Foreign Relations of the United States, 1946, Paris Peace Conference: Proceedings, Volume III

CFM Files

Verbatim Record

August 15, 1946, 10 a.m.

C.P.(Plen) 18

President: Dr. Wang Shih-Chieh (China)

Hungarian Statement—General Discussion

The President: The meeting is now open.

The first item of the morning’s agenda is the discussion on the statement made yesterday by the Hungarian Delegation. Two speakers have asked to be heard. The first speaker will be the Czechoslovak Delegate M. Masaryk.

M. Masaryk (Czechoslovakia): Mr. President and fellow delegates. We have been hearing statements by ex-enemy countries during the last few days. Yesterday Hungary was given the opportunity to tell us, the members of the United Nations, the Hungarian Government’s reaction to the draft of the Peace Treaty presented to us by the Council of Foreign Ministers. The speech we listened to was a well-guarded secret until four o’clock yesterday afternoon. The other speakers were not quite so secretive. When the arc lights were turned on to the platform I closed my eyes for a little while, listening attentively, and I asked myself two questions:

First, had I not heard this speech before?

Had I not heard it many times before, from 1918–1938, by various representatives of Hungary—admirals and others?

And the second question I asked myself—who won this war—the United Nations, or Hungary? Who was admitted to this chamber to state his views and then withdraw—was it Hungary or was it Czechoslovakia. I am still a little bewildered by it all, and you will all agree that we heard precious little about the drafts, but a great deal about the real culprit among the Nations of Europe—Czechoslovakia. There is no counterpart in Europe to the attitude of Czechoslovakia as far as minorities are concerned, during the period between the two wars—considered by many as twenty years of peace, in reality, twenty years of armistice.

Here I wish to say that I did not expect to make this sort of speech when I arrived in Paris as the head of our Delegation. This speech was forced upon me.

The transfer of populations is not our idea. It worked well after the Greco-Turkish war. For twenty years Czechoslovakia did her best to prove to the world and also to herself that the notion of a transfer was alien to her ideas of democracy. We had Germans in the cabinet for several years, and we gave to our Hungarian citizens not only what Mr. Gyöngyösi calls “les droits de l’homme”, but much, much more. What was the result? The minority section of the League of Nations was continually swamped and besieged by complaints from our Hungarian fellow citizens, complaints in very similar language to that we heard yesterday. In those days it was called “Nom, nom sohn” and the integrity of St. Stephen’s crown was the theme round which these arguments were woven into a hymn of hate. To-day the representative of the Republic of Hungary does not speak of the crown, but the resemblance of the arguments strikes us, who have been trying to find a modus vivendi, and who shall continue to do so, as most remarkable.

We Czechoslovak representatives and passionate democrats are not afraid to speak of our ancient crown of St. Stephen. We know it is a beloved museum piece, never again to be worn by a King of Bohemia.

Yesterday’s speech will not make these endeavours any easier. With the exception of a few generalities we did not hear from M. Gyöngyösi a clear condemnation of twenty years of semi-Fascist and Fascist and always feudal regime in Hungary.

Less than a week ago Mr. Balogh, member of the present Hungarian Government, told a large audience of Hungarians that present-day Czechoslovakia was a Fascist country. Moreover, who was the first country in Europe to start an anti-Semitic drive long before Hitler came into power? What has become of the very large Jewish minority in Hungary—half a million, in fact. They were not all taken away by the Germans, but they disappeared very mysteriously, or perhaps not quite so mysteriously. But we have not heard a word about that in M. Gyöngyösi’s speech.

Mr. Gyöngyösi elaborated a very interesting thesis about small nations. He told us that a small nation has no freedom of decision during crucial periods of its history. We disagree thoroughly with that notion. We think, indeed, we know, that small nations not only can but must proclaim their point of view at the time of any great international crisis. What about those numerically small nations, Yugoslavia, Australia, Canada, South Africa, Norway, Holland, Belgium and the others who all fought and gave their sons for the cause of freedom?

