cheque on that bank.
1. All payments under the above articles will be made in gold pieces of 20
or HI crowns.
12. Accounts will be rendered quarterly.

13. The Convention may be denounced and become imperative after notice
given three months in advance.

 sum up:
The three banks
Federal Reserve Bank of St. Louis


have non-interest-bearing accounts with each other, and


Until 1892 the liquidation of the balance by the debtor office to the creditor

office was effected by means of a draft or consignment in specie. This proceeding,
which involved the creation of a large number of special accounts, was extremely
burdensome and gave rise to numerous difficulties. The administrations concerned
incurred considerable expenses by the purchase and sale of the drafts used in the
liquidation of the various balances. The establishment of an International Clearing

House would necessarily lead to a great simplification of the above-mentioned
method of accounting. The question was discussed at the Vienna Postal Congress
in 1891 and,' on July 1st, 1892, a Central Accounts and Liquidation Office was
established at Berne and attached to the International Office of the Universal
Postal Union.
The International Office at Berne undertakes the balancing and liquidating
of accounts of every kind relating to the international postal and telegraph services
between the administratious of the countries of the Union.
After having worked out and adopted their accounts, the administrations
send to each other an acknowledgment of their liabilities, expressed in francs and
centimes, stating the matter and the period covered and the balance arrived at.
Each administration sends monthly to the International Office a table showing
its assets under the heading of "Special Accounts", together with the total of the
amounts due to it from each of the administrations, members of the Union; every
credit appearing in this table must be authenticated by an acknowledgement
from the debtor office.
The International Office ascertains, by comparing the acknowledgements,
whether the tables are correct, and the liabilities of each administration are carried
forward into a summarized account. Then the International Office reduces the
tables and summarized accounts to one general balance-sheet showing:
(a) the total liabilities and assets of each administration;
(b) the debit or credit balances of each administration, representing the difference between the total debit and the total credit;
(c) the sums to be paid by some of the members of the Union to a particular
administration; or, inversely, the sums to be paid by the latter to the others.
The totals of the two classes of balances under (a) and (b) must necessarily
be equal.


When the total amount of the assets and liabilities of each administration
is ascertained, the International Office decides what payments are to be made
that is to say, it states to which administrations payments must be made by the
debtor administration.
As far as possible it ensures that each administration only has to make one
or two separate payments in order to square its accounts.
It should be noted, however, that any administration to which another
administration is habitually indebted to an amount exceeding 50,000 francs has
a right to claim payments on account. These payments on account are entered
by both the creditor and debtor administrations at the foot of the tables sent to
the International Office.
Such are, in brief, the provisions regulating the clearing of postal accounts.
The preliminary draft of the plan summarised the advantages guaranteed
by the new organisation as follows:
1. " Supposing that there area n associated administrations and that a system
of money orders is in operation between them, there will be, under the present

accounting methods, no monthly accounts and 55 general clearing accounts

regarding money orders alone. The adoption of the proposed procedure would
have the immediate effect of abolishing these latter accounts.
2. " The liquidation of the 55 accounts in question at present calls for the
same number of special drafts. The new plan would reduce this number to about
10; this reduction would involve a considerable reduction of expenditure under
the heading of 'Purchase and Sale of Drafts.' Ten will also be sufficient when the
general account to be settled between the various offices includes services other
than money orders.
3. " As the new procedure provides generally for the use of negotiable drafts
in the great commercial centres, the difficulties, supplementary expenses, etc.,
resulting from the acquisition of drafts for a smaller amount or payable in towns
of less importance will be obviated."



A real step in the direction of a system of international postal transfers has
recently been taken in the agreement concluded between twenty-six countries
at Madrid on November 3oth, 1920. The essential provisions of this agreement
are as follows:
I. Any person having a postal current account in one of the countries which
is a party to this agreement may order money to be transferred from his account
to a postal current account kept in another of these countries.

2. Each administration is authorised to fix the maximum amount of the

transfers which the holder of an account may order either in a single day or during
a specified period.

3. Each administration is free to comply with all the regulations imposed

by the public law of its own country, particularly as regards the export of capital.

4. The administration in any of the contracting countries is authorised to
suspend, either wholly or partly, the transfer system, when exceptional circumstances warrant such a procedure.
5. Each administration shall itself fix the rate of conversion of its currency into
the currency of the receiving country for all transfers ordered by holders of accounts.

There can be no doubt that the introduction of a system of international

postal transfers will prove advantageous to the business world.
As regards financial policy, the international transfer system will be productive
of good results. Coin and banknotes which are at present in circulation in the
various countries will thereby become available for other purposes. The transfers
do not involve any handling of specie, since they are effected by entries in the
accounts. A double transaction involving the use of specie - the paying-in and

the paying-out - is thus dispensed with.

The international postal transfer system is certain to develop greatly, in view
of the increasing number of persons with postal current accounts in countries
where the postal cheque system has been established.
On December 31st, 1921, the number of accounts which had been opened
was as follows :
Serb-Croat-Slovene State .






The system of transfer is operated, on the one hand, by the Central Bank,
and, on the other, by the Post Office and the great private banks with their numerous
agencies. The Central Bank can only have a limited number of branches, and these

are opened only in important areas. The Post Office, thanks to its thousands of
agencies and offices, is in a certain sense the natural extension of the bank, for the
more agencies there are, the more widely does the transfer system extend its ramifications. Transfer operations are thus carried on by two organisations which
supplement each other and between which the establishment of direct relations
was a logical development.
Thus, in principle, any person in possession of a postal cheque account may
transfer any portion of his deposit to any transfer account in the Central Bank.
Conversely, any person who has a transfer account in the Central Bank may transfer
any sum to any postal cheque account, thus obviating a direct payment at the
Post Office, with the consequent charges. This arrangement undoubtedly offers
substantial advantages to persons with postal cheque accounts and those with
transfer accounts at the Central Bank.
In Banks of Issue transfer operations are rightly regarded as among their
most important duties. Hitherto transfer or clearing operations by Banks of Issue

have been confined to the territory of the State which granted them the right
to issue notes.
Several years ago the Universal Postal Union instituted international postal

orders or letters of credit. We have just given an account of a new international
postal transfer organisation, which is likely to prove of great importance when the
postal cheque system attains its full development. Why, it may be asked, should
direct relations not be established between the Banks of Issue for the purpose of
enabling transfers to be made ?
Most Banks of Issue at present possess bills on foreign countries in their portfolios; some have current accounts in foreign banks. Seeing that the holding of



funds abroad is now regarded as normal and legal, there would be nothing to prevent

a part of such funds being placed on current account in a foreign Bank of Issue.
Each bank would, moreover, be absolutely free to determine, at its convenience,
the maximum amount of such account, and any creditor bank would have the
right to demand payment at any time of the sums which might be due to it.
As Banks of Issue, on principle, pay no interest on deposits kept on current
account, it will always be possible to transfer the balance or part of the balance
to current accounts opened in foreign private banks which pay interest. This
practice is adopted by private persons who at present have money on current
account in Banks of Issue.
Banks of Issue might also authorise each other to receive payment of bills
of exchange which they hold on foreign countries and issue international letters
of credit or money orders at the request of the public.
The systems of transfer operations between holders of current accounts in the
Banks of Issue may be supplemented by an International Accounts Office, which,
after the manner of the Berne Postal Clearing Office, would set off, by means of
clearing operations, the debit and credit sides of the accounts of each bank which
was a party to the arrangement, leaving only the balances for final adjustment.
The clearing organisation acting for the twelve reserve banks in the United
States of America and employing the " Gold Settlemeni Clearing Fund" established

at Washington, might also, to a certain extent, serve as a suitable model in
drawing up the agreement to be concluded between the Central Banks.

Some will assert that the foregoing constitutes a very modest reform. They
dream of vast schemes, of monetary peace, and thus recall all the hopes and illusions which came into prominence about 1865 when many persons believed that
they could succeed in establishing a universal currency or a universal bank.
At that date metallic money was of predominant importance, but since then
an economic development of deep significance has taken place. It was brought

about by the extended use of improved methods of payment - by an advance
from cash to the banknote, from the banknote to the cheque, and, by means of

the cheque, to transfer and clearing operations.
We must not be understood to imply that the importance of precious metal
has diminished; on the contrary, indeed, it is more than ever the basis of all these
numerous substituteswhich has fallen off. of coin; it is only the actualthe circulation of paper-mone
of precious metal which take the place
As circulation
increased and the use of exchange and credit instruments, such as cheques, drafts
and clearing operations, becomes more widespread, standard money is used to an

ever-decreasing extent in business transactions. Gold provides the security for
the subsidiary metallic currency and the whole of the note issues, and it performs
this office by being accumulated in ever-increasing quantities in the vaults of the
Central Banks of Issue.
Thus, in the majority of countries, the most important duties of Bank of Issue

are related to currency, for the issues of banknotes are not augmented merely to
meet the increased requirements of credit, but also to take the place of, and represent,
specie which has largely passed into the reserves in the banks.
finds that the note, cheque and draft are more convenient in use.

The value of this mass of paper-money is mainly dependent upon its being
convertible into coin; experience, however, shows that this convertibility is by no
means constant in all countries, and may in many circumstances be considered
as highly problematical.
The securities for convertibility are of two kinds:
1. The coin and bullion in the vaults of the issuing institutions.

2. The credits which form the remainder of the assets. When the credits

are commercial and liquid, notes can be reimbursed whenever they are presented.
This, however, is not always the case. We must never lose sight of the position
of Banks of Issue in their relations with their Governments, - i. e., the amount of the
advances which the banks have made to them in one form or another.
When a Bank of Issue merely lends the Government its capital, there is no
occasion for anxiety, because the capital of a Bank of Issue is regarded as nothing
more than a guarantee fund. But when the bank lends the State more than its
capital- i.e., when it lends it either a part of the private deposits which it receives
and which may be withdrawn from it at any time, or sums which have accrued
to it as a result of the excess of its notes in circulation over and above its metallic
reserve - the danger becomes very great, because the deposits or the notes issued
are no longer covered.

The public rig


The financial history of the nineteenth century and of the 1914-1918 war
shows that Governments have frequently had recourse to the credit of their Bank
of Issue, and have forced it to increase its note circulation. The banks agree to
create paper in this way which is not backed by coin or commercial bills only on
condition that they are freed from the obligation of repaying in cash; the consequence, often inevitable, of advances to the Treasury is therefore the establishment
of an inconvertible currency.
It may therefore be stated as a general principle that the monetary position
of a country is dependent upon a real balance in its budget and the satisfactory
working of its paper-money system.
Any excess of floating debt in the form of Treasury bonds, discounted by the
Banks of Issue, may itself suffice to disturb the money market.
Advances made to States by Banks of Issue can be justified by the imperative
needs of public safety. However, this is not always the case. In times of crisis or on
the pretext of difficulties, Governments continue to use and abuse these facilities;
the world to-day, unfortunately, offers only too many illustrations of this practice.

Excessive issues of paper money immediately affect the rates of exchange.
No limit can be fixed for the fluctuations in the exchange between a country with
metallic money and a country with inconvertible currency.

If the trade balance becomes unfavourable, as is usually the case, gold is
required to pay the foreign creditor. No gold is supplied by the Bank of Issue; it
is taken from the currency, and a premium on gold is inevitable.
A paper-money system has always been regarded as inconsistent with the
very principle of a monetary convention; yet to prevent this state of affairs is
easier said than done, because circumstances which it is impossible to control may
compel Governments to adopt such a system.
M. Louis Renault, a French jurist, who is certainly qualified to speak on matters
of international law, has brought out very clearly the vulnerable side of conventions
dealing with the monetary system :

"By a convention of any kind," he writes, " freedom of action is restricted,
since an obligation is assumed to observe certain rules, and since, so long as the
convention lasts, it is only possible to be released by the consent of the other contracting parties. For that reason, only temporary conventions or conventions
which may be denounced should be concluded. For that reason also each State
must, even during the period for which the Convention is in force, retain full freedom
of action on all really essential matters. These are the grounds on which serious

objections may be brought against any monetary union. The monetary system
is of such importance in the economic life of a nation, and it may require the adoption

of measures so essential to the very security of the country, that it is dangerous
to renounce freedom in this matter.
The country runs the risk of suffering heavy
losses or failing to fulfil its obligations, which is equally regrettable."

Monetary unions cannot really be compared with other unions, such as the
Telegraphic Union and the Postal Union. The Telegraphic Union, which was
founded at practically the same time as the Latin Union, dates from May 17th,
1865; at present it extends all over the world, to the general satisfaction of all
concerned. This result is due to the fact that it is concerned with administrative
objects and that the modifications which require to be made in administrative

services can be quite easily effected without the necessity for interfering with principles of legislation.
The right of determining the monetary system constitutes one of the essential
attributes' of sovereignty, and, if we exclude the case of small States which may
occupy an exceptional position, it is dangerous for a country to renounce any part
of this right and to bind itself in this connection to a foreign Power. Experience
shows that it is the most prudent country which in these matters suffers from the
failings of others, while, when each country preserves its freedom, each must support
the burden of its own errors and its own mistakes.
Bamberger, who has always shown remarkable insight into currency questions.,

wrote: "Money, in the international sense, cannot be regarded otherwise than
as of correct weight and of full value. It follows, therefore, that to enter into a

monetary convention with a State is tantamount to imposing upon it an obligation

never to undertake a war, nor to undergo a revolution or an internal economic
crisis -a promise which is equally foolish on the part of both of the contracting
parties and consequently doubly foolish in the case of reciprocal obligations."
There is doubtless something very alluring to certain minds and flattering to
the imagination in this sort of fraternal union of nations in the monetary sphere.
But theory is not sufficient to bring about such a union. If we go to the root of the
matter, and the idea is compared with actual facts, numerous objections are discovered, and nothing can compensate for the serious dangers which result from



agreements between independent Governments on a matter so closely connected
with their respective rights of self-government.
The history of monetary unions which were concluded during the last century
serves to confirm these views.

The monetary convention entered into between the States of the German

Zollverein in 1837 and 1838 may be credited with introducing a certain measure
of order into the anarchical monetary conditions which prevailed in many small
States beyond the Rhine ; but it must not be forgotten that these States formed
a political federation and that they had reciprocally renounced certain attributes
of sovereignty - a renunciation to which independent States might not submit.
The Austro-German monetary union which was concluded in 1857 was a
deplorable failure.

As regards the Latin Union, founded in 1865, it has experienced disappointments of every kind, and the number of conferences and additional acts itself
bears witness to all the difficulties involved.
With these facts before us, we are of opinion that, under present conditions,

the monetary system must be national and that political unity must be the pre-

cursor of a common monetary system.
For that reason many schemes which have been conceived and investigated
by notable thinkers can only be regarded as capable of realisation in the more or
less distant future, and their fulfilment must be regarded rather as the crowning
economic achievement of a new international political situation, which it is the
special task of the League of Nations to create in the course of time.
However, while respecting the full autonomy of each State, I am convinced
of the value of periodic conferences, attended by directors of Banks of Issue, for
the purpose of considering in common the discount policy, the stabilisation of the
value of gold and the establishment of an international system of transfers supplemented by a clearing office.
At present the intercourse between Central Banks is limited as a rule to informal
friendly relations.

Something more is required, and I feel convinced that discu

between directors of Central Banks of Issue might lead to the valuable result of
introducing a certain measure of order into the internal monetary policy of many
The main difficulty arises from the fact that Banks of Issue are too often merely

a political tool in the hands of Governments who themselves are the sport of the
political parties on which they depend.

