Foreign Relations of the United States, Diplomatic Papers, 1945, Europe, Volume IV

661.6431/10–645: Telegram

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

Washington, October 26, 1945—8 p.m.

590. Reurtel 714 Oct 5 and 719 Oct 6 and Deptel 534 Oct 13. Unless you perceive objection, convey substance of following orally to the Hung Govt.

USSR–Hung agreement for economic collaboration signed Moscow likely to result in favored USSR position in Hung which is contrary to US policy of nondiscrimination in commercial and economic matters as evidenced by our treaty signed June 24, 1925 with Hung Govt.⁵⁰

Dept recognizes agreement phrased general terms which makes specific protest difficult but makes following points:

1. Joint USSR-Hung enterprises for reconstruction and development in Hung industry, agriculture, transport and banking should be so established and operated as to assure most-favored-nation treatment to nationals of US such as was reflected in Article X of US–Hung treaty. Dept attaches particular importance to receiving most-favored-nation treatment for US nationals in field of discovering, exploitation, refining, processing and marketing of petroleum.

2. Dept is specially concerned at clauses permitting USSR–Hung participation in “existing” plants in view of substantial US interests in petroleum and other properties in Hung. You should stress the undesirability of action adversely affecting such interests and the necessity for their proper recognition and protection.

3. USSR–Hung agreement to organize and develop river and ocean shipping should not be implemented so as to preclude granting complete freedom of transit as contemplated in Article XIII of US–Hung treaty.

4. Agreement of Hung Govt to facilitate processing in Hung factories of raw materials made available by USSR should not be implemented to deny unconditional most-favored-nation treatment for US nationals which was agreed to in Article VII of US–Hung treaty.

Regardless of present status US–Hung treaty as result hostilities, US Govt in any case regards purposes of US–Hung treaty of continued importance, considers treaty could be brought back into full force with peace treaty and perhaps subsequently replaced by treaty conferring even broader rights on a mutual basis.

Use of US Commercial Company on broad basis to facilitate trade relations with eastern Europe being considered here, in light of Hungarian Govt comments on use of same (urtel 805 Oct. 22⁵¹). USCC would not prejudice establishment normal private trade relations and would be administered on nondiscriminatory basis.

Byrnes

50. Treaty of friendship, commerce and consular rights between the United States and Hungary, signed at Washington, June 24, 1925, Foreign Relations, 1925, vol. ii, p. 341.
51. Not printed.