Mr. Gyöngyösi tells us that the Hungarians wished and hoped for an Allied victory. That is not enough. How many Hungarian airmen did fly away from Horthy to join Stalin, Roosevelt and Churchill? Not one. How many Hungarian volunteers joined the Allied forces, formed battalions, divisions and army corps alongside the fighting units of the twenty-one nations represented in this room? It may be true that the Hungarian people helped refugees from the Horthy-Hitler partnership’s forces. We know that many of our men who tried to escape via Hungary landed in the notorious Budapest prison called the Citadella.

After listening to the description of the Hungarian resistance movement I thought of a book written in 1946 by a real Hungarian democrat and patriot, Rustem Vámbéry, who had to leave Hungary a few years ago on account of the opinions he held. I quote three different places in this book which is called “Hungary—to be or not to be”. First he says:

“It is to be regretted that only few signs of this obstruction and sabotage were noticeable until the last phase of the war, when Budapest workers offered resistance to the Germans.”

Second he says that “it is true that Hungary did not want to fight on the side of Hitler to the very end, but it did want to fight at the beginning, when short-sighted politicians rejoiced at Hitler’s success and believed in his victory. And, moreover, she did unfortunately fight to the bitter end. When the defeat of the Axis became more and more evident the Hungarian Government, anxious to keep the loot received from Hitler and Mussolini, made more or less open peace overtures to the United Nations.”

Please remember, it is not myself speaking, but Mr. Rustem Vámbéry.

We are not surprised that the spokesman of Hungary chose Czechoslovakia as his main target. He thought that an offensive was the best way to gloss over certain not too savoury phases of those turbulent years.

Quite a while before the war the Hungarian minority leaders in Czechoslovakia made common cause with the Sudeten traitor Henlein, and what is worse, with the arch-murderer, Frank, perpetrator of the shocking crime of Lidice. Many Hungarian terrorists crossed our frontier at this time and organised sabotage in Slovakia and all kinds of activities reminiscent of Hitler’s.

After the sordid Vienna award by Italy and Germany,⁶ Hungary very quickly occupied the southern part of Slovakia and tens of thousands of Slovaks and Czechs were pushed out in a manner which was in keeping with the behaviour of the Axis. In the charming little town of Surany, Hungarian military opened fire on peasants leaving the church just because they were singing Slovak hymns. It must be remembered that this happened before the War. What happened during the last phases of the War?

During the first years of the war the Hungarians’ help to the Allies was conspicuous by its absence. Then, in 1944 the Slovak nation rose behind the German line and a magnificent insurrection began. The Germans had to throw seven divisions into action to hold the front. The Hungarians helped them as best they could, even after the armistice was signed. The Hungarian military formations in Slovakia assisted actively in mass executions of Slovak patriots and partisans.

After all these unspeakable experiences, can you wonder that we did not give back all the rights and privileges of which the Hungarians had taken such abusive advantage for so long? What country, I ask what country in the world would have acted differently than Czechoslovakia?

The behaviour of the German and Hungarian minorities in Czechoslovakia was very similar. Nevertheless, we have always made a distinction and will continue to make a distinction between the German and Hungarian nations. We wish to live as good neighbours with a truly democratic Hungary, the Hungarian people, the workers and honest farmers deserve a better fate than they had in the past owing, not to Czechoslovakia, but to their feudal masters under various disguises.

The question of the transfer of population is not mentioned in the draft of the treaty with Hungary, therefore I am not going to deal with it in a detailed manner. Yesterday’s speech seems to most of us a most convincing argument that this question must be considered by us all. We shall ask you to give it your attention and thus we offer you every opportunity to see for yourselves that we wish to proceed in a humane, open and democratic manner. The Hungarian Government has so far accepted only a partial solution of this pressing matter, and has concentrated on frustrating by every possible means a real final solution which, it seems to us, is vital to both parties. The Hungarian minority in Slovakia is a constant source of unrest, and I must confess that Czechoslovakia feels unable to give its approval to a renewal of the manoeuvres to which I have just referred. Irredentism territorial changes, and make-believe democracy do not make for peace, security and prosperity in Central Europe.

