CFM Files
United States Delegation Journal
USDel (PC) (Journal) 60
The Ukrainian and Byelo-Russian representatives spoke in opposition to the U.S. amendment to Article 21 (Reparation) of the Hungarian Treaty,72 emphasizing that the proposal considered the difficulties of Hungary but not the difficulties of the countries which had suffered from Hungarian action. The French Representative stated that France had accepted the article as drafted by the CFM and would maintain this position. The Greek representative said that the Greek Delegation believed that the aggressors should pay to the extent of their capacity and that, as it had no information on Hungarian capacity to pay, the Greek Delegation would abstain from voting. M. Gusev (USSR) said that the CFM had agreed to take the Armistice as the basis of the Peace Treaty and that Czechoslovakia, Yugoslavia, and the Soviet Union had therefore concluded bilateral agreements with Hungary regarding the discharge of Hungary’s obligation. The new and democratic Hungary recognized and was willing to meet this obligation. The U.S. proposal aimed to disturb the friendly relations between these countries and to support the old reactionary Hungary. The obligation was well within Hungary’s capacity to pay; no one could prove that Hungary’s economic potential was inadequate to meet this burden. The United States was generous at the expense of the devastated countries. If the United States really desired to help the new Hungary, it would return the immense quantities of Hungarian property in the U.S. zones of Austria and Germany.
Mr. Thorp (U.S.) exercised his right of final reply and answered the various statements which had been made. (1) As to rationing, Hungary did not have a functioning government until the summer of 1945, by which time supplies were so short that effective rationing was not possible. Hungary now had a rationing system. (2) As to the bilateral agreements, Hungary had not entered into these on a fully voluntary basis but as agreements in accordance with the Armistice. The Armistice was a temporary arrangement and did not and could not determine the final settlement, which would be determined by the Peace Treaty. (3) As to Hungarian property in the U.S. [Page 637] zones, the U.S. Government had taken the lead in proposing restitution to ex-enemies but the ACC had not yet authorized such restitution.73 In the one special case where it had been possible, namely, Hungarian gold, the U.S. had made restitution. It was also noted that the total amount of Hungarian property in the U.S. zones could be roughly estimated at about $75 million. (4) In his estimates allowance had been made for the price basis (1938 prices plus 10–15 percent) in estimating the burden of reparation in current dollars. (5) The recent currency stabilization had been cited as a favorable sign, but currency conditions only reflected basic economic conditions and the significance could be seen by looking at the seriously unbalanced budget. (6) As to the level of production, it had been mentioned that production in the metal working and machinery industries—which, it should be noted, produced almost exclusively on reparation account—was 94.3 percent of 1938 production, but it had not been mentioned that, according to the same official Hungarian report, production in five other basic industries ranged only from 11.9 percent to 36.7 percent of 1938 production. (7) Reparation had never been a source of good will and friendly relations. He could not understand, therefore, the argument that the U.S. proposal was designed to disturb friendly relations. Equally unfounded and unreasonable was the contention that the proposal was designed to weaken the new democratic Hungary and strengthen reactionary Hungarian elements. (8) He greatly regretted that the amendment had been described as an unfriendly act. The U.S. supported the payment of reparation and only insisted that capacity to pay should be considered. The proposal was made only in view of the facts. (9) Although the Hungarian Government had not complained about the amount of reparation, it had shown that it could not meet its “new international obligations”, of which reparation was a very important element. (10) The sum of $200 million had been reached by comparing the economic potentials of Rumania and Hungary and by taking into account the long run possibilities of Hungarian production as compared with Rumanian production. For all these reasons the U.S. proposed $200 million as a more appropriate burden and asked that the Commission vote on its amendment.
The Chair then recognized M. Gusev, over Mr. Thorp’s protest that M. Gusev had already spoken twice. M. Gusev denied that restitution to Hungary was prevented by the ACC and asked why, if the U.S. had no reparation claim and recognized Hungary’s right to restitution, it did not return this property to Hungary. Mr. Thorp explained that the U.S. had presented a proposal to the ACC in Berlin regarding [Page 638] restitution to ex-enemies and that this proposal had been referred to a subcommission for study at the suggestion of the Soviet representative. Until the ACC had given its approval it would not be appropriate to take any measures of restitution. The U.S. Government supported such restitution, though it did not recognize a “right” of the ex-enemies to restitution. On a roll-call vote the U.S. amendment was then defeated by 7 votes to 5, with 2 abstentions. Those supporting the amendment were U.S., Australia, Canada, New Zealand, and South Africa. Greece and India abstained.
After an exchange of views M. Hajdu (Czechoslovakia) agreed to withdraw the Czechoslovak amendment (1 Q 9) [C.P.(Gen.) Doc. 1.Q.9], by which the period over which reparation would be paid would be changed from 8 years to 6 years, and to propose instead that the Commission unanimously agree to include in the Record of Decisions a statement that the fact that the period of reparation deliveries was set at 8 years by the Treaty did not affect in any way the agreement on reparation between Czechoslovakia and Hungary, except that the period set in the agreement should be extended to eight years. The Commission agreed to insert such a statement in the Record of Decisions by 8 votes to none, with six abstentions. The U.S. supported the proposal.
The Commission then adopted Article 21 (Reparation) as it stood in the draft Treaty by 8 votes to 5 (U.S., Australia, Canada, New Zealand, South Africa), with one abstention (India).