Scandalous Phoenix-Wien

Darkly and deviously the secret struggle between Catholic Chancellor Kurt von Schuschnigg and Fascist Vice Chancellor Prince Ernst Rudiger von Starhemberg for control of the Austrian Cabinet continued last week amid smoking newspaper headlines. Prince von Starhemberg started matters off last month by waiting until Chancellor Schuschnigg was in Italy to crack wide open the scandal of the failure of Jewish-controlled Vienna Phoenix Life Insurance Co. His plain purpose in smearing this $150.000,000 bankruptcy through the Press was to whip up anti-Semitism in Vienna, cause a Cabinet crisis that would allow his Heimwehr to take over the Government (TIME, April 20). Chancellor Schuschnigg's next move was to attempt to force the dissolution of Prince von Starhemberg's well-equipped private army on the ground that the Heimwehr was no longer needed since Austria had adopted military conscription for its regular Army. Sticking out his chin, Prince von Starhemberg snapped that the Heimwehr would be disbanded only "over my dead body."

Vienna promptly overflowed with rumors of the number of potent Austrians who had been bribed by Phoenix-Wien's mysterious manager, the late Dr. Wilhelm Berliner. Last week Chancellor Schuschnigg revealed that he held a powerful counter-weapon against Prince von Starhemberg, the actual, 24-page list of those whom Phoenix-Wien had reached with cash euphemistically described as ''loans" "stock sales" and "insurance policies." This lifesaver, which he had been handed by a high Phoenix-Wien official, Chancellor Schuschnigg proceeded to publish.

In the years in which he was rooting his company into every cranny of Austria, pudgy Dr. Berliner took no chances with political investigation. With magnificent liberality he bribed every political group that might possibly make things difficult for him. The amount of the bribe evidently depended on his estimate of the relative political importance of the organization to be bribed. Examples:

To the Jewish National Fund

500,000 schillings ($93,500)

To the Austrian

Nazis 494,000 (92,400)

To the Peasants'

Union 182,000 (34,000)

To the

Heimwehr 95,000 (17,800)

To the Association

of Austrian

Legitimists

(Monarchists) 9,000 (1,700)

To the Socialist

Technicians'

Trade Union 3,000 (560)

To Schuschnigg's

Catholic

Ostmarkische

Sturmscharen 2,000 (375)

In addition there was 430,000 schillings paid to buy houses for Jewish refugees from Germany, and a payment of 108,000 schillings to Anton Rintelen, now serving a life sentence for participation in the Nazi Putsch which led to the murder of Engelbert Dollfuss. Maintaining the goodwill of the Austrian Press cost Phoenix-Wien 1,098,000 schillings.

Immediate result of these revelations last week was the resignation from Austria's Cabinet of a valuable minister, blunt, honest General Carl Vaugoin, Director of Railroads and onetime (1930) Chancellor of Austria. Because Austrians trusted General Vaugoin as a genuine patriot, shrewd Dr. Berliner picked him to be chairman of Phoenix-Wien's board. Shocked by the discovery of what had been going on under his nose, General Vaugoin resigned every official position.

A more serious blow to Prince von Starhemberg was the forced dismissal of Dr. Franz, Georg Strafella as Chief of the Tourist Bureau. Handsome, blond, unscrupulous, Dr. Strafella first caught the eye of Viennese bigwigs when he neatly stopped a serious strike in his native Graz. On the strength of this, honest General Vaugoin, then Vice Chancellor, decided that Dr. Strafella was just the person to handle Austria's railroads. The Viennese Arbeiter Zeitung promptly announced that

Franz Strafella had persuaded General Vaugoin to push him for the railroad post so that Strafella could get his hands on the State railroad funds to use in backing the Heimwehr. "Dr. Strafella," it added, "is a man of unclean hands and dishonorable methods." Strafella sued for libel, won his case, but was awarded no damages. Ingenuous General Vaugoin believed him, got him his railroad post.

In 1931 more whispered charges forced Franz Strafella to resign from the Cabinet, but in 1934 little Engelbert Dollfuss made him head of the Austrian Tourist Bureau.

Adolf Hitler had nearly ruined Austria's tourist traffic by imposing a 1,000-mark visa on Germans wishing to enter Austria.

In three years Strafella doubled Austria's tourist traffic from the U. S., Britain, France, Italy. In so doing, it was dis covered last week, he forced Phoenix-Wien to buy from him at face value 550.000 schillings worth of worthless stock "totally unsuited to form an insurance company's reserve." Franz Strafella did not wait to be ousted from office last week. He ducked out of Austria the day the scandal broke.

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