I think I made it clear that the present-day Hungary is not ready to give up her old and notorious revisionist policy, aimed, as always, against Czechoslovakia. And to our way of thinking this suggestion that we revise the treaties is closely allied to a reactionary policy.

May I mention one official Hungarian spokesman of a very recent vintage? He is the Hungarian Press Attaché at the Legation in Washington, Mr. Borsedy. This is what he says in his book entitled Hungarian-Slovak Rapprochement:

“The assertion by Czechoslovak propaganda to the effect that the democratisation of Hungary would do away with the revisionist policy is altogether false. The revisionist tendency was not due to the fact that the country was run on feudal lines. The relationship between feudalism and revisionism is quite another matter, like speculating on the revisionist policy of a democratic Hungary. A democratic Hungary would probably have collaborated with her neighbour in the hope of securing the rights of the Magyar minority and, moreover, creating a favourable atmosphere with a view to a revision of her frontiers. However, it is impossible to see how any Hungarian Government could have renounced the idea of a revision of the Treaty of Trianon.”

You heard yesterday how Mr. Gyöngyösi, in some parts of his speech, hinted at revisionism and in others defended it. For the time being he only disclaimed the idea of aggressive revisionism.

The spokesman of the Republic of Hungary referred to statistics and figures. I am not going to deal with them today. It seems to us that a certain degree of inflation has been introduced into the already notorious Hungarian statistics.

Just a word about the economic situation in Hungary. We realise, indeed, that it is far from satisfactory, but it is not solely due to military operations in Hungarian territory. We have all lived through similar experiences during six years of Hitler’s total war. Each country has handled its own problem as best it could. According to official documents, Hungary quite voluntarily, and in agreement with Germany transferred some 720,000 tons of raw materials, goods, machinery, rolling-stock etc. to Germany and Austria. When the war was over, instead of readjusting their economy, the Hungarians embarked on the most radical inflation in history. Hungarian official sources admit that this course was discussed and adopted regardless of the shocking economic and moral consequences it entailed. We witnessed a similar attitude in Germany after the first world war.

It is obviously easier to appeal to the generosity of others than to work by the sweat of one’s brow.

I have come to the end of a speech which I made reluctantly—most reluctantly. We came to Paris resolved to help in concluding a permanent peace with all the countries concerned, including Hungary. If anybody thinks my attitude is due to hatred or lack of understanding, he is grievously mistaken. Like my country, I am a very poor hater. No country represented at the Paris Conference wants peace more ardently than Czechoslovakia. The solution of our particular problems in connection with Hungary has been worked out honestly, after long years of painful experience. We ask for your opinion and, if you think it justified, for your help.

The President: There still remains a number of speakers to be heard. First of all, M. Kisselev, Delegate of Byelorussia and then the U.S. Delegate, Mr. Byrnes.

I call upon M. Kisselev, Chief of the Byelorussian Delegation.

M. Kisselev (Byelorussia) (Interpretation)

The Peace Conference was convened to study the Draft Peace Treaties with the ex-enemy countries, including the Draft Peace Treaty with Hungary, and to submit recommendations on the matter. We have listened with close attention to the statement made by the Chief of the Hungarian Delegation, M. János Gyöngyösi, who has put forward the views of his Government regarding the Peace Treaty with Hungary.

The whole world knows that from 1938, the pro-Fascist Hungarian Government embarked on a policy of close co-operation with Nazi Germany. In pursuance of her alliance with Germany, Hungary declared war and invaded Czechoslovakia and Yugoslavia. Afterwards, on 28th June 1941, she even declared war on the Soviet Union. Thus the pro-Fascist Hungarian Government, acting against the interests of its subjects involved the latter in a long and bloody war. The Hungarian Government mobilised all its resources in support of the German aggressor.

Hungary provided troops for the Eastern Front, and sent them into action against the Red Army. For this purpose she sent 17 of her best divisions—17 crack divisions. The Hungarian Army inflicted unspeakable suffering on the inhabitants of the countries they invaded and particularly on the people of Byelorussia.

The looting and violence which occurred caused considerable hardship to the population of the occupied countries.

