864.6363/5–1545: Telegram

The Acting Secretary of State to the Representative in Hungary ( Schoenfeld )39

27. The Department has received information from Standard Oil Company (New Jersey) concerning holdings of its Hungarian subsidiary Magyar Amerikai Olajipari R.T. (MAORT). These holdings [Page 815] are valued at approximately 58 million dollars and consist principally of oil wells, pipe lines, gasoline plants, warehouses, buildings, etc., all located in that part of Hungary south and west of the Danube River.

Standard reports its fear that crude oil, refined products and petroleum equipment may be taken from MAORT and removed to Russia either in payment of reparations under armistice or otherwise.

The Department would like to have information on whether the MAORT properties, which were taken over by the Hungarian Government in December 1941, are still in the hands of the Hungarian Government or have been returned to the Company’s representatives.40 Please report also any additional information you may receive (Reurtels 19 March 14 and 96 April 27 from Squires41) on the present condition of the property as well as description and value of MAORT-owned installations, if any, located in territories which Hungary was obliged to evacuate under the terms of the armistice.

If the Hungarian Government takes from the company crude oil, refined products or equipment for payment as reparation to the USSR, Czechoslovakia or Yugoslavia under Article 12 of the armistice, please report the extent and nature of goods taken and of payment made to the company.

If MAORT equipment is taken by Soviet authorities directly from the company as war booty or on any other grounds, you are authorized to ask General Key to make a preliminary request to Marshal Voroshilov to order the cessation of such removals pending clarification of American rights and interests involved and receipt of instructions from the United States Government.42

For your information, when the same issue was raised in Rumania by Soviet removal of goods as “war booty” from the premises of American-owned and other oil companies, the Department protested strongly both in Bucharest and Moscow, stressing primarily the need of maintaining Rumanian oil production at the maximum level in the interest of the war effort and secondarily the property rights of American [Page 816] nationals.43 In the last communication received from the Soviet Government on the subject, a letter dated January 4,44 it was stated that the Soviet Government agreed with us on the need for rapid rehabilitation of the Rumanian oil industry and accordingly had given orders for the cessation of removals. The Soviet Government maintained its position, with which we do not agree, that the equipment removed was German property and therefore war booty. No more equipment has been taken from American-owned companies, but despite a similar pledge given to the British Government, additional equipment was taken in April from a British-owned company in Rumania.

Grew
  1. Schoenfeld arrived in Budapest on May 11, 1945.
  2. Telegram 77, May 26, 5 p.m., from Budapest, reported that the MAORT holdings were still in the hands of the Hungarian Government but that the enterprise was entirely under Soviet control (740.00119 Control Hungary/5–1645).
  3. Neither printed; telegram 19, March 14 from Squires, transmitted to the Department as telegram 976, March 14 from Caserta, reported on the condition of Shell Oil properties in Budapest and added that the Soviet authorities, through their complete monopoly of gasoline stocks in Hungary, exercised virtual control over all motor transport in the country and might to no small extent determine the country’s short-term economic and political orientation through this control (864.6363/3–1445); telegram 96, April 27 from Squires, reported on the status of oil producing facilities in Hungary (864.6363/4–2945).
  4. Telegram 103, May 30, 9 p.m. from Budapest, reported that Major General Key had been asked to make representations to Marshal Voroshilov regarding MAORT properties to the effect that all removals be discontinued pending receipt of further instructions from the Department of State (864.6363/5–3045).
  5. For documentation regarding the concern of the United States over the removal (by the ‘Soviet Union of American-owned oil equipment in Rumania, see vol. v, pp. 647 ff.
  6. For a report on the Soviet letter of January 4, see telegram 55, January 5, 1945, from Moscow, vol. v, p. 647.