860F.5034/1–3046: Telegram

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

secret
us urgent

197. Urtel 153, Jan 30; Despatches 459, Jan 29, and 466, Jan 30;17 Deptel 82, Feb. 7, paragraph 6. Please communicate to FonOff note based on following:

US Govt ready enter, into negotiations with Zecho Govt, as proposed in FonOff note Jan. 25, on manner in which compensation will be paid to US citizens or concerns for any properties nationalized under recent decrees; and notes Zecho Govt’s assurance that US citizens or concerns will not be subject to discrimination or treated less favorably than citizens or concerns of Zecho or of any other country.

In view of this Govt, nationals of US are entitled to adequate and effective compensation for such of their property as is nationalized by Zecho Govt. This Govt hopes that Zecho Govt will recognize significance of adequate and effective compensation for development of mutually beneficial economic relations between US and Zecho.

This Govt notes FonOff assurance that Zecho does not intend seclude herself from economic cooperation with other countries and is ready enter negotiations with other Govts re such cooperation. From FonOff statement that solution of question how compensation for nationalized concerns might be transferred depends on facilities granted Zecho export trade, US Govt infers that Zecho Govt appreciates importance and agrees with principle of effective compensation.

US desirous aiding people of Zecho in their efforts repair war damages due enemy occupation. Similarly US hopes Zecho Govt will recognize that agreement on adequate and effective compensation will benefit economic relations between US and Zecho.

For your info, Dept considers negotiations on compensation should start between AmEmbassy and FonOff soonest practicable. Zecho Ambassador being advised contents our note.18 Public announcement [Page 189] US note not believed necessary, unless Zecho note Jan 25 made public by FonOff or you deem publication our note in US interest. If so, advise Dept, so simultaneous release can be arranged in Washington and Praha.

For your confidential info, Dept considers compensation cases classified in FonOff note as “export of Zecho capital” (as distinct from “genuine foreign investment”) may be satisfactorily settled in your negotiations on basis of compensation in local currency, provided original investment was in local currency. Where original investment was in dols, compensation should be in dols or currencies freely convertible into dols.

Byrnes
  1. Neither despatch printed.
  2. The Czechoslovak Embassy was so advised in a memorandum dated March 18, 1946 (860F.5034/3–1846).