864.6363/12–1045: Telegram

The Secretary of State to the Representative in Hungary (Schoenfeld)

808. Your 819 Oct 24.93 When an appropriate occasion arises please inform the Hungarian Govt that while this Govt of course does not object to the nationalization of natural resources by a sovereign state in accord with its own laws, it feels that Hungary should not take such a step affecting foreign owned property while that country is under an armistice regime. This consideration is specially valid in respect to the substantial American investment in petroleum property in Hungary which, according to Article XIII of the armistice, the Hungarian Govt is obligated to return in complete good order but which it has not yet restored to its American owners.

This Govt furthermore feels that if the Hungarian Govt undertakes an extensive program of nationalization, subsequent to the signing of a treaty of peace, should it be obvious at that time that it would not be in a position to make immediate, effective and adequate compensation in free exchange for American-owned property expropriated, such action would inevitably present the possibility of conflict with the obligation which the US Govt has to protect the interests of its nationals.94

Byrnes
  1. Not printed; it reported on a joint election manifesto of October 24 issued by the leadership of the Smallholders, Social Democratic, Communist and National Peasant Parties; the manifesto pledged, inter alia, the transfer to state control of underground national resources and of power producing plants (864.00/10–2445).
  2. Telegram 1105, December 15, 1945, 6 p.m., from Budapest, reported that a note had been sent to the Hungarian Foreign Minister in the sense of the Department’s instructions. It further reported that Hungarian Government nationalization program pertained to mines and sources of electrical energy but excluded oil properties. No specific request for the exemption of American-owned coal mines from nationalization laws was planned unless specifically instructed by the Department. (864.6363/12–1545)