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United States Department of State / Papers relating to the foreign relations of the United States, 1931

General,   pp. 1-824 PDF (302.0 MB)

Page 1

                     COLLAPSE IN EUROPE
I. Proposal by President Hoover for a Moratorium on Intergovernmental Debts
              Memorandum by the Secretary of State
                                     [WASHINGTON,] May 27, 1931.
  Governor Harrison' called up to say that there was a serious situa-
tion in Austria; that one of their most important banks 2was in trouble.
He said that the Austrian Government had a plan to put up 15 millions
of dollars itself and about half of that by the Austrian National Bank
and by Rothschild in addition; that, however, it was uncertain
whether this government contribution was conditioned on finding it
possible to raise the money by a sale of government notes. He said
that financial circles are afraid that a breakdown in this Austrian
matter might spread trouble to the rest of Europe; that already re-
percussions have been felt on the German exchange, which had fallen
off six points yesterday; that this was below the gold export point to
Germany and might lead to exportations of gold; and it was felt that
a failure in the Austrian situation would add to Germany's causes
for seeking a postponement of the payment of its own reparation ob-
ligations. Harrison said that there was much concern also in London
and Paris, and there were rumors that France had forced the situation
in order to make Germany ask for loans, on the basis of which France
would get assistance in a solution of the Customs Union problem'
which would be favorable to her.
  I first asked Harrison who in Washington knew about this matter.
He said Eugene Meyer4 knew about it, and I asked him whether he had
any suggested remedy. He said that he had nothing for the imme-
diate emergency-nothing except rather drastic general suggestions
which he could not discuss over the telephone.
  I then called up the President and told him of this. He said that
he had been following the trouble in Austria for several days. I told
'George Harrison, Governor of the Federal Reserve Bank of New York.
2The Credit Anstalt.
'See pp. 565 f.
4 Govenor of the Federal Reserve Board.

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