Foreign Relations of the United States, 1946, Eastern Europe, The Soviet Union, Volume VI

864.51/2–2746: Telegram

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

secret
priority

Budapest, February 27, 1946—11 a.m.
[Received 2:14 p.m.]

405. ReDeptel 192, February 21.²⁸ Press and public reaction to 10 million dollar US loan has been enthusiastic but political effect has in measure been tempered by Communist whispering campaign minimizing importance.

Focal point in Communist-inspired rumors is that Hungary was forced to renounce all interest in Hungarian displaced property in Austria and Germany in exchange for loan. Whispers add that money was only to be spent for worn-out American military equipment and that exchange of Hungarian national assets in Austria for outdated American trucks is bad bargain.

Notwithstanding this campaign, predominant opinion remains that loan marks renewed American interest in Hungarian affairs. Average Hungarian is inclined to assume American loan will be followed by stronger political backing since “Americans would certainly not lend money to a country and then permit it to go Communist”.

Press has devoted much space to story and its comment, confined largely to non-Communist press, has been jubilant. Vilag²⁹ noted effect of loan in combating inflation while other papers pointed out loan exceeds three times total value in dollars of Hungarian note circulation. Certain papers have recorded belief loan points to understanding between US and USSR as to Hungarian future while all note that financial assistance must mean renewed American interest in economic recovery of Hungary.³⁰

Schoenfeld

28. Not printed; it stated that a decision had been made to grant Hungary a credit of $10 million payable over 30 years at 2? percent interest, for the purchase of surplus property (800.24/12–445).
29. Newspaper of the Citizens’ Democratic Party.
30. Telegram 377, February 23, 1946, from Budapest, reported that President Zoltán Tildy, Prime Minister Nagy, and Finance Minister Gordon had expressed their great appreciation to Schoenfeld for the United States surplus property credit (800.24/3–2346). Telegram 414, February 27, from Budapest, reported that Schoenfeld had received a personal note from Prime Minister Nagy on February 26 expressing sincere thanks to the United States for credit (864.51/2–2746).