Ministers of Finance would be in a much stronger position to resist the demands
for expenditure made by their colleagues if they were expressly forbidden to resort
to the dangerous expedient of discounting Treasury bonds in the Banks of Is§ue.
When the exchequer is empty and it is no longer possible to obtain money by the

artificial, dangerous and speedily fatal device of the printing press, then wiser

councils frequently begin to prevail. Happy the countries where the directors of
Banks of Issue have sufficient independence to say " No" to the demands of Government policy.
It is necessary to safeguard Governments against their own weakness. If in
the future the provisions indispensable for the maintenance of a sound paper currency should be settled by an international agreement, internal monetary legislation
would become more stable and conform more closely to true monetary principles,
because it would be placed under the protection and guarantee of an international
In this connection the consistent co-operation of Banks of Issue would be of
great value in investigating the best methods of returning to normal conditions.
Certain countries will be able, by economy and labour, to return by degrees

to the former gold parity.
Other countries, where the evil is already too serious, will be unable to escape
bankruptcy by having recourse to the devaluation of their money through the
establishment of a new gold parity.
All the various cases require to be investigated in the light of economic principles
and special circumstances.

International trade is fatally prejudiced by the instability of the exchanges,
which inevitably renders any buying or selling transaction in foreign countries a
speculative operation.
The Banks of Issue which, before the war, were responsible for the preservation

of the monetary standard and the maintenance of the exchanges within strictly
defined limits, are in the best position to determine the basis of the monetary
reconstruction of Europe.
April 1922.




2nd November 1922.

With the Governor's



C. 703. M. 413. 1922.


Resolution adopt6e par le Conseil
le mercredi 4 octobre 1922.

Le Conseil a recu du president de la Conference des Principales Puissances alliees, tenue
Londres le 15 aofit 1922, une requete d'etudier la situation de l'Autriche.
Le Conseil a invite les Gouvernements d'Autriche et de Tchecoslovaquie a sieger au Conseil.
line Sous-Commission, composee des delegues de Grande-Bretagne, France, Italie,
quie et Autriche, a ete priee de pr6parer les resolutions a soumettre au Conseil; celui-ci vient de
recevoir ses propositions.

Conformement a ces propositions, le Conseil, en ajoutant les stipulations mentionnees cidessous, approuve le projet presenter Protocoles N °' I, II et annexes et III.

Il consent a accepter les responsabilites qui en decoulent et recommande l'adhesion aux
Protocoles I et II a tout Etat desireux d'aider a la reconstruction de l'Autriche en prenant une
part dans le projet en question.
Le Conseil invite la Sous-Commission autrichienne a continuer a surveiller le developpement
de la situation, afin de lui adresser un rapport chaque fois que le besoin s'en fera sentir.
La Sous-Commission est priee de designer sans retard le Commissaire general mentionne aux
Protocoles N °' II et III en vue de ratification par le Conseil, et it est entendu que ce Commissaire
general ne devrait pas appartenir a l'une des quatre Principales Puissances participant a l'emprunt,
ni a l'un des pays voisins de l'Autriche.
Sur la proposition des Puissances garantes, signataires du Protocole No II, le Conseil decide
que la presidence du Comite de contrOle des Puissances garantes appartiendra, aussi longtemps
que durera le systeme de contrOle (Writ dans les Protocoles II et III, au membre italien de la Commission et la vice-presidence au membre tchecoslovaque.
Le texte francais des protocoles et annexes fera foi.

C. 693. M. 410. 1922.
October 3rd, 1922.


Protocol No.




Of the one part,
At the moment of undertaking to assist Austria in her work of economic and financial
Acting solely in the interests of Austria and of the general peace, and in accordance with the
obligations which they assumed when they agreed to become Members of the League of Nations,
Solemnly declare :
That they will respect the political independence, the territorial integrity and the sovereignty
of Austria;
That they will not seek to obtain any special or exclusive economic or financial advantage
calculated directly or indirectly to compromise that independence;
That they will abstain from any act which might be contrary to the spirit of the conventions
which will be drawn up in common with a view to effecting the economic and financial reconstruction of Austria, or which might prejudicially affect the guarantees demanded by the Powers

for the protection of the interests of the creditors and of the guarantor States;
And that, with a view to ensuring the respect of these principles by all nations, they will,
should occasion arise, appeal, in accordance with the regulations contained in the Covenant of
the League of Nations, either individually or collectively, to the Council of the League, in order
that the latter may consider what measures should be taken, and that they will conform to the
decisions of the said Council;

Of the other part,
Undertakes, in accordance with the terms of Article 88 of the Treaty of St. Germain, not to
alienate its independence; it will abstain from any negotiations or from any economic or financial
engagement calculated directly or indirectly to compromise this independence.
This undertaking shall not prevent Austria from maintaining, subject to the provisions of the
Treaty of St. Germain, her freedom in the matter of customs tariffs and commercial or financial
agreements, and in general, in all matters relating to her economic regime or her commercial
relations, provided always that she shall not violate her economic independence by granting to
any State a special regime or exclusive advantages calculated to threaten this independence.
The present Protocol shall remain open for signature by all the States which desire to adhere
to it.
In witness whereof the undersigned, duly authorised for this purpose, have signed the present
Declaration (Protocol I).
Done at Geneva in a single copy, which shall be deposited with the Secretariat of the League
of Nations and shall be registered by it without delay, on the fourth day of October one thousand
nine hundred and twenty-two.

[Here follow the signatures.]

Membres du Conseil.]

C. 693. III. 410.



le 3 octobre 1922.



Protocole N° I.



D'une part,
Au moment oiI ils entreprennent d'aider l'Autriche dans son oeuvre de restauration economique et financiere,
Agissant uniquement dans l'interet de l'Autriche et de la paix generale et d'accord avec les
engagements qu'ils ont déjà pris quand ils ont accepte de devenir Membres de la Societe des Nations,
Declarent solennellement :

Qu'ils respecteront l'independance politique, l'integrite territoriale et la souverainete de

Qu'ils ne chercheront aucun avantage special ou exclusif d'ordre economique ou financier
de nature a compromettre directement ou indirectement cette independance;
s'abstiendront de toute action qui pourrait etre contraire a l'esprit des conventions
qui seront stipulees en commun pour la reconstruction economique et financiere de l'Autriche ou
qui pourrait porter prejudice aux garanties que les Puissances auront stipulees pour sauvegarder
les interets des creanciers et des Etats garants;
Et que, le cas echeant, en vue d'assurer le respect de ces principes par toutes les nations, ils
s'adresseront, en conformite avec les regles du Pacte de la Societe des Nations, soit individuellement, soit collectivement, au Conseil de la Societe pour qu'il avise aux mesures a prendre et
qu'ils se conformeront aux decisions dudit Conseil.

D'autre pal t,
S'engage, dans les termes de l'article 88 du Traite de Saint-Germain, a ne pas aliener son
independance; it s'abstiendra de toute negociation et de tout engagement economique ou financier qui serait de nature a compromettre directement ou indirectement cette independance.
Cet engagement ne s'oppose pas a ce que l'Autriche conserve, sous reserve des dispositions
du Traite de Saint-Germain, sa liberte en matiere de tarifs douaniers et d'accords commerciaux
ou financiers et, en general, pour tout ce qui touche a son regime economique ou a ses relations
commerciales, etant entendu, toutefois, qu'eile ne pourra porter atteinte a son independance economique par l'octroi a un Etat quelconque d'un regime special ou d'avantages exclusifs, de nature
a menacer cette independance.

Le present Protocole restera ouvert a la signature de tons les Etats qui voudront y adherer.
En foi de gut i, les soussignes, dfiment autorises a cet effet, ont sign la presente Declaration
(Protocole I).

Fait a Geneve, en un seul exemplaire, qui restera depose au Secretariat de la Societe des
Nations et sera par lui immediatement enregistre, le quatre octobre mil neuf cent vingt-deux.
(Signd) BALFOUR.

(Sign) SEIPEL.


Pour co pie conlorme :

Directeur de la Section Juridique du Secretariat de la Societe des Nations.

C. 694. M. 411. 1922.


auirembres du Conseil.]


le 3 octobre 1922.


Protocole N° II.
En vue

l'Autriche dans son ceuvre de restauration economique et financiere, les


d'un commun accord les dispositions suivantes:

Le Gouvernement autrichien pourra creer, sous la garantie resultant de la presente Convention, la quantite de titres necessaires pour produire une somme effective equivalente au maximum
a 650 millions de couronnes-or. Le capital et les interets des titres ainsi emis seront exempts de
tous imptits, droits ou charges au profit de 1'Etat autrichien.

Les frais d'emission, de negociations, de remise seront ajoutes au capital de l'emprunt fixe
dans l'article precedent.

Le service des interets et de l'amortissement de l'emprunt sera assure au moyen d'une annuite
fournie par les revenus affectes en garantie de cet emprunt d'apres les dispositions contenues dans
le Protocole No III.

Le produit de cet emprunt ne pourra etre employe que sous l'autorite du Commissaire general
design par le Conseil de la Societe des Nations et conformement aux obligations contractees par
le Gouvernement autrichien et contenues dans le Protocole No III.

Les Gouvernements britannique, francais, italien, tchecoslovaque, sans prejudice des autres
Gouvernements qui accederaient a la presente Convention, s'engagent a demander sans deg a
leur Parlement l'autorisation de garantir - sous reserve de l'approbation par le Parlement autrichien du Protocole No III et du vote par ce Parlement de la loi prevue a l'article 3 de ce Protocole -

le service de l'annuite de cet emprunt jusqu'a concurrence d'un maximum de 84 pour cent a
repartir suivant arrangements speciaux entre les interesses.

Chacun des quatre Gouvernements aura la faculte de designer un representant au Comite
de controle dont les attributions sont fixees par les dispositions suivantes. Chacun de ces represen-

tants disposera de 20 voix. Les Gouvernements qui accepteraient de garantir le reliquat de
l'annuite non couverte par la garantie des Gouvernements britannique, francais, italien et
tchecoslovaque auront egalement la faculte de designer soit chacun un representant, soit de s'entendre pour designer des representants communs. Chaque representant aura une voix par fraction
de i % garantie par son Gouvernement.

Les modes d'application de la garantie, les conditions de l'emprunt, prix d'6mission, taux
d'interet, amortissement, frais d'emission, de negociations et de remise devront etre soumis
l'approbation du Comite de controle des Etats garants. Le chiffre de l'annuite necessaire all service des interets et de l'amoitissement de l'emprunt sera egalement approuve par le Comite de
controle. Tout emprunt projete par le Gouvernement autrichien, en dehors des conditions du programme vise au Protocole No III, devra etre soumis a l'approbation prealable du Comite de controle.


ole determinera les conditions dans lesquelles devraient etre effectuev
ments si la garantie etait mise en action, ainsi que le mode de remboure

contrats d'emission, le Gouvernement autrichien aura le droit d'operer
ts avec l'assentiment du Comite de controle; it sera tenu d'exercer cette
te par le Cornite de controle.

e aura le droit d'exiger la production de situations et comptes periodiques
ments de caractere urgent sur la gestion des revenus affect& en garantie;
mmissaire general les modifications administratives et ameliorations
productivite. Les modifications de tarifs de ces recettes, qui seraient de
ement global minimum, &value en or, tel qu'il sera arrete avant l'emission
r les annuli& necessaires, devront etre soumises al'approbation prealable
en sera de meme pour les projets de contrats de concession ou d'afferARTICLE II.

ent des revenus affectes serait insuffisant et risquerait de mettre en action
ments, le Comite de controle pourra requerir l'affectation d'autres revenus
au service de l'annuite.
u de contrat de nature a modifier notablement la consistance du domaine

communiqué au Comite trois semaines avant gue l'acte ne devienne

e se reunira periodiquement a telles dates qu'il fixei a lui-meme, de prefe
te des Nations. Il ne pourra communiquer qu'avec le Commissaire general;
se fain representer aux reunions du Comae de controle. Les decisions de
a maj °rite absolue des voix presentes; toutefois, une majorite de deux tiers
quise pour les decisions relatives aux articles 7 et 8.
le sera con vogue en session extraordinaire sur une demande reunissant

ole ou chacun de ses membres pourra demander tous renseignements et
boration du programme de reformes financieres et sur son execution. Le
u Commissaire general toutes observations et lui faire toutes representaues necessaires pour sauvegarder les interets des Gouvernements garants.

mite de controle ou tout Etat garant pourra adresser un recours au Conseil
qui se prononcera sans (Mai.

concernant l'interpretation de ce Protocole, les parties accepteront l'avis
des Nations.
ussignes dfiment autorises a cet effet ont signe le present Protocole.

eul exemplaire, qui restera depose au Secretariat de la Societe des Nations
ment enregistre, le quatre octobre mil neuf cent vingt-deux.





Federal Reserve Bank of St. Louis

(Signe) SEIPEL.


C. 694. M. 411. 1922


Protocol No. ll

With the object of assisting Austria in the work of her e


consent drawn up the following provsions:

The Austrian Government may create, under the guaran

tion, the amount of securities necessary to yield an effect
65o millions of gold crowns. The capital and interest of the
all taxes, dues or charges for. the benefit of the Austrian St

The expenses of issue, of negotiation and of delivery, sh
as fixed under the preceding Article.

The service of the interest and amortisation of the loan s

provided by the revenues assigned as security for this loa
contained in Protocol No. III.

The yield of the loan may not be employed except unde
General appointed by the Council of the League of Nations a

contracted by the Austrian Government and set out in Pro

The Brtsh, French Italian and Czechoslovak over
by other Governments which may accede to the present C

delay from their Parliaments authority to guarantee (su

Austrian Parliament of Protocol No. III, and to the voting b
plated in Article 3 of the said Protocol) the service of the a
of 84 per cent., to be shared under special arrangements be

Each of the four Governments shall have power to appoint a repre
of Control the functions of which are determined by the provisions s
repre,sentative shall have twenty votes. Those Governments which m

remainder of the annuity which is not covered by the guarante

Italian and Czechoslovak Governments, shall in like manner have p
representative each, or to agree among themselves to appoint comm
representative shall have one vote for every % guaranteed by his G

The method of application the uarantee, the conditions of th
rate of interest, the amortisation, the expenses of issue, of negotiatio
submitted for the approval of the Committee of Control constitute
The amount of the annuity necessary for the service of interest and am
likewise be approved by the Committee of Control. Every loan propos
ment, and not falling within the conditions of the programme contem
shall first be submitted for the approval of the Committee of Contr


The Committee of Control shall determine the conditions under which the advances by ths.
Governments should be effected in the event of the guarantee coming into operation, and tN.
method of repaying such advances.

Within the limits fixed by the contracts under which they are issued, the Austrian Government shall have the right to effect conversion of the loans with the consent of the Committee
of Control; it shall be obliged to exercise this power on the request of the Committee of Control.

The Committee of Control shall have the right to require the production of periodical statements and accounts and any other information urgently needed in regard to the administration
of the revenues assigned as security; it may bring to the attention of the Commissioner-General
any administrative changes and improvements calculated to increase their productivity. Any
changes in the rates producing such revenues which might be such as to reduce their minimum
total yield, expressed in gold, as this may be determined before the issue of the loans in order to
provide the necessary annuities, shall first be submitted for the approval of the Committee of
Control. The same rule shall apply to proposed contracts for the concession or farming out of

those revenues.


Tn case the yield of the assigned revenues should be insufficient and should involve a possibility
of bringing into operation the guarantee of the Governments; the Committee of Control may require
that other revenues sufficient to meet the service of the annuity shall be assigned as security.

Any draft instrument or contract which is likely materially to change the nature, condition
or administration of the public domain of Austria shall be communicated to the Committee three
we ks before the instrument becomes final.

The Committee of Control shall meet from time to time at such dates as it may itself determine,

preferably at the seat of the League of Nations. It shall communicate only with the Commissioner-General, who shall be present or shall be represented at the meetings of the Committee of
Control. The decisions of the Committee shall be taken by an absolute majority of the votes
present; provided always that a majority of two-thirds of the votes present shall be required for
any decisions under Articles 7 and 8.
An extraordinary meeting of the Committee of Control shall be convened on a request supported by not less than ten votes.