In spite of this, the Byelorussian Delegation considers that the Peace Conference should not be inspired by feelings of hate for the Hungarian people. The Peace Conference must also bear in mind that Hungary withdrew from the war against the Allies, that she broke with Germany and that on 28th November 1944, she declared war on Germany.

The Council of Foreign Ministers took all these factors into consideration when they drew up the Draft Peace Treaty with Hungary and that is why I see no reason for going into the details of each section of that Peace Treaty. However, M. Masaryk, Chief of the Czechoslovak Delegation and speaking on its behalf, has raised a number of points which do not appear in the Peace Treaty.

I am referring to the questions relating to the transfer of Hungarians now living on territory ceded to Czechoslovakia.

Now, it is necessary to define this problem. It should be remembered that some of the Hungarian elements in Czechoslovak soil were constantly causing trouble and preventing good relations between the two countries—so much so that Germany was given a pretext for taking certain districts from Czechoslovakia and handing them over to Hungary. Such was the outcome of the Vienna Award of November 2nd, 1938.

The Byelorussian Delegation feel it would be well to eliminate these sources of trouble, which may cause further difficulties between Czechoslovakia and Hungary at some future date. Such a course is indicated not only because the establishment of good relations would serve the interests of Hungarians and Czechoslovaks alike, but also because it would be a stabilising factor in the maintenance of peace in that part of Europe.

Lastly, I would draw the Conferences’ attention to the fact that, as soon as they could rid themselves of the pro-Fascist elements which held them enslaved, the Hungarian people resolutely set out along the path of democratic progress, and have already achieved a number of successes.

The democratic Government of the new Hungary has carried through several reforms which have facilitated the restoration of the country, securing better living conditions for the inhabitants and enabling them to exercise their civil rights.

The Byelorussian Delegation ventures to hope that peace with Hungary may help to foster the democratic elements of the young Hungarian Republic and facilitate the establishment of friendly relations with her neighbours. Indeed, we hope to witness the inception of a spirit of international co-operation between Hungary and all the United Nations.

M. Byrnes (U.S.A.): Gentlemen, the procedure of having the representatives of the former enemy States present their views at the beginning of the Conference instead of at its end is a commendable one. This procedure will enable the Commissions to start their work, not only with the preliminary treaty drafts prepared by the Council of Foreign Ministers, but with the general observations of the former enemy States on those drafts. This procedure was devised wisely, to facilitate the work of the Conference,

Some of the discussion which immediately followed the general observations of the former enemy States on the proposed treaties, has not made the work of the Conference easier and has not helped us on the road to peace. The United States would be willing even to let reflections cast on her policies pass unnoticed, if her silence would help us on the road to peace. America is eager to work and co-operate with her allies in peace, as she was willing to fight with them in the war and, no one views with greater regret than I, the repulse to our efforts to work and to co-operate. But peace among Allies in this interdependent world, cannot be favoured by ignoring repeated misrepresentations levelled against America, from this floor. The United States has no apology to make for her principles of justice, equality and freedom, which we have striven for to the best of our ability, sometimes successfully and sometimes unsuccessfully, to have written into the peace treaties. A word of explanation is required to make it clear why some questions were decided in the Council and others were not. All the members of the Conference will agree that it would be helpful to harmonise their viewpoints so far as possible, to avoid conflicts, friction and misunderstanding when the Conference did convene, but we urged from the outset that when, after discussion in the Council, there was a difference of viewpoint, we should request the advice and the recommendations of this Conference.

