Moscow Embassy Files

Memorandum by Mr. Frederick T. Merrill, Secretary, United States Delegation13


Istvan Bede, Hungarian Minister, en route to his post in London after several weeks in Budapest, made the following comments today on the draft treaty for Hungary:

The Hungarian Delegation will be forced by strength of public opinion at home to raise the Transylvanian issue.
The Delegation will hope to provoke discussion of Hungary’s economic situation in the Economic Commission. The Soviets’ waiver of reparation penalties was made to prevent the Hungarians from talking reparations. This concession will help the stabilization program by enabling the Government to balance the budget for at least several months, but Hungary had to pay a stiff price for this relief by surrender of capital assets (the coal mines in Transylvania). In addition, the Soviets’ assessment of the value of these assets was arbitrary and $20,000,000 below the Hungarian figure. The Hungarians after study of the treaty provisions feel that the Soviet position on the controversial economic clauses other than reparations is more favorable to them than our proposals.
The Czech proposal to deport 200,000 Hungarians from Slovakia was completely unjustifiable both from a humane and economic point of view and the Hungarians would protest. He understood we were opposed. The Czech territorial demands opposite Bratislava would cut the main highway to Vienna and were motivated primarily by prestige considerations. Bratislava had a sufficient area to expand in their present bridgehead and along the northern bank of the Danube. Ceding this territory to Czechoslovakia, however, might be the basis for some sort of an exchange of territory with the Czechs, but he did not mention a specific proposal which the Hungarians are said to have ready.
The Hungarian people are now fully aware of the draft treaty provisions and are shocked at the severity of the terms. Many of those well informed were blaming Rakosi for having sabotaged peace treaty preparations. The present Government would fall if such a treaty were [Page 829] signed but no repercussions as a result of the treaty would occur until after signature. At the moment internal political questions were uppermost.

Bede discussed the internal political situation at some length. Some of his remarks may be of interest to the Department and Budapest. The accompanying telegram is suggested.14

  1. This memorandum was directed to Messrs. Matthews and Reber.
  2. Not printed.