The Committee of Control, or any one of its members, may demand any information or explan-

ations as to the elaboration and the execution of the programme of financial reform. The Committee may address any observations or make any representations to the Commissioner-General
which it recognises to be necessary to safeguard the interests of the guarantor Governments.

In the event of abuse, the Committee of Control or any guarantor State may appeal to the
Council of the League of Nations, which shall give its decision without delay.

In the event of any difference as to the interpretation of this Protocol, the parties will accept
the opinion of the Council of the League of Nations.

In faith whereof the undersigned, duly authorised for this purpose, have signed the present


Done at Geneva in a single copy, which shall be deposited with the Secretariat of the League

of Nations and shall be registered by it without delay, on the fourth day of October, one
thousand nine hundred and twenty-two.

[Here follow the signatures.]



La repartition de la garantie entre les quatre Gouvernements britannique, francais, italit
et tchecoslovaque, prevue par l'article 5 du protocole II et le paragraphe 2 du preambule, aura lieu
conformement aux dispositions suivantes:

i. La garantie des annuites correspondant a la somme de 13o millions, necessaire pour le
remboursement des avances vise au paragraphe premier du preambule, sera repartie par tiers
entre les trois Gouvernements britannique, francais et tchecoslovaque.
2. La somme necessaire au remboursement du credit tchecoslovaque s'elevant a environ
8o millions de couronnes-or, le Gouvemement tchecoslovaque s'engage a limiter a 6o millions de

couronnes-or le montant du remboursement auquel it aura droit sur le produit de l'emprunt.

Il acceptera en paiement de cette part de 6o millions des titres de l'emprunt emis en sus du montant des souscriptions effectives. Quant au solde de cette creance, it se contentera pour le couvrir
de bons libelles en couronnes tchecoslovaques et jouissant des memes droits et gages que les titres
de l'emprunt; mais it est entendu que ces bons ne beneficieront pas de la garantie des autres Gouvernements et pourront etre emis en excedent du chiffre de 650 millions.
Le Gouvemement britannique et le Gouvemement francais, qui ont droit, aux termes de leurs
contrats, au remboursement total du montant de leurs avances sur le produit du premier emprunt,
acceptent un bareme de remboursement progressif faisant porter sur les dernieres tranches d'emprunt la plus grande partie de la charge du remboursement.
L'Italie aura droit au remboursement sur le produit de l'emprunt, conformement a un bareme
de paiement identique a celui adopte pour la creance anglaise de la part de son avance qui n'aura
pas ete recouvree apres avoir ete employee aux termes de l'annexe A. En cas de mise en action de
la garantie, l'Italie, en ce qui concerne la garantie de 13o millions, supportera seulement la charge

afferente a la part de l'annuite de l'emprunt correspondant au montant des remboursements
auxquels elle a droit.
Dans la mesure of l'Italie sera amen& a assumer ainsi une partie de la garantie des 13o millions, la part de garantie de la France, de la Tchecoslovaquie et de la Grande-Bretagne sera diminuee d'autant.

Fail a Geneve le quatre octobre mil neuf cent vingt-deux.

(Signd) BALFOUR.



Pour cobie conforme:

Directeur de la Section juridique
du Secretariat de la Societe des Nations.

De la comparaison de l'article 5 du Protocole No. II (fixant au maximum de 84 % la garantie

des quatre Gouvernements a repartir suivant arrangement) du Preambule et de l'annexe B, it
ressort :

Que chacun des quatre Gouvernements s'engage a garantir chacun 20 % de l'annuite correspondante au capital emprunte pour faire face au deficit de 520 millions;

Que la repartition de la garantie sur l'excedent de l'annuite correspondant a la difference
de 13o millions entre le total de 650 et cette somme de 520 millions sera reglee conformement
l'annexe B.

Geneve, le 4 octobre 1922.
(Signe) BALFOUR.


C. 694. M. 411. (Annexes) 1922


The apportionment of the guarantee between the four Governments, British, French, Italian
and Czechoslovak, provided for in Article 5 of Protocol II and paragraph 2 of the preamble shall
take place in accordance with the following provisions :1. The guarantee of the annuities corresponding to the sum of 130 millions required for
the reimbursement of the advances referred to in the first paragraph of the preamble, shall be
apportioned as to one-third to each of the British, French and Czechoslovak Governments.

2. With regard to the sum required for the reimbursement of the Czechoslovak credit,
amounting to about 8o million gold crowns, the Czechoslovak Government undertakes to
limit to 6o million gold crowns the total of the reimbursement which it will have the right
to claim from the proceeds of the loan. It will accept in payment of this share of 6o millions,

bonds of this loan issued over and above the total of the effective subscriptions. With regard to
the balance of this claim, it will be satisfied that it should be covered by securities in Czechoslovak
crowns and enjoying the same rights and guarantees as the bonds of the loan, but it is understood

that these securities shall not benefit by the guarantee of the other Governments, and may be
issued in excess of the sum of 65o millions.
The British and French Governments, which are entitled, by the terms of their contracts, to

complete reimbursement of the amount of their advances out of the proceeds of the first loan,
accept a scale of progressive repayment, charging the larger part of the repayment on the later
instalments of the loan.
Italy shall have the right of reimbursement out of the proceeds of the loan in accordance
with a scale of payment identical with that adopted for the English claim, on that part of its
advance which shall not have been repaid after having been utilised in accordance with the terms
in Annex A.

In the case of the guarantee coming into force, Italy shall, in respect of the guarantee
of the 13o millions, be responsible only for the liability appertaining to that part of the annuity
of the loan which corresponds to the total.
To the extent to which Italy shall thus be led to assume a portion of the guarantee of the
13o millions, the share of the guarantee borne by France, Czechoslovakia and Great Britain shall
be correspondingly diminished.

Done at Geneva, the fourth day of October, one thousand nine hundred and twenty-two.
[Here follow the signatures.]

From a comparison of Article 5 of Protocol No. II (which fixes at a amximum of 84% the
guarantee to be given by the four Governments and to be apportioned as may be arranged) with

the Preamble and with Annex B, it follows :-

That each of the four Governments undertakes to guarantee 2o% of the annuity corresponding
to the capital of the loan floated to meet the deficit of 52o millions;
That the apportionment of the guarantee for the remainder of the annuity, which corresponds
to the difference (13o millions) between the total of 65o and this sum of 52o millions, will be
made in accordance with Annex B.

[Here follow the signatures.]

Geneva, October 4th, 1922.



C. 695. 1922.

-2deem it necessary, other specific assets determined in agreement with him. It will not takipny
measure which in the opinion of the Commissioner-General would be such as to diminish the value
of such assets so as to threaten the security of the creditors and of the guarantor States. In par tk

cular, the Austrian Government may not, without the approval of the Commissioner-Generir
introduce into the rates producing the revenues assigned as security any changes which might
be such as to reduce their minimum total yield expressed in gold as this may be determined, before

the issue of the loans, in order to provide for the necessary annuities.
The yield of the gross revenues assigned as security will be paid into a special account, as
and when collected, for the purpose of assuring the service of the annuity of the loans. The Commissioner General may alone control this account. The Commissioner. General may require such
modifications and improvements as may increase the productivity of the revenues assigned as
security. If, notwithstanding such representations, it should appear to him that the value of these
assets is seriously prejudiced by their management by the Austrian Government, he may require
that this management shall be transferred to a special administration, either by the constitution
of a Government monopoly, or by the grant of concessions of or leases.
6 (a). The Austrian Government undertakes to grant no concessions which, in the opinion
of the Commissioner-General, might be such as to compromise the execution of the programme
of reforms.

(b) The Austrian Government will surrender all right to issue paper money and will not
negotiate or conclude loans except in conformity with the programme above set out and with
the authorisation of the Commissioner-General. If the Austrian Government should consider

itself obliged to envisage the issue of loans not covered by the conditions of the programme contem-

plated in this Protocol, it would first submit such plans for the approval of the CommissionerGeneral and of the Committee of Control.
(c) The Austrian Government will ask its Parliament to make such modifications as are
considered necessary, in accordance with the report of the Financial Committee (Annex), both
in the statutes of the Bank of Issue and, should the occasion arise, in the Law of July 24th, 1922
(Bulletin des Lois No. 490). The statutes of the Bank of Issue shall assure it complete autonomy
in its relations with the Government. The Bank should be responsible for the cash transactions
of the State, it should centralise the Government's receipts and payments and should furnish
periodical financial statements at the dates and in the form which may be determined in agreement with the Commissioner-General.
(d) The Austrian Government will take and carry out all decisions necessary for the full
realisation of the programme of reforms, including all necessary administrative reforms and the
indispensable alterations in the legislation.
7. The Austrian Government will take all measures necessary to ensure the maintenance
of public order.
8. All obligations defined above relating to the functions of the Commissioner-General
or to financial or administrative reforms, so far as they relate to a period subsequent to January
1st, 1923, are conditional and shall not become finally binding until the British, French, Italian
and Czechoslovak Governments have confirmed their promised guarantees by the approval of their
respective Parliaments.
Nevertheless, the Austrian Government definitely undertakes :
(a) to take as from the present date all measures in its power to reduce the deficit;
these measures are to include, in particular, increases in the railway, postal and telegraphic
rates, and in the sale prices of the products of the monopolies.

(b) to submit immediately to the Austrian Parliament the draft law contemplated
in paragraph (3), which will give for two years to the Government now in office, or to
any succeeding Government, full authority to take all measures which in its opinion may
be necessary to assure the re-establishment of budgetary equilibrium at the end of that

(c) to prepare immediately a programme of reform, to set in motion the necessary
legislative action and to apply the first measures of execution contemplated by the programme, between the present date and January 1st, 1923.
In the event of any difference as to the interpretation of this Protocol, the parties will accept
the opinion of the Council of the League of Nations.
The present Protocol shall be communicated to those States which have signed Protocol
No II signed at Geneva on October 4th, 1922.

In faith whereof the undersigned, duly authorised for this purpose, has signed the present
Done at Geneva in a single copy, which shall be deposited with the Secretariat of the League of

Nations, and shall be registered by it without delay the fourth day of October nineteen hundred
and twenty-two.

[Here follow the signatures.]

C. 695. 1922.
aux Membres du Conseil.]

le 3 octobre 1922.

Protocole N° III.

Le soussigne, agissant au nom du Gouvernement autrichien et dirment autorise a cet effet,
declare accepter les obligations qui suivent :

1. Le Gouvernement autrichien demandera au Parlement la ratification de la declaration
politique sign& par lui, qui fait l'obj et du Protocole No I.
2 Le Gouvernement autrichien etablira, dans le delai d'un mois, en collaboration soit avec
le Commissaire general, dont les attributions font l'obj et du paragraphe 4 ci-dessous, soit avec une
delegation provisoire du Conseil de la Societe des Nations, qui pourra etre nominee a cette fin,
un programme de reformes et d'assainissement a realiser par &tapes et destine a permettre a l'Au-

triche de retablir un equilibre permanent de son budget dans un Mai de deux ans et dont les
lignes d'ensemble ont ete trades dans le rapport du Comite financier (Annexe). Ce programme
devra mettre l'Autriche en mesure de satisfaire a ses obligations par l'accroissement des recettes
et la reduction des depenses; it exclura tout recours a l'emprunt, sauf dans les conditions qui y
seront determinees; it interdira, aux termes des statuts a donner a la Banque d'emission qui sera
instituee, toute nouvelle inflation monetaire.
It devra, en outre, permettre a l'Autriche d'assurer sur des bases permanentes sa stabilite
financiere, par un ensemble de mesures tendant a une reforme economique generale. Le rapport
du Comite economique, qui traite de cet aspect du probleme, sera dfiment communiqué au Cornmissaire general.

Il est entendu qu'au cas ou le premier programme apparaitrait a l'usage comme insuffisant
pour retablir un equilibre permanent du budget dans un Mai de deux ans, le Gouvernement
autrichien devrait, en consultation avec le Commissaire general, y apporter les modifications
appropriees au resultat essentiel a atteindre. Le Gouvernement autrichien demandera au Parlement d'approuver le plan ci-dessus.
3. Le Gouvernement autrichien presentera immediatement au Parlement autrichien un proj et
de loi qui, pendant deux ans, donnera a tout Gouvernement qui serait alors aux affaires pleins
pouvoirs pour prendre, dans les limites de ce programme, toutes mesures qui, a son avis, seront
necessaires en vue d'assurer, a la fin de cette periode, le retablissement de l'equilibre budgetaire,
sans qu'il soit necessaire de recourir ulterieurement a une sanction nouvelle du Parlement.
4. L'Autriche accepte la nomination par le Conseil de la Societe des Nations d'un Commissaire general, qui sera responsable devant le Conseil et revocable par lui. Ses fonctions sont definies

dans leurs grandes lignes dans le rapport du Comite financier.
Il aura pour mission de requerir l'execution du programme de reformes et de veiller a son
execution. Le Commissaire general residera a, Vienne. II pourra s'adjoindre le personnel technique
necessaire. Les depenses du Commissaire general et de son service seront approuvees par le Conseil

et seront a la charge du Gouvernement autrichien. Le Commissaire general adressera tous les
mois au Conseil un rapport sur le progres des reformes et les resultats acquis. Ce rapport sera
communique sans Mai aux Membres du Comite de controle.
Le Gouvernement autrichien accepte de ne pouvoir disposer des fonds provenant des emprunts,

ni prodder aux operations destinees a escompter le resultat des emprunts, qu'avec l'autorisation
du Commissaire general, les conditions qui seront fixees par le Commissaire general pour accorder
cette autorisation ne devant avoir d'autre objet que d'assurer la realisation progressive du programme de reformes et d'eviter un avilissement des gages affect& au service de l'emprunt.
Si le Gouvernement autrichien estime que le Commissaire general a abuse de son autorite,
it pourra adresser un recours au Conseil de la Societe des Nations.
Les fonctions du Commissaire general prendront fin par decision du Conseil de la Societe des
Nations, quand celui-ci aura constate que la stabilite financiere de l'Autriche aura ete assuree,
sans prejudice du controle special des gages affectes au service de l'emprunt.
5. Le Gouvernement autrichien affectera comme gages a l'emprunt garanti les recettes brutes
des douanes et du monopole des tabacs et, au cas of le Commissaire general l'estimerait necessaire,

-2d'autres gages specifiques, d'accord avec lui. Il ne prendra aucune mesure qui, de l'avis du Ommissaire general, serait de nature a diminuer la valeur de ces gages de fawn a menacer la surete

des creanciers et des Etats garants. Le Gouvernement autrichien ne pourra notamment faiak
subir, sans l'approbation du Commissaire general, aux tarifs des recettes affectees en garanOr
des modifications qui seraient de nature a reduire leur rendement global minimum evalue en or,
tel qu'il sera arrete avant remission des emprunts pour couvrir les annuites necessaires.
Le produit des revenus bruts affectes en gage sera verse a un compte special au fur et a mesure
de leur perception, en vue d'assurer le service de rannuite des emprunts. Le Commissaire general
seul aura la disposition de ce compte. Le Commissaire general pourra requerir les modifications
et ameliorations de nature a accroitre la productivite des recettes affectees en garantie. Au cas
ou, malgre ces representations, la gestion du Gouvernement autrichien lui paraitrait compromettre
gravement la valeur de ces gages, it pourra requerir que cette gestion soit transferee a une administration speciale, soit par voie de mise en regie, soit par voie de concession ou d'affermage.
6. a) Le Gouvernement autrichien s'engage a ne pas accorder de concessions qui, selon l'avis
du Commissaire general, seraient de nature a compromettre l'execution du programme de reformes.
b) Le Gouvernement autrichien abandonnera tout droit d'emission de papier-monnaie et ne
negociera ni ne conclura d'emprunt, sinon conformement au programme defini ci-dessus et avec
l'autorisation du Commissaire general. Si le Gouvernement autrichien se croyait dans la necessite
d'envisager des emprunts en dehors des conditions du programme vise dans ce Protocole, it devra
soumettre ces projets a l'approbation prealable du Commissaire general et du Comite de controle.
c) Le Gouvernement autrichien demandera au Parlement les modifications jugees necessaires, en conformite avec le rapport du Comite financier (Annexe), aux statuts de la Banque
d'emission et, le cas echeant, a la loi du 24 juillet 1922 (Bulletin des Lois No 490). Les statuts de
la Banque d'emission devront lui assurer, vis-a-vis du Gouvernement, une pleine autonomie.
Elle devra exercer les fonctions de caissier de l'Etat, centraliser les operations de recettes et de
depenses et fournir des situations periodiques aux dates et dans la forme qui seront fixees d'accord
avec le Commissaire general.
d) Le Gouvernement autrichien prendra et executera toutes les decisions necessaires en vue
de realiser pleinement le programme d'assainissement, y compris les reformes administratives et les
transformations indispensables dans la legislation.