Our friends of the Soviet Government, on the other hand, took the view that it could not consent to the calling of the Conference until all issues which they regarded as fundamental from their viewpoint, were agreed upon at the Council of Foreign Ministers. It so happens, therefore, that the issues which the Soviet Government regard as fundamental, have been settled in the Council of Foreign Ministers. We support those settlements. On the other hand, a number of issues which we regard as important are unsettled, and the Soviet Government vigorously opposes our viewpoint. We do not object to the Soviet Government vigorously presenting its viewpoint on these issues before the Conference. We did not and do not ask the Soviet Government to come to agreement with us on these issues before we are willing to discuss them with our allies in this Conference. But we object to misrepresentation of our position and motives. We object to accusations being laid against the Italian Government, because in its opening statement it did not on all issues, associate itself with the Soviet point of view. We object to the Soviet Government giving the impression to the Conference that other ex-enemy States are more democratic than Italy, because they have harmonised their viewpoint with the Soviet Union. The new Italy, constituted by a free election, is entitled to the sympathy and encouragement of every democratic State. The United States believes in the sovereign equality of nations. We are opposed to making small nations satellites of larger States. The Soviet representative, in answering the opening statement of the Italian representative,⁷ referred to Great Powers which have enriched themselves during the war. The Soviet representative so spoke in the course of warning Italy against the economic ambition of those powers. Now, what Great Power enriched itself during the war? I certainly know of none. I hope that the Soviet representative was not referring to the United States of America, which came so unhesitatingly to the support of the Soviet Union when in peril. Our only regret was that we could not provide more help and provide it more quickly. America never bound herself to withhold aid from those resisting Axis aggression. Months before the United States of America was attacked, President D. Roosevelt announced that America would become the Arsenal of the democracies and took energetic action to organise Lend-Lease, which continued in increased measure after the United States entered the war. Over 11 billions went to the Soviet Union under Lease-Lend programmes, and, as I said, our only regret was we could not send more. The United States’ expenditure during the war aggregated 400 billion dollars. That represents American labour, human material and resources. Most of the money was borrowed from the people of the United States. For years to come they must work to pay off this debt. For this expenditure the United States of America has received and asked for no recompense, other than the freedom she fought to secure for herself and for all mankind.

The United States have contributed generously to U.N.R.R.A. In other ways also they have contributed and will continue to contribute to the rest of the war-devastated countries. They offer their friendship to all those countries who will reciprocate. I recall again that, directly and indirectly, America has aided the people of Italy to the extent of 900 million dollars, since the Armistice. Under the proposed treaties, the United States seeks no territory and seeks no reparation. The United States have asked that property of the United States and other United Nations, lost or damaged in the ex-enemy State, should be restored or compensated for. Now, that principle is usually recognised in peace treaties. The proposal was agreed to in principle by the Soviet Government in Potsdam. It was agreed to in the Armistice terms, but it is now said that this proposal is an unfair and onerous burden, although it involves nothing like the great sum our Soviet friends are exacting from these countries as reparations. The restoration of United Nations property in these countries would be made in local currency and would leave productive assets in those countries which would add to the taxable resources of the country. Reparations are different. Reparations mean foreign exchange or goods taken out of those countries and thereby constitute a drain on their resources. Repairing damage to United Nations factories in ex-enemy countries, helps to restore industry in those countries and aids in their economic recovery. It takes nothing out of those countries. Reparation, on the other hand, takes valuables assets from these impoverished States and necessarily slows down their recovery.

The United States must also repudiate the suggestion of the Soviet Delegation that the economic clauses proposed by the United States and which are based upon the principle of equality and most-favoured nation treatment are based on an effort to exploit the ex-enemy countries for the selfish advantage of the United States.

Now, I should have thought it unnecessary at this late date in the history of the United Nations to occupy the time of the Conference with a defence of the principles of equality of economic opportunity for all countries. It is a principle embodied in the Atlantic Charter and re-affirmed in the United Nations Declaration. It is an accepted principle in one of the treaties presented to this Conference by the Council of Foreign Ministers. Yet, in spite of this impressive record of agreement, we have heard this principle of economic liberty denounced as a method of enslavement and exploitation of the weak by the strong. We have heard it suggested that the ex-enemy countries should have objected to the provisional establishment for them of a position of reciprocal equality with members of the United Nations during a transitional period, in which they will have time to conclude the definitive commercial treaties. But at the Potsdam Conference the proposal of the United States was accepted in principle. Among other things, the proposals which were accepted in principle declare that “We deem it essential that the satellites do not conclude treaties, agreements or arrangements which deny to Allied nationals access on equal terms to their trade, their raw materials and industry.”

