860F.00/10–3145: Telegram

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



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7. On the subject of nationalization, Beneš17 remarked that the decrees were much more sweeping than he had desired. He said he had done everything within his power to restrict their scope but had been unable to restrain the radicals without precipitating an open break which he was unwilling to risk at this time. He anticipates that there will have to be considerable modification of the program of nationalization as it is put into effect and apparently derives considerable satisfaction from the fact that the radicals are now on the defensive. He said there would undoubtedly be severe criticism in the Assembly18 and seems to feel that the debates which he anticipates in the Assembly and the press will operate to restrain the radicals from further excesses. I judge from the general nature of his remarks that he feels a major concession had to be made to the radicals to avoid communism and that state socialism with the modifications time will bring is perhaps the best method of meeting the threat of communism. When I pointed out that the cost of acquiring the nationalized foreign interests would be very great at the time he was trying to reorganize the state’s finances, he said he recognizes this factor but hoped that between the expropriation of German properties, reparations and the reorganization of state finances in view of the state’s small external indebtedness, it would be possible to compensate the foreign interests without incurring too severe a burden. [Page 556] He added that he had made it clear to the radicals that the nationalized enterprises must be managed by experts, operated according to approved business methods and must yield a profit, failing which they must expect many of the enterprises to revert to private ownership.

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  1. For the remaining portions of this telegram, see pp. 508 and 939, and vol. ii, p. 1304.
  2. Eduard Beneš, President of Czechoslovakia. In telegram 473, October 25, the Ambassador in Czechoslovakia reported that President Beneš on October 24 signed four decrees dealing with the nationalization of mines and other key industries, food industries, joint stock banks, and private insurance companies (860F.5034/10–2545).
  3. The Czechoslovak Provisional National Assembly opened on October 28.