7. Le Gouvernement autrichien prendra toutes mesures en vue d'assurer le maintien de

l'ordre public.
Tous les engagements &finis ci-dessus, relatifs aux attributions du Commissaire general ou
a des reformes d'ordre financier ou administratif, dans la mesure oh ils se rapportent a une periode

posterieure au 1er janvier 1923, sont conditionnels et ne deviendront defmitifs que lorsque les

Gouvernements britannique, francais, italien et tchecoslovaque auront sanctionne leur promesse de
garantie par l'approbation de leurs parlements respectifs.
Toutefois, le Gouvernement autrichien s'engage definitivement :

a) A prendre des maintenant toutes les mesures en son pouvoir pour reduire le
deficit, ces mesures comportant en particulier un relevement des tarifs de chemins de
fer, des postes, des telegraphes et des prix de vente du produit des monopoles;
b) A presenter immediatement au Parlement autrichien le projet de loi vise au
paragraphe 3 qui, pendant deux ans, donnera au Gouvernement en exercice ou a tout Gouvernement qui lui succedera pleins pouvoirs pour prendre toutes mesures qui, a son sens,
seront necessaires en vue d'assurer, a la fin de cette periode, le retablissement de l'equilibre
c) A preparer immediatement un programme de reforme, a provoquer les mesures
legislatives necessaires, a appliquer les premieres mesures d'execution prevues dans ce
programme d'ici au ter janvier 1923.
En cas de differend concernant rinterpretation de ce Protocole, les parties accepteront l'avis
du Conseil de la Societe des Nations.
Le present Protocole sera communiqué aux Etats signataires du Protocole No II, signe a Geneve
le 4 octobre 1922.

En fci de quoi le soussigne, dilment autorise a cet effet, a signe le present Protocole.
Fait a Geneve en un seul exemplaire, qui restera depose au Secretariat de la Societe des Nations

et sera par lui immediatement enregistre, le quatre octobre mil neuf cent vingt-deux.

[Suivent les signatures.]

C. 692. M. 414. 1922.

aux Membres du Conseil.]


le 4 octobre 1922.


Socidte des Nations



League of Nations







- 3 -Question 2.
Le Comite financier est prig d'examiner quel est, calcule en or, le montant du deficit qu'il envisage
comme inevitable pendant la periode de transition.

Le Comite evalue le deficit total auquel it faut s'attendre, pour la periode transitoire de deux
annees, a 52o millions de couronnes-or, non compris la somme necessaire au remboursement de
certaines avances faites cette armee, ce qui porte le total a 65o millions de couronnes-or.
Afin de permettre la realisation des reformes, ce deficit doit etre couvert a l'aide de credits.
Cette evaluation est etablie d'apres le « budget normal » etabli ci-dessous, qui tient compte
des reformes precedemment envisagees:
Budget normal

Dette publique
Services administratifs
Assistance sociale

Millions de couronnes-or




devrait etre possible de couvrir, au bout de deux annees, ces 237 millions-or par des impots.

Ce chiffre ne correspond, en effet, qu'a. 40 couronnes-or par tete d'habitant et pourrait etre,
par la suite, augmente ; mais les difficult& qui resultent actuellement d'une assiette d'imposition,
toujours basse pendant une periode de depreciation, et celles d'un caractere different qu'entrainera

immediatement la stabilisation de la monnaie, rendent peu probable qu'on reussisse plus tot
a atteindre ce chiffre.
Question 3.
Quelles garanties l'Autriche peut-elle of /rir pour des credits prives, et quelle est la valeur approximative de ces gages ?

Les garanties les plus appropriees devraient, si les reformes administratives necessaires
etaient effectuees, donner le rendement annuel suivant :
En millions de couronnes-or

Forks et domaines



Les trois premieres de ces garanties sont affectees en gage pour la nouvelle banque d'emission,
d'apres les plans actuels du Gouvernement autrichien. Toutefois, d'apres des evaluations prudentes,

on peut estimer qu'il resterait, sur le produit des douanes, 28 millions disponibles comme gage
de second rang, outre les 40 millions provenant du monopole des tabacs, qui constituent une garan-

tie de premier rang.
De plus, le Comite estime (voir reponse a la question 4) que le projet relatif a la creation de la
nouvelle banque d'emission, peut sans danger etre modifie, de facon a laisser la totalite du produit
des douanes comme garantie de premier rang pour les credits necessaires a la periode de transition.

En outre, Pimp& fonder devrait, en cas d( besoin, avec les reformes necessaires, pouvoir
etre affecte en qualite de garantie supplementaire de premier rang.
Le service d'un emprunt pour le maximum de 650 millions de couronnes-or, ne depasserait

pas 70.000.000 de couronnes-or.
De l'avis unanime du Comite, les garanties couvrent donc largement les credits necessaires
a la periode de transition, mais a la condition essentielle que les reformes recommandees soient

executees (que les mesures necessaires soient prises pour donner au Gouvernement l'autorite
suffisante et inspirer a l'opinion publique la conviction qu'elles seront effectuecs) et que l'ordre
soit maintenu a l'exterieur comme a l'interieur.

-4Question 4.

prid de f ormuler son opinion sur le projet de creation d'une banque d' emis-

le projet de creation d'une banque d'emission constitue une partie
e des mesures necessaires a la reconstruction de l'Autriche.
stime que:
100.000.000 de francs-or est tout a fait exagere 30.000.000 devraient

t du capital de la banque et d'un taux raisonnable d'interet en affectant
emiere hypotheque, est une mesure qui devrait etre abandonnee. Cette
e si l'on adoptait les autres mesures prevues pour la reconstitution des

que doit etre fourth par des souscriptions privees. S'il est necessaire
la part de l'Etat devra, le plus tot possible, etre retrocedee a des parti-

le prevoyant que la nomination des directeurs et des directeurs-adjoints
exige confirmation du Gouvernement Federal, doit disparaitre.
er tout particulierement sur le fait que la banque d'emission ne pourra
isation du credit en Autriche, que si parallelement, les reformes enerblir l'equilibre du budget sont mises a execution (et si les credits indise transition sont obtenus) ; meme dans ce cas, la reussite definitive de

uree que si la situation economique est progressivement amelioree.
Question 5.
pent -on envisager les moyens de couvrir le deficit pendant la periode

r estime que le deficit a couvrir au moyen d'emprunts, au cours des
monte a environ 520 millions de couronnes-or, plus une somme pour
faites en 1922, ce qui porte le total a 650 millions de couronnes-or.
getaire qui, tout d'abord, doit etre convert en monnaie autrichienne,
re. On peut donc esperer que lorsque le credit interieur de l'Autriche

iderable du deficit pourra etre couvert au moyen d'emprunts interieurs.
est inexistant a l'heure actuelle; le recours aux emprunts, aussi bien int&

donc interdit, tart que les conditions financieres suivantes n'auront

autrichien doit immediatement (sans attendre la decision de la Societe
les mesures en son pouvoir pour empecher une augmentation du deficit
par exemple, un relevement des tarifs des chemins de fer, des postes,
hones, une augmentation des prix de vente pour les produits des mono-

role doit etre cr.& et mis en vigueur; le Gouvernement autrichien doit
sa cooperation pleine et entiere est acquise, en vue de permettre le
cette institution.
anes et le monopole des tabacs, sous reserve des ameliorations necesinistration, doivent etre constituees en gage des emprunts.
it autrichien depend, en outre, de l'adoption de diverses autres mesures
e d'Autriche du Conseil. Par exemple: la garantie de l'integrite territoutriche, sous les auspices de la Societe des Nations ; l'amelioration
internationales de l'Autriche et celle de son regime economique int&
gendarmerie bien organisee dans l'ensemble du territoire ; la creation
ojetee et la cessation de toute nouvelle emission de papier-monnaie.
ures auront ete prises et auront montre leur efficacite, it est raisonnable
redit propre de l'Autriche lui permettra d'emprunter, taut a. l'interieur
it vain d'esperer que ces reformes pourront entrer utilement en vigueur
e leur application, le Gouvernement et le peuple autrichiens ne peuvent
rtitude, la realisation de l'obj et final qu'ils se sont propose, a savoir:
ibre economique et financier. En outre, it faut parer immediatement
e exterieure necessaire pour se procurer par des emprunts les moyens
uvrir ce deficit, les gages indispensables ne seront pas reconstitues


di Le Comite financier est donc oblige de conclure qu'aucun programme de reconstitution de
l'Tutriche ne peut etre couronne de succes, a moins que certaines Puissances ne se declarent
Fetes a garantir les emprunts necessaires pour couvrir le deficit prevu. Il est etabli que ces garanties

peuvent etre accordees, dans la plupart des cas, qu'avec le consentement des Parlements des
Puissances garantes, mais si des promesses de garanties, subordonnees a une confirmation parkmentaire, pouvaient etre obtenues des maintenant, ces promesses fourniraient la base ext6rieure
de reconstitution du credit necessaire pour la mise en oeuvre des reformes. Les garanties doivent
correspondre au deficit global maximum, car it serait a la fois difficile et dangereux de se lancer dans

un programme general de reformes sans avoir l'assurance, des le debut, d'avoir les moyens suffisants. Ceci ne veut pas dire necessairement que les garanties aient a jouer pour la somme totale,
et it peut fres bien se faire que les garanties n'impliquent, le cas echeant, aucun debours en especes,
de la part des Puissances garantes. Si le programme de reforme reussit, it y a lieu d'esperer qu'il
sera possible de faire face a une certaine partie du deficit maximum, soit au moyen de ressources
interieures, soit en evitant d'avoir recours a des garanties exterieures, et que les recettes de l'Etat
autrichien suffiront largement a assurer le service des emprunts garantis, sans qu'il y ait lieu de
faire appel aux Puissances garantes. Mais it n'en est pas moins vrai que des garanties correspondant
au montant global du deficit constituent une condition prealable essentielle du succes. Plus le
nombre des Puissances garantes sera grand, plus la base de confiance sera large.
II. Passons maintenant a l'esquisse des mesures pratiques, destinees a faire face au deficit,
en partant de l'hypothese que les reformes indiquees plus haut ont ete commencees et que les
promesses de garantie pour le total du deficit ont et6 obtenues des differentes Puissances.
Cette époque de transition peut etre subdivisee en quatre 'Anodes :
Premiere periode. Dcpuis la promesse de garanties jusqu'au commencement du controle.

Pendant cette premiere 'Anode, ii est essentiel que le Gouvernement autrichien prenne
toutes les mesures possibles pour reduire le deficit, mais aucun autre changement dans la situation
actuelle ne sera possible au cours de cette periode.
Deuxieme periode. Depuis le commencement du controle jusqu'a la ratification des garanties
par les Parlements respectils, soit le 31 ddcembre 1922.

On suppose que la nouvelle banque d'emission ouvrira ses portes dans quelques semaines
et que le systeme de con.trole etabli sous les auspices de la Societe des Nations commencera a fonctionner. Nous estimons qu'une somme de 120 a 16o millions de couronnes-or sera necessaire pour
couvrir le deficit au cours de cette seconde periode.

Nous pensons que, dans la mesure ou cette somme ne sera pas couverte par la reserve se
trouvant a la disposition du Gouvernement autrichien au moment ou le contrOle commencera
a jouer, it sera possible de se procurer le complement de la facon suivante : sur la partie non &pens&
des credits francais, italien et tcheque, it reste disponible une somme totale qu'on estime, a la date
de ce rapport, s'elever a environ 45 millions de couronnes-or. Si les gouvernements preteurs sont

consentants, cette somme pourrait etre employee comme garantie partielle de bons du Tresor

a trois ou six mois (libelles en couronnes-or ou en une monnaie etrangere) qui seront emis en Autriche par le Gouvernement autrichien et achetes par les banques autrichiennes. Ces bons pourraient
etre garantis, en outre, par une premiere hypotheque sur les douanes et sur le monopole des tabacs.

Peut-etre, l'or qui appartient a l'ancienne Banque d'Autriche-Hongrie pourrait-il etre egalement
utilise temporairement comme garantie pour ces bons du Tresor, au lieu d'être depose a la nouvelle
Banque d'emission. La question de savoir quelle est la meilleure maniere d'utiliser cet or pourrait
etre resolue par un accord entre le Gouvernement et les banques, puisque celles-ci sont grandement
interessees dans la Banque d'dmission. On pourrait raisonnablement demander aux banques
autrichiennes d'accepter ces conditions a titre de collaboration au succes des reformes.
Troisieme periode. Depuis la ratification des garanties jusqu' a omission d'un emprunt

a long terme.

Des que les garanties des gouvernements existeront, it deviendra possible d'emettre des
bons du Tresor autrichien, en couronnes-or ou en monnaies etrangeres, sous reserve du droit de
remboursement sur le produit de l'emprunt proj ete ; ces bons pourront etre gages, soit comme ceux
de la deuxieme periode, soit sur la garantie des Puissances. Le mode de recours aux garanties
peut, de preference, etre discute a propos de la quatrieme periode. Il est important que les mesures
a prendre par les Parlements des Puissances garantes ne soient pas differees au dela du 31 decembre 1922.

Quatrieme periode. Depuis emission de l'emprunt jusqu' a la fin de la periode de transition,
31 ddcembre 1924.