A policy of economic equality permits each nation to carry on its economic relations with others along the lines of its own economic welfare. By avoiding preferential arrangements with some countries it eliminates corresponding discrimination against other countries which inevitably give rise to discrimination.

Would anyone seriously propose that an opposite intent should be written into these treaties? That Italy or the Balkan countries should be free to discriminate in favour of some and against others of the Allied countries which co-operated in the defeat of the aggressor? No one would make that suggestion. Would anyone suggest that these countries which were the principal objects of German economic penetration and German settlement, should continue under the same system of economic relationship, but should merely substitute for Germany some other country, upon which they would be almost entirely dependent for supplies and for markets?

It is out of such arrangements and not out of non-discriminatory trade that enslavement and exploitation arise. It has been suggested that the Article constitutes an impairment of the sovereignty of the ex-enemy States. Let us examine that argument. Unlike the corresponding articles of the 1919 treaties, the present treaties impose no unilateral obligations. They merely require that, during a period of 18 months, Italy, the three Balkan countries and Finland will accord non-discriminatory treatment in commercial matters to those members of the United Nations which reciprocally grant similar treatment to them in like manner.

This is not a punitive article of the treaty. It is as much in the interest of the countries to which it is offered as it is in the interests of the United Nations. It affords all countries, and especially small countries, a measure of protection against the ruthless exercise of economic and political power. It allows each country to develop its resources according to its own aptitude and to buy to its best advantage what it needs from other countries. It is the best assurance against a deterioration of world economy into a series of economic blocks.

The United States has sought no territorial or other exclusive advantages for itself from this war. But it does attach the greatest importance to the establishment of conditions for stable peace and prosperity throughout the world. It cannot remain indifferent to arrangements under the treaties or outside of them, which tend to restrict and divert trade or distort economic relations to the prejudice of the great majority of the United Nations and of world peace and prosperity.

Before I close, I want to say a word or two about Greece. In this Conference she has been criticised by an ex-enemy State and by some members. That is very unfair. At a most critical hour, before some of us realised our own peril, that small but great nation resisted with matchless valour the full might of the European Axis.

I shall never forget and you will never forget how we then waited for the news from Greece. With the courage which she has ever shown, she held the Italian and German attack; she gained valuable time for all of the Allies. Her losses were great and, whatever our differences may be, we should not forget the debt we owe to the people of Greece.

I worked to bring about this Conference, to advance the cause of peace, not to quarrel with any of our Allies. The people of the United States have no quarrel with the people of any Allied State. The peoples of all the United Nations want peace. Let us—their responsible leaders—not disappoint their hopes and their prayers.

The President: There is still one speaker on the list: I call on M. Vyshinsky, representative of the Soviet Union.

M. Vyshinsky (U.S.S.R.) (Interpretation): We have just heard a series of declarations and observations on the statement made yesterday by the Hungarian Delegate and concerning the Peace Treaty which is being examined by the Conference.

I have asked to be allowed to speak because I deem it necessary to state, on this subject, the conceptions of the Soviet Delegation.

The last speaker, the honorable Delegate of the U.S.A., has touched, in his statement, upon a great number of questions which bear no direct relation to the peace treaty with Hungary. He spoke to us about Italy, about more general questions and even of the procedure we have adopted for the work of this Conference. Of course, each speaker is at liberty to choose the way which, in his opinion, will take us a step forward. But this particular way does not seem to me to lead us forward and we do not think it will contribute to the success of our work.

All that M. Byrnes has said about the questions of procedure, the fate of Italy, of Greece or other subjects related thereto, does not seem necessary, in our opinion to be discussed now. But we cannot accept one of the remarks made by the U.S.A. Delegate, in which he says that the ex-enemy states would also have the possibility of being heard before the end of the Conference. This declaration is not in keeping with the procedure we have adopted. It is premature to speak, at the present moment, of measures that can be taken by the Conference or anticipate an action which may or may not be taken at some future date. The question, in order to be put before the Conference, should be written on the agenda of a meeting and discussed, according to the rules accepted in all international conferences.

