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League of Nations loan: League of Nations Commissioner A. Zimmermann (right) and Federal President M. Hainisch. Photograph from 1922.



League of Nations Loan: 1) Based on the Geneva Protocols of 4 October, 1922, Austria was granted a loan of 650,000,000 gold crowns by the governments of Great Britain, France, Italy and Czechoslovakia, for which it was obliged to pledge its customs revenues and its tobacco monopoly in return. The maturity was fixed at 20 years, the bond was issued in 10 different currencies and was floated at 11 financial centres; net proceeds amounted to 611,000,000 crowns or ATS 880,000,000, the effective yield varied between 8,6% and 10,2%. The loan was used in part to balance the budget deficits of the years 1922 and 1923, around 50% of net proceeds had to be deposited with foreign banks at a rate of 3-4%; however, the interest fell short of the amount Austria owed its creditors, which were in some cases the same banks the money had been deposited with. The remainder of the loan was used by the federal government for productive investment (1924-1927), ATS 50,000,000 was used in 1927 to reduce the federal debt with the Austrian National Bank. Granting of the loan went hand in hand with financial control by the Dutch High Commissioner of the League of Nations Council, A. Zimmermann, who carried out this function until 30 June, 1926. On 1 December, 1934, Austria called in the loan and financed the redemption by floating the "Austrian Guaranteed Conversion Loan 1934-1959" with a total of ATS 567,000,000 (1936).

2) In the Lausanne Protocol of 15 July, 1932, Austria was granted another League of Nations loan of ATS 300,000,000 with a maturity of 20 years (1933-1953). The underwriting countries were Great Britain, France, Italy, and Belgium. Austria undertook to renounce the annexation and a customs union with Germany. The Dutch controller Meinoud Rost van Tonningen was in office until 5 August, 1936. The loan passed parliament by 81 : 80 votes. The proceeds of ATS 306,000,000 that became available in the middle of the year 1933 were used to pay off floating foreign debts and to redeem debts of the federal government and the Federal Railways with the National Bank.

Both loans were duly serviced until 1938, in October 1938 service of capital and interest service ceased following a redemption offer by the German Reich. In a foreign debt agreement concluded in Rome in 1952, the interest rate for the Conversion Loan 1934-1959 was fixed at 4,5%, for the remainders from the old loans from 1945-1953 lump sum payments were fixed for the period up to 1978, and the remaining loan repayments were extended to 1980.


Literature: H. Kernbauer, E. März and F. Weber, Die wirtschaftliche Entwicklung, in: E. Weinzierl and K. Skalnik (eds.), Österreich 1918-1938, vol. 1, 1983; G. Klingenstein, Die Anleihe von Lausanne, 1965; K. G. Schogger, in: Mttlg. der Oesterreichischen Nationalbank 1995.


 
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