Si l'un des gouvernements garants le prefere, it peut, naturellement, etre mis a meme de
preter directement de l'argent au Gouvernement autrichien sur ses propres ressources. Nous suppo-

-6sons toutefois que la plupart des gouvernements prefereront bonier leur assistance a l'octroi dare
garantie. Ces garanties pourraient etre accordees, sous l'une des trois formes suivantes :
a) Chacune des Puissances garantes pourrait assumer une responsabilite conjoins
et solidaire pour les emprunts autrichiens a emettre jusqu'aconcurrence d'un maximum de
650 millions de couronnes-or. Cette garantie permettrait le placement de ces emprunts
aux conditions les plus favorables, mais nous estimons qu'il est politiquement impossible
d'assurer une telle garantie conjointe et solidaire.

b) Chaque gouvernement pourrait garantir un emprunt a emettre par l'Autriche
ayant pour gages les avoirs autrichiens hypotheques, plus sa propre garantie, jusqu'a
concurrence d'un maximum donne qui constituerait une proportion determinee du
montant total necessaire: par exemple, en supposant que dix Puissances accordent une
telle garantie en proportions egales, it y aurait dix types d'emprunts autrichiens, tous
garantis par les memes avoirs autrichiens, mais garantis separement par les diverses

Puissances. Ce proj et restreindrait considerablement le marche des emprunts autrichiens
et retarderait de beaucoup la date a laquelle on peut esperer que le credit autrichien sera
assez fortement etabli pour que l'on puisse placer un emprunt autrichien sans garantie
c) * Les Puissances garantes pourraien' convenir de garantir une proportion determinee d'un seul emprunt autrichien qui serait emis en une ou plusieurs tranches, selon
les besoins: par exemple, en supposant de nouveau qu'il y efit dix Puissances donnant
leur garantie en proportions egales, chaque tranche serait garantie jusqu'a concurrence
de dix pour cent par chaque Puissance; les avoirs hypotheques garantiraient la totalite
de cette tranche d'emprunt, mais chacun des garants ne serait responsable que jusqu'a
concurrence de dix pour cent seulement.
Le Comite financier donne ses preferences a cette derniere solution, mais le jeu exact des garanties est une question qui peut plutot etre reglee par accord avec la maison d'emission ou le groupement des maisons d'emission, appeles a mener a bien le lancement meme d'un emprunt a long
terme. Une prompte decision sera toutefois necessaire en ce qui concerne la forme sous laquelle
les garanties devront etre appliquees a remission de bons du Tresor envisagee au cours de la troisieme periode.
Il n'est pas necessaire de pousser plus loin, a l'heure actuelle, ces details techniques. En y faisant allusion, notre but est seulement d'indiquer , d'une maniere generale, la nature des garanties
qui doivent etre demandees aux divers gouvernements et d'insister sur le fait que les lois autorisant ces garanties devront etre redigees en termes assez larges pour prevoir diverses eventualites.
Toutefois, nous sommes convaincus que, si ces garanties sont accordees, it n'y aura pas d'obstacles
insurmontables a ce que les emprunts necessaires soient places, en temps opportun, soit en Autriche,
soit sur les marches financiers hors d'Autriche, etant toujours bien entendu que le Gouvernement

et le peuple autrichiens auront demontre, dans l'intervalle, qu'ils meritent l'appui envi ag8, en
collaborant, par tous les moyens en leur pouvoir, a l'application efficace du plan de reforme et au
bon fonctionnement du systeme de controle etabli par la Societe des Nations.
Question 6.

Le Comae financier est prig d'exprimer son avis sur les conditions essentielles de tout controle
qui serait etabli pour rendre el fectives les recommandations fates par le Comae en vue du retablissement de l'equilibre bud getaire et du credit autrichiens.

Le controle doit avoir pour but d'assister le Gouvernemnt autrichien et de collaborer avec
lui dans r execution du programme de reformes radicales de la realisation desquelles depend la
possibilite d'emprunter.
Ce programme devrait titre prealablement adopts par le Gouvernement autrichien, sanctionne
par le Conseil de la Societe des Nations ou son Comite d'Autriche et vote par le Parlement autrichien. Mais it est juge necessaire que ce vote ne soit pas considers comme une simple approbation
generale de principe, ne dispensant pas le Gouvernement autrichien de venir solliciter les sanctions
legislatives pour les series de mesures de reorganisation d'economie et de taxation a prendre
pour l'execution de ce plan. Il devrait etre entendu que l'approbation initialeconfere au Gouvernement pleins pouvoirs pour prendre, d'accord avec le controle, les decisions de toute nature conformes au programme approuve et pour son execution.
Le programme, sanctionne par la Societe des Nations, serait d'ailleurs la charte du Controle,
la source de son autorite. Le Controle devrait en requerir r execution, mais it serait sans pouvoirs
pour exiger des mesures qui depasseraient les limites de ce programme ou seraient en contradiction avec lui.
Afin que le ContrOle soit mis en &tat de remplir sa mission, it aura le droit de fixer les
etats, situations ou rapports periodiques qui devront lui etre produits, de demander tous renseignements qu'il jugera utiles a toutes administrations, de prodder ou faire prodder a toutes
verifications d'ecritures, constatations sur place qu'il jugera opportunes. La banque d'emission,
caissier de l'Etat, devra centraliser toutes les operations comptables de recettes et de depenses


C'est cette troisierne alternative c) qui a tits adoptee par le Comite d'Autriche du Conseil.

-7riettre au Contro le des etats periodiques certifiant les recettes, les depenses et les soldes
teurs divers de 1'Etat autrichien.
NAucune operation d'emprunt, de quelque nature qu'elle soit, ne pourra etre effectuee sans
utorisation prealable du Controle.
Les produits des recettes affectees en gages aux differents emprunts et les produits de tous
les emprunts devront etre centralises a la Banque d'emission dans des comptes speciaux. Aucun



retrait de fonds au debit de ces comptes ne pourra etre opere sans l'autorisation prealable du Controle.

Question 7.

Le Comite financier est Arid de preparer un rapport Mead sur le inwle de controle a dtablir
en Autriche.

En reponse a ce desir, le Comite financier a l'honneur de porter a la connaissance du
Comae d'Autriche du Conseil les observations suivantes, auxquelles it s'est arrete a l'unanimite.
L'organisation d'un controle applicable a l'Autriche pose des problemes nouveaux pour la
solution desquels les precedents ne doivent titre invoques qu'avec precaution.
La mission du Contro le, telle que le Comite d'Autriche l'a deja definie, sur la proposition du
Comite financier, derive d'un programme revetu d'une double sanction : du Conseil de la Societe
des Nations et du Parlement autrichien.
Vis-à-vis du Gouvernement autrichien, muni des pleins pouvoirs pour l'application de ce
programme, le ContrOle est charge d'en requerir l'execution.
Il en resulte : 10 que la nomination et la revocation des agents de controle doivent etre reser\lees au Conseil de la Societe des Nations, sous l'autorite duquel doit etre poursuivie l'execution du
programme; 20 que le Conseil ne peut se desinteresser de cette execution, et que des rapport,'
periodiques doivent lui etre adresses sur les progres des reformes.
Mais le Conseil doit-il limiter la son role ?
II semble que si des insuffisances ou des abus etaient constates dans l'execution de ce programme, le Conseil doive demeurer l'autorite superieure pour en juger.
Mais it importe que la responsabilite des agents du ContrOle demeure entiere, et que l'on ne
tende pas, par des requetes incessantes ou injustifiees, a chercher a. immiscer le Conseil dans l'admi-

nistration financiere de l'Autriche. Ce n'est qu'en definissant d'une facon precise les cas oil l'on
ferait appel a la decision du Conseil et les interesses a qui ce droit d'appel serait accorde, que l'on
evitera ces inconvenients.
Parmi les interesses, on doit admettre en premiere ligne, le Gouvernement autrichien. Mais
on doit songer aussi aux droits des gouvernements garants. Ces derniers, en effet, ne peuvent

demeurer indifferents aux progres de la politique d'assainissement : celle-ci ecartera-t-elle ou aggravera-t-elle les risques de leur garantie ? Mais it doit etre bien entendu que seuls des abus de nature

compromettre la bonne execution du programme pourraient donner lieu a un appel.
Comment, d'autre part, les gouvernements garants seront-ils admis a surveiller leurs interets
engages par la bonne execution du programme de controle ?
Il semble, tout d'abord, qu'on ne puisse songer a confier l'exercice du controle a. des represen-

tants des gouvernements garants. Le controle, en effet, doit etre exerce sous la seule autorite
du Conseil de la Societe des Nations. Dans l'interet meme de l'Autriche, pour que le Conseil
puisse conserver librement son autorite superieure et son role d'arbitre, on ne peut songer a. confondre la mission de controle qui doit etre exercee en son nom et la representation des gouvernements interesses auxquels un droit d'appel est reconnu, mais on peut admettre que les representants des gouvernements garants, reunis en comite, auront le droit de suivre l'execution du
programme et de recevoir les renseignements necessaires pour les eclairer.
Comment seraient alors reglees les relations entre ce Comite et le ContrOle ?
Si le Conseil doit demeurer l'autorite supreme, it serait sans doute inopportun que ce Comae
siege en permanence aupres du controleur. Nous proposons donc que ce Comite ait des reunions
periodiques tous les 3 ou 6 mois par exemple, et de preference au siege de la Societe des Nations.
Dans une conference avec les agents du Controle, ce Comite serait a meme de leur demander tous

renseignements et explications, mais ii serait sans pouvoir pour leur donner des instructions.
Au cas oil des difficult& graves surgiraient ou un conflit naltrait a propos d'abus graves, le Conseil

serait appele a en arbitrer.

La question se pose alors de savoir si la mission de controle devrait etre confiee a un agent unique ou a un college. En vue de reduire au minimum les frais de controle et d'assurer une unite de vue

indispensable, un controleur unique serait hautement preferable; it pourrait d'ailleurs s'assurer
le concours de quelques assistants choisis en raison de leur competence technique.
Les frais de controle seraient arra& par une decision du Conseil de la Societe des Nations et
mis a la charge du budget autrichien.

Le controle prendrait fin par decision du Conseil de la Societe des Nations, quand

aurait constate que la stabilite financiere de l'Autriche aura ete assuree par l'execution des reformes,

sans prejudice du controle special des gages affect& au service de l'emprunt.





_3raising the total to 65o million gold crowns. To enable the reforms to be effected, this sum irt
be available from credits.

This estimate is based upon the following "normal budget", which allows for the ahoy.
Expenditure (normal budget'.

Public debt
Civil Service
Social assistance

Millions of gold crowns.



It should be possible to obtain 237 million gold crowns in taxation by the end of two years.
This amounts to only 4o gold crowns per head and should be ultimately capable of increase; but
the difficulties which now result from low assessment during a period of depreciation and those
of a different kind which follow immediately upon a stabilisation make the full attainment of this
figure at an earlier date improbable.

Question 3.
What securities can Austria oiler for private credits and what is their approximate gold value ?

The most suitable securities should, with the necessary administrative reforms, yield the
following annual returns:
Millions of gold crowns.
i. Forests and domains
3. Customs
4. Tobacco


Of these, the first three are assigned as security in connection with the new Bank of Issue
under the Austrian Government's plan for the Bank. On a conservative estimate, however, of
these claims, this would leave 28 millions of the Customs available as a second-rank security,
in addition to the 4o millions from the Tobacco Monopoly as a first-rank security.
Moreover, the Committee considers (see answer to Question 4) that the plan for the new Bank
of Issue can safely be modified so as to leave the whole of the Customs as a first-rank security for
the credits required for the transition period.

In addition, the imp& fonder should, if necessary, be available (with reform) as a further
first-rank security.
The service of a loan amounting even to the maximum of 65o million gold crowns should not
exceed about 70 million gold crowns.
In the unanimous opinion of the Committee, therefore, the securities are ample for the credits

required for the transition period, on the vital conditions that the reforms recommended are
carried through (and the necessary measures taken to ensure sufficient authority to give confidence that they will be carried through) and that external and internal order are assured.
Question 4.
The views of the Financial Committee are requested on the proposed Bank of Issue for Austria.

The Committee considers that the establishment of a Bank of Issue is a useful and indeed
vital part of the measures required for Austria's re-establishment.
The Committee considers, however, that :(a) The capital proposed, zoo million gold francs, is altogether excessive: 3o millions should

(b) The guarantee by the State of the capital of the Bank and of an adequate return upon
it, secured by a first charge on the customs, should be relinquished. This should be possible if
the other measures for the re-establishment of Austria's finances are adopted.
(c) The capital should be raised by private subscriptions. If public funds must be used the
public interests should be sold out to private holders at the earliest opportunity.
(d) The present provision that directors and substitutes elected by general meeting require
the confirmation of the Federal Government should be eliminated.
The Committee desires, however, to emphasise the fact that the Bank can only be of use in
re-establishing Austria's credit organisation if the drastic reforms required to establish budget
equilibrium are also taken (and the necessary credits for the transition period are obtained) ; and
that, even so, it cannot be permanently successful unless her economic position is also gradually


Question 5.


Under what conditions can means be proposed for covering the deficit during the period of transition ?

I. The Financial Committee estimated that the deficit to be covered by means of loans
during the first two years is in the neighbourhood of 520 million gold crowns, plus a sum to cover
certain advances made this year which raise the total to 65o million gold crowns. This is a budget
deficit and, in the first instance, it is Austrian currency, not foreign currency, which is required
to meet it. It may be expected, therefore, that, once Austria's internal credit is re-established,
a considerable proportion of the deficit will be covered by internal loans. But at present Austria's

credit is non-existent, and neither internal nor external borrowing is possible for her until the

following financial conditions have been satisfied :
1. The Austrian Government must forthwith (without waiting for any decision by the League
of Nations) take all measures within its power to prevent an increase of the deficit (such as raising
of railway, postal, telegraph, and telephone charges, increases in the prices at which the products

of the Tobacco and Salt Monopolies are sold, etc., etc.).
2. A Control must be organised and set to work, and evidence must be given of the full cooperation of the Austrian Government in securing its efficient functioning.
3. The Customs revenues and the Tobacco Monopoly, subject to the necessary improvements
in administration, must be allocated as security for loans.
The re-establishment of Austria's credit is further dependent on the adoption of various other
measures already under discussion by the Austrian Committee of the Council, such as: the guaran-

teeing of Austria's territorial and economic integrity, under the auspices of the League of
Nations; the improvement of Austria's economic international relations, as well as of her
internal economic structure; the establishment of an efficient gendarmery throughout Austria;
the establishment of the proposed Bank of Issue; and the cessation of new issues of paper

When all these measures have been taken and have proved their value, it is reasonable to
hope that Austria may be in a position to borrow, both internally and externally, on her own credit.
But it would be vain to expect that such reforms could be effectively initiated unless, at the time

of their initiation, the Austrian Government and people were able to look forward with some
certainty to the achievement of their final purpose of re-establishing financial and economic equilibrium. Moreover, the deficit begins to accrue at once, and the necessary credit on which loans
can be issued to provide ways and means for covering the deficit will not exist for many months,
unless some basis for credit is found from outside Austria.

The Financial Committee is, therefore, driven to the conclusion that a successful reconstruction
of Austria is impossible unless some of the Powers are prepared to guarantee the loans required
to cover the anticipated deficit. It is recognised that such guarantees cannot be given in most
cases without the consent of the Parliaments of the guaranteeing Powers, but, if promises of
guarantees subject to parliamentary confirmation can be secured at once, these would provide
the necessary basis of credit on which the initiation of the reforms depends. The guarantees must
cover the full maximum deficit, since it would be both difficult and perilous to embark on the full
programme of reform if the means for completing it were not visible from the beginning. This
does not necessarily mean that the guarantees for the whole sum will actually come into operation,
and it may well prove that the guarantees eventually involve no actual cash liability upon the
guarantors. If the reform programme succeeds, there is reason to hope that some part of the
maximum deficit can be provided internally or without external guarantees, and that the revenues
of the Austrian State will amply secure the service of the guaranteed loans without recourse to

the guarantors. But it remains true that guarantees covering the whole total are an essential
pre-requisite. The larger the number of guaranteeing Powers, the broader will be the basis of

II. We proceed now to sketch the practical steps to be taken to deal with the deficit, on the
assumption that the reforms indicated are initiated and promises of guarantees up to the total
of the deficit have been given by various Powers.
The period of transition can best be examined in four stages, viz.

First stage: from the Promise of Guarantees till the Initiation of the Control.

During the first stage, it is essential that the Austrian Government should take all possible
measures for reducing the deficit, but otherwise no change from present conditions will be possible.
Second stage: from the Initiation of the Control till the Ratification of the Guarantees by the respective
Parliaments, say, December 31st, 1922.

It is assumed that the new Bank of Issue will open its doors within a few weeks, and the
Cont of to be set up under the auspices of the League of Nations will begin to function. We estimate that from 120 to 160 million gold crowns will be required to cover the deficit during this
second period.