I would like, for a minute to stop and consider the declarations made by M. Byrnes, declarations obviously directed against the Soviet Delegation. I would like to make it clear that I am not going to enter into any polemics with him; this is not the time for it. If necessary, M. Molotov, as head of the Soviet Delegation, will answer it if he judges it to be an opportune moment.

I would only like to refer to questions related to the peace treaty with Hungary and, primarily, to speak about economic clauses which have not been settled by the Council of Foreign Ministers. Without entering into details, I consider it would be of extreme interest to know why the Council of Foreign Ministers could not come to an agreement; why, in the course of the preparation of the draft peace treaties with five different countries, the Council was able to settle a considerable number of important and difficult questions, but could not agree on the economic clauses? Why, if the principle defended by the U.S.A. and upheld, evidently, by the U.K. Delegate and some other Delegates whose opinion we know beforehand, was equitable and reasonable, has the Council been unable to come to an agreement?

The Soviet Delegation is of the opinion that it is necessary to take into account a certain amount of vital elements in elaborating economic clauses and in examining claims submitted by the victorious states against the vanquished. Unquestionably, one of those elements is the value of the engagements previously undertaken by a vanquished state. Consequently, such an engagement cannot be imposed twice. It would be dangerous to take such an action and it would not even be reasonable, as the resources of a vanquished country must be taken into account; fresh demands, and further burdens cannot be added to obligations previously contracted, when all sources remain the same.

All this waste of words on such observations is not justified and can only result in creating new misunderstandings.

These are the views of the Soviet Delegation, whose principles have already been stated on several occasions.

I will merely remind you that in elaborating economic clauses, it is necessary to take into account engagements previously assumed and, further, the economic possibilities of the vanquished nations.

There is, of course, a basic postulate: we, the representatives of the Soviet Union, have the right to demand reparations equal, rouble for rouble, to the war damages inflicted on us. But, apart from that, we must face the realities. We must not lose sight of the demands of reason and equity.

Unfortunately, all the Members of the Council of Foreign Ministers, who have taken part in the elaboration of treaties, have not always adhered to this principle and there lies the source of differences that have prevented an agreement on the economic clauses.

Facts have to be taken into account, otherwise, the decisions taken very soon turn against those who wanted to ignore these vital factors.

As far as Hungary is concerned, the Soviet Government has always scrupulously observed these principles. We have taken into account present day facts and Hungary’s existing economic situation.

What is this economic situation? Let us examine what fresh claims can be added to those stated in the armistice convention and the preliminary agreements.

Let us examine what has already been laid down. I repeat it would be both dangerous and harmful to act differently.

What was the policy of reparations pursued by the Soviet Union in respect of Hungary?

We have first submitted our rightful claims and then, we have tried to mitigate them by considerations of reason, because we wanted the signed clauses to be really viable.

We would like to remind you, for instance, that during the year 1945, Hungary was to deliver to the Soviet Union goods to the total value of 35,500,000 American dollars. In fact, the deliveries have only amounted to 10,500,000 i.e. slightly less than 35% of the promised deliveries and obligations entered upon at that time.

This manner of paying reparation and compensation seems to us difficult to accept. Nevertheless, we have tackled the problem at its root; we have tried to discover what were the real facts. We have based ourselves on the commercial agreement which governs the exchange of goods between the Soviet Union and Hungary. By this exchange agreement, we note that the Soviet Union has delivered to Hungary 6,000,000 dollars worth of goods, while receiving, as I have just stated, only 10,500,000 dollars in exchange in discharge of her initial obligations.

Indeed, a simple mathematical calculation will show that in reality the sum received by the Soviet Union, representing sundry compensations, was 3,500,000 dollars, instead of 33,500,000 dollars, and that in virtue of an agreement which is known to the other two great powers, and which is now in force.

I would point out that, in spite of the smallness of the Hungarian contributions, the Soviet Union itself has scrupulously fulfilled all its pledges, and at the close of last year, when Hungary asked the U.S.S.R. for additional supplies for the period 1946–1947 in order to sustain her failing economy, we agreed to provide them.

