611.60F31/77
Memorandum by the Assistant Chief of the Division of Western European Affairs (Culbertson)
Mr. Grady asked Mr. Kabeláč to come in yesterday afternoon in order to discuss with him the proposed exchange of notes providing for most-favored-nation treatment in respect of customs, quotas and exchange. The Czechs had a day or so previous left at the Department a copy of instructions which they had received from Prague.13 These instructions suggested that there be two exchanges, one public and one confidential. The public one would provide for most-favored-nation treatment without defining just what is covered by that in respect of quotas and exchange. The definition would be included in a secret exchange of notes.
Mr. Grady pointed out to Mr. Kabeláč that we would much prefer to have the whole subject matter brought out in a public exchange of notes, and inquired just how much delay might ensue were the Legation again to take up the matter with Prague. Mr. Kabeláč seemed to feel that his Government placed considerable emphasis on this suggestion of two exchanges, and that there might be some difficulty in arriving at any decision prior to April 1. Mr. Grady then handed to Mr. Kabeláč a copy of a proposed exchange of notes and a draft14 of the type of note which we would want to receive from the Czech Government, in which note the Czech Government would state its understanding of the meaning of the provisions of the note which would be made public. It was pointed out to Mr. Kabeláč that we could not undertake any secret agreement, but that it would probably be all right if his Government explained its understanding [Page 145] of the provisions with regard to quotas and exchange and submitted this understanding in a note to us.
In the draft note handed to Mr. Kabeláč there was a provision with regard to monopolies. This was not included in our original proposal to the Czechs. Mr. Kabeláč felt that to insert this new provision might raise difficulties in Prague. In view of the provisional character of this agreement, and in view of the fact that it can be denounced on thirty days notice, Mr. Grady agreed to leave it out.
Mr. Kabeláč thought that there might be some questions which the Czech Minister would want to raise, and asked that he might call back later in the afternoon. He did this, but merely said that the text of the note as handed to him was being sent by telegraph to Prague.