-5We believe that this sum can be met, so far as it is not covered by the reserve at the dispolal of

the Austrian Government at the moment of the initiation of the control, on the following Wes.
There are available out of the unspent portion of the French, Italian, and Czechoslovak cred,
sums understood at the date of this report to amount to about 45 million gold crowns.
If the lending Governments agree, these sums could be used as part security for three-or sixmonths Treasury Bills (expressed in gold crowns, or in some foreign currency) to be issued in
Austria by the Austrian Government and purchased by the Austrian Banks. The Bills might be
further secured by a first charge on the Customs and on the Tobacco Monopoly. Possibly the gold
belonging to the old Austro-Hungarian Bank might also temporarily be used as security for these
Treasury Bills, instead of being deposited in the new Bank of Issue. It would be a matter for arrangement between the Government and the Banks, which are largely concerned in the Bank of Issue,

which of the two uses for the gold is preferred. The Austrian Banks might reasonably be asked
to accept these conditions as their contribution to the success of the reforms.
Third stage : from Ratification of the Guarantees to the Issue of a Long-term Loan.

As soon as the Government guarantees become available, Austrian Treasury Bills in gold
crowns or foreign currencies can be issued, subject to right of redemption out of the proceeds of
the prospective loan, secured either as proposed during the second period or by the guarantees
of the Powers. The method of using the guarantees can best be discussed in connection with the
fourth period. It is important that action by the Parliaments of the guaranteeing Powers should
not be delayed beyond December 31st, 1922.
Fourth stage: from the Issue of the Loan to the End of the Transition Period, December 31st, 1924.

If any guaranteeing Government so prefers, it can, of course, obtain power to lend money
direct to the Austrian Government out of its own resources. We assume, however, that most Govern-

ments will prefer to confine their assistance to the grant of a guarantee. There are at least three
alternative forms under which such guarantees could be given:(a) Each of the guaranteeing Powers might assume a joint and several responsibility
for Austrian loans to be issued up to a maximum total of 65o million gold crowns. Such
a guarantee would ensure the placing of the loans on the most favourable terms, but
we are of opinion that it is politically impossible to secure such a joint and several guarantee.
(b) Each Government might guarantee a loan to be issued by Austria on the security

of the pledged Austrian assets, plus its own guarantee, up to a given maximum, which
would be an agreed proportion of the total required, e.g., supposing that ten Powers
agreed to give such guarantees in equal proportions, there would be ten types of Austrian
loans, all secured on the same Austrian assets but guaranteed separately by different
Powers. Such a plan would greatly restrict the market for Austrian loans and postpone
for a long period the date at which Austrian credit could be expected to be strong enough
for an Austrian loan to be placed without external guarantee.
* (c) The guaranteeing Powers might agree to guarantee an agreed proportion of a
single Austrian loan, issuable in one or more instalments as required, e. g . , supposing, again,

that there were ten Powers giving guarantees in equal proportions, each instalment
would be guaranteed as to 10 % by each Power, and while the pledged assets would be
security for the whole, the individual guarantors would be responsible to the extent
of io % only.
We are inclined to favour this alternative, but the exact application of the guarantees is a
matter which can best be determined by the issuing house, or group of issuing houses, which will
be called upon to carry through the actual operation of issuing a long-term loan. An early decision
will, however, be necessary as to the form in which the guarantees are to be applied to the issue
of Treasury Bills proposed during the third period.
It is unnecessary to pursue these technical details further at the present stage. Our object
in alluding to them is to indicate generally the nature of the guarantees which must be asked for
from the various Governments, and the necessity for the legislation which authorises such guarantees being drawn in terms sufficiently wide to cover various eventualities. We are convinced,
however, that, if such guarantees were given, there will be no insuperable obstacles in placing all
necessary loans in due course, either in Austria or in money markets outside Austria, provided
always that the Austrian Government and people have, in the meanwhile, proved that they are
deserving of the assistance proposed by contributing by all means in their power to the efficient
working of the reform plans and of the control established by the League of Nations.
Question 6.
The Financial Committee is requested to state its opinion as to the conditions which are essential
in any control that may be instituted in order to give effect to the recommendations made by the Committee with regard to the re-establishment of Austria's budget equilibrium and her credit.

* This third alternative (c) was the one adopted by the Austrian Committee of the Council.



lb The aim of the controlling authority should be to assist the Austrian Government and collaMate with it in carrying out the programme of radical reform upon the realisation of which depends
the possibility of borrowing.
This programme must be adopted in advance by the Austrian Government, sanctioned by the
Council of the League of Nations, or its Austrian Committee, and voted by the Austrian Parliament.

But the vote of the Austrian Parliament cannot be regarded as a mere approval of general principles, which will leave the Austrian Government under the obligation of applying for specific legislative authority to carry out the series of measures of reform, involving reduction of expenditure

and increase of taxation, which will have to be taken to put the plan into effect. The initial
approval should be clearly understood as conferring on the Government full powers to take decisions of every kind in agreement, with the Controlling Authority, provided that they are in conformity with the approved programme and are directed to giving effect to it.
This programme, which will have been sanctioned by the League of Nations, will, further,
become the charter of the Controlling Authority and the source of its powers. The Controlling
Authority's task will be to ensure that it is carried into effect, but it will have no mandate to insist
upon measures which go outside the limits of the programme, or are contradictory with it.
In order to be in a position to fulfil its mission, the Controlling Authority must have the right
to determine the nature and form of the accounts, statements or periodical returns which it will
require to be submitted to it; to ask for any information which it may regard as useful from any
departments of Government; to verify, or cause to be verified, any accounts which it may think fit;
and to make investigations on the spot if it so desires. The Bank of Issue, which will be the cashier
of the State, should centralise all the accounts of receipts and expenditure, and submit periodical
returns to the Controlling Authority, certifying receipts, expenditure and credit balances of the
various departments of the Austrian State. No borrowing operation of any kind should be carried
out without the prior authorisation of the Controlling Authority.
The produce of the revenues pledged for the various loans and the produce of any loans should
be placed to the credit of special accounts in the Bank of Issue, and such accounts should not be
allowed to be drawn upon without the prior authorisation of the Controlling Authority.
Question 7.
The Financial Committee is requested to draw up a detailed report on the nature of the Control
to be established in Austria.

In compliance with this desire, the Financial Committee has the honour to commend to the
attention of the Austrian Committee of the Council the following observations which express its
unanimous opinion.
The organisation of a form of control to be applied to Austria raises new problems, for the
solution of which precedents can only be appealed to with the greatest caution.

The functions of control, as the Austrian Committee has already defined them, on the
recommendation of the Financial Committee, are to be imposed in accordance with a detailed
scheme invested with a twofold authority: that of the Council of the League of Nations and
that of the Austrian Parliament.
As regards the Austrian Government, which is to be endowed with full powers to give effect
to this scheme, it is the duty of the Control Authority to insist upon the execution of the scheme.
Hence it follows that: (I) the appointment and the dismissal of the Agents of the Control
Authority must rest entirely in the hands of the Council of the League of Nations, under the
authority of which the execution of the scheme is to be carried out; and (2) that the Council
cannot regard the execution of the scheme as a matter with which it has no further concern, and
that periodical reports ought to be submitted to it setting out the progress of the work of reform.
It may, however, be asked whether the Council ought to confine its duties within these limits.
It would appear that, if defects or abuses should be ascertained in carrying out this scheme,
the Council should continue to be the supreme authority to consider them.
It is, however, desirable that the agents of the Control Authority should have undivided
responsibility, and that the Council should not be involved, as the result of constant or frivolous
petitions, in interference in the financial administration of Austria. Only by defining in accurate
terms the cases where an appeal can be made to the Council for a decision, and the party to whom
this right of appeal should be granted, will it prove possible to eliminate these disadvantages.
Among the parties interested, the first place must be given to the Austrian Government.
Consideration, however, should also be given to the rights of the guarantor Governments.
The latter, indeed, cannot remain indifferent to the progress of a policy which aims at healthier
conditions. They will wish to know whether the latter will have the effect of diminishing or increas-

ing the risks attaching to their guarantees, but it must be clearly understood that only abuses
which are of a nature to endanger the satisfactory execution of the programme should give rise to
an appeal.
How can the guarantor Governments be enabled to protect their interests, which demand that
the programme of supervision should be properly carried out ?



It would appear prima facie that the duty of supervision cannot be entrusted to repressigafives of the guarantor Governments. The supervision must be carried out under the conti of
the Council of the League of Nations alone. In the interests of Austria herself, in order that tag
Council may fully maintain its superior authority and carry out its role of arbiter, it would lir
impracticable to confuse the task of supervision, which is to be accomplished in its name, with the
representation of the Governments concerned, which possess a recognised right of appeal. It
would, however, be reasonable that the representatives of the guarantor Governments should
form a committee and should have the right to examine the execution of the programme and to
receive necessary information for their enlightenment.
What relations would in that case be established between this committee and the supervising
authority ?
If the Council is to remain the supreme authority, it would no doubt be undesirable that this
committee should be in daily communication with the Controller. We therefore propose that the
committee should meet periodically - every three or six months, for example - and for preference
at the seat of the League of Nations. In any conference with the representatives of the Control

Authority, the committee would be entitled to ask for any information or explanation, but they
would not have the right to give instructions. If any serious difficulties should arise, or should
there be any question of serious abuse, the Council would be called upon to arbitrate in the
The further question arises whether the duty of supervision should be entrusted to a single
agent or to a body of persons. In order to reduce to a minimum the expenses of Control and to ensure
the necessary uniformity of view, a single Controller would be highly preferable. It should be open

to him to secure the help of technical assistants.

The costs of Control would be fixed by a decision of the Council of the League of Nations, and

would be charged upon the Austrian budget.
The Control would come to an end, as a result of a decision of the Council of the League of
Nations, when that body was of opinion that the financial stability of Austria had been attained
by the execution of reforms, without prejudice to any special control of the guarantees given to
secure the interest on the loan.


The Financial Committee has necessarily confined its examination of the measures required
to re-establish Austrian finances within the sphere of financial considerations. It recognises that,
apart from these considerations, there remains the problem of the fundamental economic position
of Austria. Austria cannot permanently retain a sound financial position, even if she attains it
for the time, and maintain her present population, unless her production is so increased and adapted
as (with due allowance, of course, for her important invisible exports) to give her equilibrium also
in her trade balance.

This balance is at present seriously adverse, partly, but certainly not wholly, as a result of
inflation and currency dislocation. All possible measures, whether by the amelioration of the
international economic relations, the encouragement of the conditions which would increase
Vienna's entrepot, financial, and transit business, and of those which will attract further private
capital towards the development of her productive resources are, therefore, of the greatest importance.
These are, however, outside the Financial Committee's province. If the appropriate financial
policy is adopted and maintained, the Austrian economic position will adjust itself to an equilibrium, either by the increase of production and the transfer of large classes of its population to
economic work, or economic pressure will compel the population to emigrate or reduce it to destitution. At the worst, this would be better than the wholesale chaos and impoverishment of the
great mass of the town population which must result from the continuance of the present financial
disorganisation, which affords no basis for such economic adaptation as is possible.
The Committee feels bound, in conclusion, to issue one word of grave warning. Austria has for
three years been living largely upon public and private loans, which have voluntarily or involuntarily become gifts, upon private charity and upon losses of foreign speculators in the crown. Such
resources cannot, in any event, continue and be so used. Austria has been consuming much more
than she has produced. The large sums advanced, which should have been used for the re-establishment of her finances and for her economic reconstruction, have been used for current consumption.
Any new advances must be used for the purposes of reform; and within a short time Austria will
only be able to consume as much as she produces. The period of reform itself, even if the new
credits are forthcoming, will necessarily be a very painful one. The longer it is deferred the more
painful it must be. At the best, the conditions of life in Austria must be worse next year, when
she is painfully re-establishing her position, than last year, when she was devoting loans intended
for that purpose to current consumption without reform.
The alternative is not between continuing the conditions of life of last year or improving them.
It is between enduring a period of perhaps greater hardship than she has known since 1919 (but

-8wit the prospect of real amelioration - thereafter the happier alternative), or collapsing into a

chlbs of destitution and starvation to which there is no modern analogy outside Russia.
a There is no hope for Austria unless she is prepared to endure and support an authority which
u s t enforce reforms entailing harder conditions than those at present prevailing, knowing that
in this way only can she avoid an even worse fate.

The following members constituted the Financial Committee when studying the above




Mr. FASS (substitute for Sir Basil Blackett).
Temporary Members: M. Maggiorino FERRARIS.



*AD [Communicated to the Council.]

C. 726. 1923 II



November 3oth, 1923.

(Twelfth Session.)

1=tecolistr-uctior1 of Hungary.
Cove,ing Note from the Chairman ol the Financial Committee.

London, November 29th, 1923.


I have the honour to transmit the Report of the Financial Committee which was required
under the Decision of the Council dated September 29th last concerning the possibilities of a
loan for Hungary.
After having approved the enquiries carried out by the Secretariat at Budapest, the attached
Report was adopted unanimously by the members of the Financial Committee present at the
session, viz. M. Janssen, M. Niemeyer, M. Parmentier, M. Bianchini, M. Ter Meulen, M. Pospisil,
M. Sekiba, Sir Henry Strakosch.
I have etc.
(Signed) Alb. E. JANSSEN,
Chairman of the Financial Committee.

The President of the Council
of the League of Nations.

[F. ioi]
In accordance with the authority given by the Council Resolution of September 29th (made
operative by the Reparation Commission Decision of October 17th), the Financial Committee
has studied the question of the financial reconstruction of Hungary at its session of November
zoth to 28th.
Members of the Secretariat, in accordance with the same authority, had already visited
Budapest (accompanied by M. Bouniols of the Finance Service of the Reparation Commission)
from November 6th to 16th to undertake the necessary preliminary work.
The Committee has had the advantage both of the results of the work of the Secretariat at
Budapest and also of direct discussions with an authoritative Hungarian delegation including
the Minister of Finance (Dr. de Kallay), the Minister of Commerce (Dr WalkO), two ex-Ministers
of Finance (MM. Popovics and Teleszky) and the Hungarian Minister in Paris (Baron Koranyi)
and the Under-Secretary of State for Agriculture (Dr. Schandl).
On the basis of this information, the Financial Committee presents the following report.

The Hungarian problem (like the Austrian) is partly financial and partly economic.
The budget has been unbalanced. Expenses have exceeded receipts. The deficit has been
met by inflationary methods. The crown has fallen in value. This fall has, apart from its
other consequences, increased the deficit itself by reducing the real value of taxation receipts,
and, at the same time, has deprived Hungary of a basis on which her economic life could develop;
and the situation has thus proceeded in the vicious circle so familiar in the financial history of
Europe during the last few years.
At the same time, the trade balance of Hungary has been seriously adverse, largely, perhaps,
but not wholly, as a result of the falling exchange.
S. d. N. 970 (F)

990 (A) + 973 (F)

900 (A) 1243. Imp. Kondig.

-2Hungary cannot, of course, be in a sound situation until both her budget and financial

position and also her trade balance are satisfactory.