I would add in passing that the Reparations Treaty provided for payment within six years, and that we generously agreed to extend the period to eight years.

Under this new agreement Hungary was to supply us with 21 millions in goods during the first year, 23 millions during the second year, 25 millions during the third, and so on. All these proposals were generously accepted by the U.S.S.R. In this connection, it is not without interest to recall that the United States representative protested against the payment of reparations by Hungary to the Soviet Union. He maintained that this was the cause of Hungary’s economic troubles. Here we have a strange position indeed, for not only does he discount the fact that we agreed to accept payment in part for damages due in toto, but also he forgets that we have given Hungary substantial assistance in the restoration of her economy.

The Soviet Government has been faithful to its reparations policy, and has never deviated an inch. We have always kept firmly to realities, and never entertained any fantastic ideas. We wanted to help to restore Hungarian economy, in order to enable Hungary to join the democracies at last. That is one of the factors which will make for the restoration of European economy as a whole.

If our fellow-delegates can see their way to adopting this view, which we consider reasonable and just, we think that the Conference might without difficulty accept the economic clauses we suggest, which are based on the possibilities and requirements of the conquered nation.

The real causes of Hungary’s economic difficulties lie in the war expenditure incurred by that country in helping Germany against the United Nations. They can also be imputed to the expenses of the pro-German Fascist leaders, and also to the fact that much Hungarian wealth was taken into Germany by the Hungarian Puppet Government and by Szalassy’s partisans. The greater part of this wealth is now in the American Zone. It is due to the lack of this wealth and the fact that it has not yet been restituted to Hungary that this country is hampered in its economic rehabilitation. Yesterday, the Hungarian delegate told us that up to the present, two-thirds of the Hungarian Railway’s equipment had not yet been restituted. Where, then, is this equipment? It is impossible to restore Hungarian economy without it or to ensure the circulation of trade. Without means of transport, the very life-blood of Hungarian economy is stopped.

It was also mentioned that a large proportion of Europe was now living on charity. The Soviet Delegation contends that these countries must not be placed in such a condition that they are forced to ask for alms. There is no point in giving with one hand and taking away twice as much with the other.⁸

It is true that Hungary has received assistance. But that does not alter the fact that two-thirds of its rolling stock is missing. Where is this equipment? I must repeat that without it Hungary cannot possibly proceed with its economic reconstruction and we must not overlook this fact. I ask the Delegates here present to remember this.

If it is truly desired to ensure the economic rehabilitation of certain European countries, and, in point of fact this constitutes the corner stone of European economic reconstruction as a whole, then the Soviet Delegations policy with regard to the drafting of the economic clauses must be adhered to in its essentials.

I would now like to say a few words with regard to the statement made by the Chief Delegate of Czechoslovakia, Mr. Masaryk. The points at issue raised in his declaration are of a most serious character. The Soviet Delegation considers that they are of major importance and intends to take an active part in the search for the most equitable solution. That is a solution which will satisfy both our interests and the common principles which we have all professed.

The President. The general discussion on the Hungarian statement is closed. In principle, we should now receive the Finnish Delegation but as it is now too late to do this, I will adjourn the meeting.

The Meeting will be resumed this afternoon at 4 p.m. when the Finnish Delegation will be invited to state the views of its Government. After the Finnish Delegation’s statement there will be a general discussion and the various Delegations which have expressed the desire to speak, will be successively called upon to do so.

The meeting is closed.

(The meeting rose at 1:15 p.m.).

6. For text of the Vienna Award of November 2, 1938, see Documents on German Foreign Policy, 1918–1945, series D, vol. iv, p. 125.
7. The statement by Molotov under reference is summarized in the United States Delegation Journal account of the 14th Plenary Meeting, August 13, p. 189.
8. In response to public indications of approval by the Czechoslovak delegation of the views presented here, Byrnes requested in telegram 4368 (Delsec 877), August 30, that the policy of continuing the extension of credits to Czechoslovakia be re-examined; for text of telegram, see vol. vi, p. 216.