701.60F11/193

Memorandum by the Chief of the Division of Western European Affairs (Boal) of a Conversation With the Czechoslovak Minister (Veverka)

The Czechslovak Minister called this morning to present the new Secretary of Legation, Mr. Otakar Kabelac. In the course of the conversation he mentioned the Danubian Federation idea. I asked him what he understood the plan to be and he said that he thought it would consist of a series of preferential rates between the different countries. I asked him whether he thought this would lead to an eventual disappearance of the general run of customs barriers between the countries and he said that he thought it might but that in his country the agrarian interests which dominated the Parliament would be very much opposed to the abolition of protective rates on cereals since other countries produced cereals and other agricultural products at lower costs and the net result of such a lowering of tariffs would be to lower the Czech farmers’ standard of living.

He asked whether this Government would be disposed to give up unconditional most-favored-nation treatment with states taking part in such a confederation. I told him that we really could not say in advance. That, of course, we realize that a group of nations joining together into something resembling a customs union might present a different problem when it came to preferences between them, from that of a country which alone extended special preferences on certain commodities; that of course a good deal might depend on whether [Page 855]all nations were treated equally and on the same basis, by nations forming such a federation. That all of this for the moment, however, seemed to be in the future and I could not say what the attitude of this Government on the matter might be.

The Czechoslovak Minister seemed to be very favorable to the idea of a Federation and expressed the sincere hope that it would succeed and the belief that it was practicable.

Pierre de L. Boal