She must not only meet her public expendi-

ture by taxation but she must produce (and dispose of) as much as she consumes.
Before this double problem, financial and budgetary on the one hand and economic on the
other, the League must clearly limit and define its role.
The Financial Committee has no hesitation in recommending that, as in the case of Austria,
any financial operations for which the League undertakes any responsibility should be definitely
and expressly limited to remedying the budgetary, and therefore the financial, position. The
scheme recommended below is essentially one to enable the fall of the crown to be at once arrested

and its value maintained; it contemplates a balanced budget after a limited period of reform;
and it proposes a loan for the purpose - and the sole purpose - of covering the deficit during
this period. It is true that the Hungarian trade balance needs improving; but the necessary
economic adaptation must be effected by Hungary herself. The essential contribution of the
proposed scheme is to give a stable basis on which this adaptation can take place. It is true
that the country needs liquid capital for the purpose of developing its national resources. But

this capital must come not by means of a loan to the Government secured on national
revenues but through natural and private channels under the attraction of the economic
prospects of Hungary. The contribution the scheme makes is to offer stability and security
in the financial basis of the country, which will allow these prospects of economic development to have their full attractive force to foreign capital. It follows incidentally from this

fundamental conception that the shorter the period within which budget equilibrium can

be attained, and the smaller the amount of foreign money which must be devoted to this limited
but primary object, the quicker and better are the prospects of capital flowing in through private
channels to assist in Hungary's economic restoration and development.
This is not to suggest that the Committee considers the economic restoration as of secondary
importance, nor even that the League itself can do nothing to assist it
On the contrary, no purely financial scheme can save the situation unless, as may be hoped,
it forms the basis on which the country's economic life will develop; and one cardinal feature
of this is the freer interchange of goods between Hungary and her neighbours, in the arrangement
of which the League can perhaps give valuable assistance. This is, however, outside the direct
sphere of competence of the Financial Committee and not an actual part of the financial scheme
here proposed.
We propose to refer again to the economic question (see IX). For the moment we confine
ourselves to one general remark. In the case of Austria, there were fears - happily to all
appearance disproved by later events - that Austria, within the frontiers defined by the Treaty
of St. Germain, was essentially not "viable." In the case of such a country as Hungary, with its
rich natural resources and self-sufficiency in food, the position is entirely different. Adaptations
may be - will be - required. An economic policy adjusted to her conditions must be adopted.
Some changes in her economc life may well develop. Great improvements in the facilities for foreign

trade are required. But all these things are possible, and all will be facilitated by financial

Starting with this general conception, the Committee unanimously recommends the following
scheme as best adapted both to the needs of Hungary and to the practical possibilities of external

Its principles in main outline may be summarised as follows:

I. The stoppage of inflation with a view to the stabilisation of the Hungarian crown, this
being assisted by:
An independent Bank of Issue enjoying the monopoly of note issue;
III. The balance of the budget by June 3oth, 1926, so that thereafter current expenses will
be met by taxation without recourse to either inflation or loans;
IV. A reconstruction loan, secured by specific Hungarian revenues, to cover the deficit till
June 1926, so that inflation may be stopped without waiting till the budget is balanced (which
could probably never be achieved while inflation was still in progress) ;
v. A control through a Commissioner-General appointed by, and solely responsible to, the
Council of the League, for the purpose of ensuring the due execution of the whole programme.
The success of the scheme so outlined requires:
vi. Satisfactory political relations between Hungary and her neighbours;
VII. Suitable arrangements with regard to her external obligations, particularly relief credits
and reparations.
And, to be ultimately successful, the scheme requires to be supplemented by:
vimm. Economic restoration and development and all the measures required to assist it, in particular commercial agreements with neighbouring countries.
We now proceed to describe the scheme proposed in greater detail.



It is essential, both in order to create the confidence without which the loan cannot be obtained

and also to ensure the conditions under which alone Hungary can proceed with the measures
required for her reconstruction, that all anxiety should be removed as to her political relations,
particularly with her immediate neighbours.
The Committee therefore presumes that a Protocol corresponding to the Austrian Protocol I
will be signed. The Committee confines itself to expressing its view that it is essential,
from the point of view of the prospects of the loan, that a Protocol of the kind referred to should
be signed and that modifications in the text, if any, should not be such as to weaken the general


The scheme aims at stabilising the value of the crown. This value must be its real value,
i.e. its real purchasing power. At the present moment attempts are made through the Devisenzentrale to maintain, for certain purposes, an official exchange rate which is much higher than
its real value. Such attempts must cease before the reconstruction plan can begin. The continuance of an official rate, different from the real value, by the side of the real rate used on the open
market would make all reconstruction impossible.
It is important that the abolition of a separate official rate should be effected as soon as pos-

sible, so that it shall cease to exercise an indirect influence on the free market rate, and so that
there may be every assurance, at the beginning of the reconstruction period, that the basis on
which stabilisation will be effected will be a basis of real value, i.e. the purchasing power of the
currency, undistorted by any artificial cause.
The first measure, therefore, which the Hungarian Government should take is the immediate
abolition of the present artificial quotation of the crown.
(Incidentally, we consider that the Hungarian Government would be well advised to proceed
towards the establishment of a completely free exchange market in accordance with the principles
approved by the Brussels Conference. The progressive abolition of restrictions should, moreover,
in our view, contemplate the termination of the Governmental control not only of the exchanges
but also of prohibitions of import and export. This is not only necessary for -economic reasons;
it is also clearly related to the problem of monetary stabilisation and the real value of the crown).
As the stoppage of inflation must precede the issue of an external loan, the problem of meeting
budget deficits in the interval requires careful consideration.
It will be convenient to recall here the main action which will be necessary before any external
loan can be negotiated.

The Council of the League must have approved the scheme, and the necessary Protocols

must have been signed.
The Reparation Commission must have agreed and have taken the requisite decisions with
regard to reparation (see X).

Arrangements must be made with regard to relief credits so as to secure the necessary

priority for the reconstruction loan (see X).
Hungary must have ratified and published the Protocols.
The Bank of Issue must be established (the Statutes drawn up and passed, the subscriptions
obtained) and have begun to function so that inflation shall have definitely ceased (see V).
A detailed programme of budget reform must be drawn up by the Hungarian Government
in agreement with a League Delegation, which must visit Budapest for the purpose; and the
Hungarian Parliament must have accepted this programme and given full powers for its execution
(see VIII).
The control must have been constituted and have begun to function.
It is of the utmost importance that the whole of the above action should be completed at
the latest before the end of February.

In the meantime, the Hungarian Government must meet the current deficits by internal

resources. This should include an internal short-term loan payable in paper crowns but repayable,
if necessary, in gold. So far as such a loan is devoted to meeting the normal budgetary deficit in the
first three months of 1924, it might be properly repayable out of the proceeds of the reconstruction

The subscribers might also be given, as in the case of Austria, preferential rights in the
allotment of shares in the Bank of Issue.
The detailed methods of finding resources for this interim period must be arranged by the
Hungarian Government in agreement with the League Delegation, which will go to Budapest to
arrange the programme of reform with the Government as soon as the necessary decisions have
been taken by the Council of the League and the Reparation Commission. The date suggested
above assumes the minimum of delay in all the prior action required. Much of this action, though
to be taken by different authorities, cannot be simultaneous. For example, Hungarian legislation
must wait till the Council and the Reparation Commission have taken their decisions.


-4Rapidity of action is therefore of the utmost importance. Any undue delay at any step

would postpone the date at which it would be possible to obtain proceeds from any external loan.
And this would have the serious results of both increasing the difficulties of meeting budget deficits
in the interval and of diminishing the general confidence in a successful issue to the scheme on
which the prospect of an external loan depends.

The main principles for the establishment of a Bank of Issue may be set out as follows:

i. The Bank must have the sole right of note issue.
The Government, the Provinces, and the Municipalities must have no right to issue notes
or borrow from the Bank.
If the Bank takes over the assets and liabilities of the existing Issuing Department, the
commercial portfolio included among its assets must be confined to such securities as the
Bank is allowed to include in its portfolio under its new Statutes.
2. The Bank must be a Central Bank, and its function should be mainly that of a bankers'

The Bank will guide the monetary policy of the country and fix the bank-rate.
It should aim at a policy tending to keep the value of the crown stable, neither attempting

an appreciation nor allowing a depreciation.
4. The main business of the Bank will consist in rediscounting commercial bills which correspond to real and normal transactions; these should have the endorsement of at least two
solvent persons and should in principle not have a longer currency than go days.
In no case should the Bank make, or be entitled to make, uncovered loans, or give long-term
credit whether on mortgage or by immobilising capital in any enterprise or in any manner
whatever (such as fixed capital, industrial securities, etc.).
5. The Bank shall act as cashier for the State.
Management and Control.

The Bank must be entirely independent of the Government.
Its capital should be subscribed entirely by private shareholders (a total share capital of
3o million gold crowns would seem sufficient).
If the Hungarian Government takes up certain shares in the first instance in return for
the provision of certain assets, these shares ought to be disposed of to private shareholders

as soon as possible.
7. The Board of Management should represent the economic interests of the country (industry,
commerce, agriculture, and finance).

It should be independent of all political influence, and the Government should take no
part in the administration.
8. In order to increase the confidence of potential lenders, it will be necessary temporarily
to associate with the Bank an Adviser. This Adviser might be appointed by
the Hungarian Government on the nomination of the Commissioner-General. He should
have a right of suspensive veto, every such veto being based on an article in the law or
statutes, with appeal to the Commissioner-General.
g. The provisions with regard to reserves should be strict, but at the same time such as to
allow a certain elasticity in case of necessity.
io. The Bank should publish every week a detailed statement of its position, which should
include the following items:
Notes in circulation.
(a) Governmental.
(b) Bankers'. '
Bills payable.
Other liabilities.


Metal reserve:
(a) Gold.
(b) Silver.
Token money.

Moneys and securities in stable foreign
Commercial bills,

warrants and other

Advances to the Government (amount
taken over from the former Institute
of Issue).
Other loans and advances.
Other assets:
(a) Buildings and furniture.
(b) Sundry accounts.



It is essential that the Bank of Issue should be in full operation when the programme of reconstruction comes into force. This will greatly facilitate the subscription of the necessary loan.
For this purpose the law providing for the creation of the Bank should be voted by the Hungarian Government at the same time as the ratification of the Protocols to be signed at Geneva.
It is desirable that the proposed statutes should at once be drafted by the Hungarian Government and submitted for the observations of the Financial Committee during its session in December.
The subscriptions for the capital of the Bank should be obtained at the earliest possible date
thereafter, and in any case before the negotiations for the external loan.
The Hungarian Government should then make a solemn declaration announcing the definite
termination of inflation. The present Issue Department should be abolished. The new Bank
of Issue would take over its assets and liabilities after adjustment of the accounts under an agreement with the Government; and the Bank should then at once take up its new duties.


We have examined with care and in detail the budget position as shown in the closed

accounts of 1922-23 and in the estimates for the current and following years.
We confine ourselves here to indicating our main conclusions without stating in detail the
considerations on which they are based.
While considerable economies in expenditure, to which we refer below, are possible in certain

directions, a net increase rather than reduction in terms of gold value must be anticipated as
compared with the expenditure of last year. A substantial increase in the yield of taxation is
therefore necessary.
The Hungarian tax revenue is now estimated to yield a little over 200 million gold crowns,
or about 27 gold crowns per head of population. The pre-war revenue within the territory of
present Hungary was at the rate of about 6o gold crowns per head of population; and even assuming
that the dislocation caused by the war has to a certain extent impaired the taxable capacity, we
think it ought to be possible within two years to raise the produce of taxes to 5o gold crowns per
A substantial part of this increase in yield may be expected from the automatically better
returns (in terms of gold value) from existing taxes (as in the case of Austria) when stabilisation of
the currency is effected. In addition, some increase in the rate of taxation is clearly possible.
We may mention particularly the imp& foncier. In citing this tax in particular we have in mind
the relief which land has obtained from mortgage charges by the depreciation of the crown ; the
further relief it has just obtained from charges recently weighing upon it in the form of export
taxes and prohibitions; and the further relief it may shortly expect to obtain, when stabilisation is
effected, by no longer having to hand over the foreign devises obtained by the sale of agricul-

tural produce for export to the Devisenzentrale at a rate which, in fact, operates as a heavy

export tax.
On the expenditure side, we think, economies in personnel should be made by a net reduction
of at least 10,000 (not counting those now under notice) ; but as against this, increase of the rates
of salary must be anticipated. Steps should be taken to ensure the balancing of the railway
budget at the earliest possible date, and capital expenditure on public undertakings should be
restricted to what is absolutely indispensable.
In the net result we think budget equilibrium should be attained by June 3oth, 1926.
We think the total deficits for this period - allowing for the payments of such external obligations as we must assume the Government will have to meet in the period --should certainly be met
within the limit of 25o million gold crowns.
We recommend that the amount of the reconstruction loan issued for the purpose. of meeting
these deficits should be sufficient to give a net yield of this sum - 25o million gold crowns.
We recommend the above sum in order to give a definite assurance that the plan of reconstruction can be carried out within the limits of the funds available. We consider, however, that the
League Delegation which will visit Budapest *should require a strict detailed programme (well
within the above limits) so constructed as to leave a provision in case of any unforeseen adverse
factor occurring during the reconstruction period, in order to avoid all risk of the plan being
impeded by exhaustion of funds in such an eventuality. The Commissioner-General should, of
course, work to the strictly limited programme so framed.

A loan, then, yielding (net) 25o million gold crowns is required. How can it best be obtained;
on what conditions and on what securities ?
We have tried to construct a scheme which does not rely on Government guarantees. We
doubt whether it would be practicable to obtain them, and we do not think they should be necessary.

-6For Austria they were necessary because by September 1922 Austria's financial position
(combined with her dependence upon imported food and raw materials) was such as to present a
real risk of social disorder developing to a point at which it would destroy the value of any securities she could offer. Moreover, the efficacy of League control was untried and unknown; and

the recuperative power of a country when given the support of currency reform was equally
a matter of conjecture. The position of Hungary to-day is very different. Her budget is by no
means in so desperate a condition.
The disorganisation of her economic life measured by
depreciation of the currency is considerably less; her natural resources (particularly her selfsufficiency in food) afford a more solid basis; her agricultural population does not present the risks
feared from the industrial population of Austria. Above all, perhaps, we have the proved results

of the Austrian experience: the astonishing increase both in the value of the assigned revenues
and the general economic and financial recovery that have resulted from stabilisation and control.
We therefore propose that the loan shall be secured on certain assigned revenues of the
Hungarian State, with the provision that additional revenues shall be assigned if necessary,
and the whole reinforced by the scheme of comprehensive reform and control described in this
report. Before referring in detail to the assigned revenues, we wish to make it clear beyond any
possibility of misunderstanding that we regard their value as dependent upon the adoption of
the whole scheme, which must be regarded as an interdependent entity.

We propose that the revenues assigned to the service of the loan should in any case include
the following:
(a) Customs receipts (gross receipts) ;
(b) Tobacco monopoly (gross receipts);
(c) Salt monopoly (net receipts);

(d) Sugar tax.


In 1922-1923 the customs amounted to 28 million gold crowns (18 million on imports, 6 on
exports, and 4 millions resulting from various special levies).
The export duties have already, however, been mostly abolished; and it is intended (as it is
obviously desirable) that the rest should be abolished too.
We consider that the yield for this year may be reasonably estimated at 12 millions; and that

it should thereafter substantially increase if the system of tariff restrictions is modified and
commercial relations with neighbouring States are improved.

Tobacco Monopoly.

The gross receipts in 1922-1923 amounted to 3o million gold crowns.
The results of the last three months for which data are available (July to September) were
at the rate of only 20 millions a year, but an increase may be expected, partly because the prices
have not yet been fully adjusted to .the fall in the crown; partly because the privilege of homegrowing (exempt from tax) is being withdrawn; and partly as a result of increased consumption
after stabilisation.
On the whole, we consider that we may safely estimate, for the current year 1923-1924, gross
receipts of not less than 3o million gold crowns.
We recommend that the gross receipts should be assigned as in the case of Austria. In estimating their value as a security, howeVer, we must have some regard to the possible difficulty of
actually using for payments of interest more than the net receipts, without some dislocation of
the service. The net yield may be taken at a conservative estimate at not less than 15 million
gold crowns.

