611.6431/9–145
The Secretary of State to the Representative in Hungary (Schoenfeld)
The Secretary of State refers to despatch no. 239 of September 1, 194576 from the American Mission in Budapest concerning a proposed barter trade arrangement between Hungary and the United States.
In any further conversations on this subject the Officer in Charge should make it clear that the Department is in general opposed to any inter-governmental bilateral barter trade agreements. While the Department in the present emergency transitional period is not disposed to object strongly to the conclusion of short-term bilateral trade arrangements between certain European countries which are able to negotiate a mutual exchange of urgently needed commodities, it could not favor the adherence by this Government to any such agreement. The Department intended by its telegram no. 211 of July 23 encouragement only of private exchanges on the side of the United States or possibly purchase by the United States Government of commodities on the U.S. requirements list.
The Officer in Charge should also make it clear that entirely aside from considerations of international trade policy, it will be impossible for the United States to make any formal trade arrangements with Hungary until it is no longer subject to the armistice arrangements. When such conditions are realized, it will then be possible to give consideration to a possible contractual basis for regulating trade relations [Page 913] between Hungary and the United States on the recognized American basis of nondiscrimination in international trade.
The Department has arranged with the Department of Commerce to inform the trade of Hungarian availabilities and requirements as listed in the proposed barter arrangement, and has under consideration other methods of facilitating the resumption of normal commercial relations between the two countries as outlined in the Department’s telegram no. 502 of October 5.77 This includes particularly consideration of using the United States Commercial Company as agent on behalf of the Hungarian Government pending the opening of normal trade channels between the two countries.
With reference to despatch no. 248 of September 4, 1945 enclosing the two letters from Messrs. Nicholas Hahn and George Orban to Anderson, Clayton and Company of Houston, Texas and to George H. McFadden and Bros, of New York City,78 the Officer in Charge is informed that the letters were forwarded to the addressees with the following comment:
Although a barter transaction of this nature involves many problems for American business and is an undesirable method of conducting international trade, it may be the only way at the present time of meeting pressing needs in many parts of Europe under emergency conditions of unstabilized finances and disorganized production. It is the policy of this Government to assist individuals or private companies in foreign countries when they wish to make contacts with individuals or private companies in the United States concerning trade proposals and to facilitate at the present time the reestablishment of commercial relations. This Government is attempting to secure general agreement on conditions of world trade which will enable commercial relations to be conducted on a multilateral, nondiscriminatory basis.
Both firms replied to the Department that they were not interested in a barter arrangement, whereby they would supply cotton to the Hungarian company in return for cotton textiles manufactured therefrom. They were, however, interested in a straight export of cotton, provided a method for financing it could be arranged.