860F.51/2–746: Telegram

The Secretary of State to the Ambassador in Czechoslovakia (Steinhardt)

secret
u.s. urgent

82. For the Ambassador. Urtel 133, Jan. 25. 1. For your confidential information, National Advisory Council on International Monetary and Financial Programs has approved at meeting January 29, negotiation of an Eximbank reconstruction loan to Czecho of approximately $50 (fifty) million, with understanding that loan negotiations may result in data showing need for larger credit.

2. Since official application by Czecho Ambassador9 to Dept for $300 million Eximbank loan, dated September 1, and initial discussions with Czecho Commercial Counselor10 here (Deptels 291, Oct. 5, and 348, Oct. 3111), Czecho Embassy has taken no initiative on either reconstruction loan or $25 million cotton credit. They have not entered into negotiations with Eximbank and have not submitted statement of requirements for reconstruction loan. Czecho explanation for delay is that special mission from Praha, possibly headed by Masaryk, would arrive Washington to negotiate loan. (Urtel 735, Dec. 1412). No recent information available in Dept on possible arrival of mission. Czecho Embassy apparently not in close touch with Praha. Embassy has not received sufficient instructions or even authority to submit statement of requirements prepared by them.

3. Pending receipt of definite information concerning engagements assumed by Laušman in Moscow (urtel 133, Jan. 25) Dept considers that negotiations for Eximbank loan should proceed. In view of [Page 183] your comments, however, and report in urtels 153, Jan. 30; 146, Jan. 29; 144, Jan. 29; and 114, Jan. 22,13 Dept proposes to address note to Czecho Gov’t if and when loan negotiations are begun. Substance of note should provide that due respect is shown to rights of American citizens in Czecho and provision is made for adequate and effective (i.e. dollar) compensation to American owners of properties subject to nationalization in Czecho (your 153). Do you consider that Dept should include in note provision for establishment of mixed U. S–Czecho Commission to determine basis and nature of compensation or is agreement in principle by Czecho Gov’t a sufficient guarantee?

4. Proposed note would also provide for commitment by Czecho Gov’t to abstain from adopting measures of a long-range character which would conflict with Proposals for Expansion of World Trade and Employment, pending participation by Czecho in preliminary International Conference.14 Note would further include Czecho agreement to make available to this Gov’t full information concerning Czecho’s international economic relations and commitments (your 133). Final conclusion of loan agreement would therefore be dependent on satisfactory Czecho reply to our note on above and related subjects.

5. Subject to satisfactory assurances by Czecho Gov’t mentioned above, Dept considers that U.S. economic assistance to Czecho is necessary if Czecho Gov’t resists inclusion in any economic plan reported in your 133. Dept requests your advice on prompt initiation of loan negotiations by Czecho Gov’t. In your discretion you are authorized to discuss subject informally and unofficially with Czecho ForMin or other appropriate key officials. Please report results of your discussion urgently to Dept.

6. Czecho Foreign Office note on nationalization of Jan. 25 (urtel 153, Jan. 30) is being carefully considered in Dept. Reply will be forthcoming upon receipt of full text.

Byrnes
  1. Vladimir Hurban.
  2. Emanuel Jan Hajny.
  3. Foreign Relations, 1945, vol. iv, pp. 553 and 554, respectively.
  4. ibid., p. 556.
  5. None printed, except No. 153, January 30. Telegram 146, January 29, listed those American-controlled enterprises affected by a Czechoslovak Government decree nationalizing 115 metal working enterprises (860F.5034/1–2946). Telegram 114, January 22, reported on the nationalization of 7 leather firms in Czechoslovakia (860F.5034/1–2246).
  6. For documentation regarding the proposals of the United States for the expansion of world trade, see vol. i.