(c) Salt Monopoly (net).

The actual net receipts for 1922-1923 amounted only to 1.6 million gold crowns.
The price is, however, now being increased by one-third, and the cost of purchase (which
is entirely from abroad) is expected to be less.
On the whole, we think the net yield for 1923-1924 may be reasonably estimated at 3 million
gold crowns.

We recommend that the net receipts should be assigned.
It should be considered later whether it would not be advisable to substitute a fixed duty
for the present salt monopoly.

Sugar Tax.
The tax is 42% on the wholesale price, collected as the sugar leaves the factory. The collec-

tion is simple and efficient: there are only 13 sugar factories (under the supervision of the Treasury)

in Hungary.

The realised results for 1922-23 were 9.3 million gold crowns. There was a considerable fall,
due to special and temporary reasons, in the three months ending September.


-7 We think a conservative estimate for the yield of this year would be 6 million gold crowns.

We thus have:

Estimate for 1923-24

12 million gold crowns









We should repeat that these estimates are not those of the Hungarian Government, but the
conservath e estimates made by ourselves. If, in estimating the value of the assigned reveas an effective security, we take the net receipts of the tobacco, the total would still be
llion gold crowns. And if, for each of the revenues, we take the least favourable estimate,
on the worst period and least favourable circumstances in each case, and also take only the
bacco yield, we should still have a total of 25 million gold crowns.
We consider that these securities are sufficient to be assigned in the first instance.
We recommend that these assigned revenues should (as in the Austrian case) be held in a
ed account controlled by the Commissioner-General and, when his tenure has terminated,
e controlling authority which remains - (see VIII); and that it should be his duty to retain

sums as are required for the service of the loan (together with such reserves as may be defined

e conditions of the loan), and to release the remainder for the current expenses of the

arian Government.
We should note incidentally that we anticipate that, unless the circumstances are very- un-

rable, a considerable surplus should be available for release rn this way, and we have allowed
is in calculating the probable deficits during the period of reconstruction.
Note: In view of several changes in tariff just being brought into operation, the net statistics
h will be available in the next few weeks will be important ; and it may be desirable to amend
of the above figures at our next meeting.)

We consider, however, that, particularly in the absence of Government guarantees. it is
ntial that, as in the case of Austria, there should be a provision that, should the above
ues prove at any time insufficient for the service of the loan (with the necessary reserve

), any other revenues may be assigned and thereafter come under the same system.
ose all other revenues must be kept clear of prior or equal charges.

For this

To this we propose one exception. We propose that the receipts of State undertakings,
cularly the railways, shall be exempt from this provision, so that the Government may be
o arrange for their conduct under autonomous or semi-autonomous management and that,

at case, the way may be clear for separate loans for genuine capital expenditure on the basis
eir own assets so soon as their working results are such as to make this possible.
t should be clearly understood that we regard it as absolutely essential that Hungary should
a position to give a clean first charge upon all the revenues contemplated above as required
ecurity of the loan, not only upon those to be assigned in the first instance but also upon
which may have to be assigned at a later date; and that the necessary releases for the loan
d, therefore, be obtained.

We consider that, in addition to the revenues which we propose should be assigned for the

ce of the loan, a valuable additional security might be furnished (as proposed by the

arian Government) by a first mortgage (under conditions to be considered in detail at a later
upon the land now belonging to the Government as a result of the capital levy law.

We consider that the loan, so secured, should be issued in as many countries as possible.

We recommend that, again as in the case of Austria, Trustees should be appointed, with powers
ally of a similar character to those specified in the General Bond of the Austrian Loan. And
ontemplate a General Bond defining the rights of the bondholders on the same general lines,
t so far as they may have already been included in the Protocols.


The fact that Government guarantees, provided for in the Austrian loan, are not contemd as available in the case of Hungary makes it the more essential that the conditions of conhould be entirely satisfactory and sufficient froin the point of view of the lender.
t must be realised that the only revenues which Hungary can offer, sufficient as they may
security for the loan so long as they maintain their value, can only maintain this value if
ungarian crown itself maintains its value. All the revenues assigned are collected in
arian crowns; their value in gold (which is what concerns the lender) must fluctuate, and
end to depreciate, if the crown itself falls in value.


-8The assigned revenues can only, therefore, be regarded as satisfactory if considered in relation to a general scheme which ensures the continued stability of the crown. As the crown might
fall: (a) as a result of a continued disequilibrium of the budget after the period during which deficits
are to be met by the loan, which would force renewed inflation; or (b) as a result of lax financial
policy by the Bank of Issue, the lender will certainly insist:

(a) On a programme of budget reform calculated to secure budget equilibrium within a
period which does not exceed that during. which the loan will meet.the deficits;
(b) The establishment of a Bank of Issue independent of Government control, and so constituted

as to give assurance of proper financial policy.
We have dealt above with (b) (See V).
As regards (a) the lender will also insist that :
(I) There shall be adequate control by an impartial authority invested with sufficient power
to assure that the programme will be duly carried out by the Government; and
(it) That legislative provision should be made to secure that the execution of the programme
by the Government shall not be impeded by Parliamentary action in the course of execution
We regard the following provisions as essential:
1. A detailed programme of budget reform, within the limits indicated ii. this report, should
be drawn up by the Hungarian Government, within a month after the signature of the Protocols,
to the satisfaction of a Provisional Delegation of the League appointed for the purpose, with the
addition of the Commissioner-General referred to below if he is then appointed.
2. This programme should specify the maximum expenditure allowable within each period
of six months ; the minimum taxation receipts which are allowable without giving rise to a demand,
to which the Hungarian Government undertakes to give effect, to add new taxes or increase the
rates of existing taxes; and the maximum deficits for each period.
It should include such definite provisions for progressive reduction of specified classes of
expenditure as may be agreed by the Delegation, on the proposal of the Hungarian Government,
and such taxes, at specified rates, as may be similarly agreed: the whole constituting such a programme as, if duly carried out, to give an assurance of budget equilibrium by June 3oth, 1926,
with an adequate margin for safety.
3. The Hungarian Government should undertake that if, in the course of execution, the
above programme should appear likely to be inadequate for the attainment of budget equilibrium
within the specified period, they will, on the demand of the Commissioner-General, amend it
so far as may be necessary for that purpose, whether by the further reduction of expenses or further
increase of taxation.
4. The programme should be placed by the Hungarian Government before the Hungarian
Parliament for approval and for the delegation of such full powers for the execution of the programme, either as originally framed or as amended in accordance with paragraph 3, as will render
unnecessary any further Parliamentary sanction during the whole period of reform. It should
further provide for a definite acceptance by the Hungarian Government of the principle of assuring
budget equilibrium by June 3oth, 1926.

5. The Commissioner-General must at all times follow the execution of the whole programme,
and for this purpose should work on the basis of monthly estimates (within the six monthly limits
of the general programme). The Hungarian Government should undertake to give him throughout

the whole period of his control all the information he may require, and all the facilities for
obtaining information which he may request as to all items of the expenditure of the Hungarian
Government, from whatever source, and all items of its receipts; as well as the whole of the
connected administrative system and operations.
Subject to this and to any special provision as to military expenses declared inconsistent
with the Treaty by the proper authority, the Commissioner-General will not object to particular
items of expense or require modifications of the taxation system so long as the progress of the reform
scheme is up to or in advance of the programme, except on the ground that the particular expense

or feature in the taxation system is such (e.g., by involving serious later commitments) as, in his
opinion, to compromise the later progress of the scheme.
If, however, the progress towards budget equilibrium is behind the programme, the Commis-

sioner-General may object to (and, if necessary, take the measures referred to in 6 and 7)

any items of expense which in his view are inconsistent with the due progress of the general scheme

and ought to be dispensed with.

He may also, or alternatively, demand new taxation (see 3

The proceeds of the loan should pass into an account which can only be drawn upon by the

Hungarian Government on the authorisation of the Commissioner-General; and he should be
entitled and required to withhold authorisation, to such extent as he may decide, if the expenses
are in excess of the programme.
So long as the progress contemplated in the programme is being attained, however, and subject
to the reserves in this memorandum, he should be required to authorise payments from the proceeds
of the loan to meet the deficits.

The revenues from the assigned revenues should pass into an account similarly con-

trolled by the Commissioner-General. He should retain such sums as are necessary for the service
of the loan on such conditions, and with such margin, as the conditions of the loan may specify.


-9The balance should be released to the Hungarian Government for its current expenses, unless the
withholding of the proceeds of the loan is insufficient to secure due execution of the programme,
ir in which case further sums may be withheld from the assigned revenues for this purpose.
8. During the appointment of the Commissioner-General (whether during his first tenure or on
re-appointment in accordance with para. 12), the Hungarian Government shall undertake not
to raise any loans not provided for in this scheme except with his consent
09. The lenders will, in our opinion, regard it as absolutely essential that the choice of the
Commissioner-General should be such as to give full assurance to the lender that he will have no
tendency to be influenced in his decisions by any other object than the purely financial one of
securing that budget equilibrium is attained within the specified period and that no commitments
are entered into which would endanger that equilibrium thereafter.
It is essential that not only should the Commissioner-General be in fact without any bias
in his decisions from any such ulterior motives, but that the original appointment should be such
as to prevent any possible anxiety on this point. As it is unlikely that the Commissioner-General
or his reputation can be personally known to the great bulk of the lenders, the only sure way of
securing this object, even at the expense of narrowing the field of choice, appears to us to be that
the Council should take a self-denying ordinance which would exclude the same nationalities as
in the case of Austria, for which the following resolution was passed:
It is understood that the Commissioner-General should not belong to one of

the four Principal Powers taking part in the loan or to one of the countries adjoining
io. The functions of the Commissioner-General should be brought to an end (subject to
re-appointment in accordance with para. 12) by a decision of the Council of the League of Nations
when the Council shall have ascertained that the financial stability of Hungary is assured.
In coming to this decision it would be understood that the Council would take into account
any additional external obligations beyond those falling in the budget during the reconstruction
period, which may have to be borne in subsequent years (see X)
1. The Reparation Commission, in its decision of October i7th, contemplated an association

of the "Etats creanciers" with the control in the following phrase:-

"Ce plan comporterait un controle exerce par la Societe des Nations, auquel seraient
associes les Etats creanciers de la Hongrie par le moyen d'un Comite dont les membres
seraient nommes par la Commission des Reparations."
Such a Committee would give the countries chiefly interested a means of directly watching
the progress of the work, as the Committee of Control of the Guaranteeing States does in the case
of Austria.
It might, in our opinion, be very useful for this purpose so long as the appointment, duties,
and method of working are such as to raise no fear that the work of the Commissioner-General
and the execution of the programme of reform will be influenced by any other motive than the
limited and definite object of securing budget equilibrium.
Such a Committee might well have power to ask the Commissioner-General for any information

as to his work; to ask him to obtain information on any points in which they may be interested;
to make suggestions and representations to him; and, in case of difference of opinion, to appeal
to the Council of the League.
We regard it as essential, however, in order that the authority of the Commissioner-General
may not be affected or the execution of the programme compromised, that :
(a) The Committee should meet outside Hungary, as the Committee of Control of the Guarantee-

ing States meets outside Austria;
(b) That the Committee should (again on the model of the Austrian Committee of Control)
make no communications to the Hungarian Government otherwise than through the
Commissioner-General (or the Council).
(c) That the Committee should have no powers to impose or block action (as distinct from its

right to require information) except by means of representations to the CommissionerGeneral, and, in case of difference, by appeal to the Coundil of the League.
12. Control after End of Reconstruction Period. The above recommendations relate to the
control necessary during the period of reconstruction. It will, of course, be necessary to
provide, as in the case of Austria, that a control of the assigned revenues should remain after
this period and till the complete liquidation of the loan. It will doubtless be arranged, under

conditions which might be more precisely defined towards the end of the reconstruction period,
through the Trustees of the loan.
We consider, however, one further provision to be essential. We consider that, if at any time
the development of the Hungarian financial position is such as, in the view of the Trustees, to
endanger the continued value of the securities assigned to the loan, the Trustees should have
the Tight to ask the Council to re-establish the full control, under the conditions applicable during

the reconstruction. period, including the Adviser to the Bank, to continue until the Council
is again able to decide that the financial position is sound. We suggest that the Council might
arrange to take its decision on this administrative point by a majority.
It is, of course, essential, if this recommendation is accepted, that the original Protocol
should specify that a control of the securities assigned will be established on the termination
of the reconstruction period, and that Hungary should agree to accept this control; and further

- 10 that Hungary should engage herself to accept the re-established full control in the eventuality
referred to above. The above proposals with regard to the control after the end of the reconstruction period are without prejudice to the continuance of the Committee to be named by the Repa- 1p
ration Commission (see paragraph II), on the clear understanding that the powers of the Trustees,
including the right of appealing for a new control, are in no way impaired.


The economic development of Hungary is an essential corollary of a scheme of financial
reconstruction. The latter provides the basis and the opportunity; but it is essential that Hungary
should take advantage of this opportunity if she is to attain a permanently satisfactory position.
The problem is outside the sphere of our direct recommendations. We confine ourselves to

(1) It is essential that commercial treaties should be arranged which will allow the freer
interchange of commodities between Hungary and her neighbours.
This depends partly upon general political relations, partly upon the specific economic policy
of the different countries. It depends partly upon Hungary herself ; partly upon her neighbours;
and perhaps the League itself can exercise a useful influence.
(2) The most vital thing for Hungary is that she should achieve the best production of and find markets for - the products for which her natural resources and her natural aptitudes
best fit her. To the extent to which she diverts her resources in labour and in capital to producing what can be more cheaply obtained from abroad at the expense of what she can produce
better than other countries there must be a net economic loss.
We notice, for example, that her agricultural production and to some extent the industries
based upon it are far from attaining their full development, and that markets for her surplus
(particularly of wine) are not available; while, on the other hand, she is developing certain new

industries (under cover of inflation and prohibitions) which have no affinity to her natural resources.
We wish to point out that, while we realise the many factors involved in the problem, the develop-

ment of such industries in this way must necessarily have the triple result of diverting capital
from her main production (where it is urgently needed), increasing the cost of living (with reactions
on the whole of her economic life, including the power to export), and increasing the difficulties

of negotiating commercial treaties which are needed to secure markets for her most valuable
So far as Hungary develops a policy of producing (by artificial aids) for her own consumption

those goods for the production of which she has no natural advantages, she must necessarily

make it more difficult for herself to dispose of the surplus of what she can produce better and more

cheaply than her neighbours and with greater advantage to herself.

(3) We think it essential that all direct impediments to export, prohibitions, taxes on export,
and the maintenance of an artificial rate of exchange through the Devisenzentrale, which operates

as an extra tax on export, should at once be abolished.

(4) As regards imports, we advise a rapid reduction of restrictions and prohibitions, inspired
by the above principles, and designed to facilitate commercial agreements which will aid export.

Two classes of external obligations require special consideration: (a) Relief Bonds; (1)) Reparation.
(a) We regard it as essential that a priority over any payments in respect of these Bonds should
be given to the reconstructed loan, so that this latter loan can be secured by a clean first charge
on Hungarian revenues. In addition, we hope that funding arrangements can be made with the
creditor countries of such a character as to make the annual charge upon the Hungarian budget
a light one.
(b) The Financial Committee considers that the adoption of a scheme of financial reconstruction

affords the best prospect of Hungary reaching a position in which it will be possible for her to
pay reparation.
But if it is to be possible to raise a reconstruction loan, it will certainly be necessary to suspend
reparation payments during the period of budget reconstruction. Moreover, the extent and methods
of any later payments should be defined at once and in such a manner as not to impair the budget
equilibrium nor the stability of the crown during the period of the amortisation of the loan. The
Financial Committee proposes to consider this question further at its December meeting.











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