860F.51/2–1946: Telegram

The Secretary of State to the Ambassador in Czechoslovakia (Steinhardt)

secret
u.s. urgent

119. For the Ambassador. Deptel 82, Feb. 7. After discussion with Diamond of AmEmbassy,15 Dept considers advisable to clarify situation regarding Eximbank loan negotiations.

You should make clear to Czech Govt, that the Eximbank reconstruction loan is not likely to exceed approximately $50 million (plus a possible cotton credit of about $25 million) in view of Bank’s other commitments and limitation on its funds. Further Czecho credit needs would probably have to be taken care of by the International Bank for Reconstruction and Development after it begins operations.

Dept understands that Czecho Govt, considers that a loan of only about $30 million would be considered a failure of Masaryk’s mission and would result in unfavorable political repercussions. If that is the situation, you are authorized to inform Masaryk informally and unofficially that perhaps he should reconsider the advisability of his coming here and entrust loan negotiations to other officials. Dept wishes to avoid situation which would result in lessening of Masaryk’s prestige and thus weakening of democratic forces in Czecho Govt.

Dept wishes to know whether Czecho delegation which will attend meeting at Savannah (Mladek, Pazman, Krai and Hanč) will also be authorized to negotiate Eximbank loan. Urtel 215, Feb. 9.16

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Dept considers essential that Czecho loan delegation should have complete economic program showing in detail purposes for which reconstruction loan is to be used, Czecho import requirements, and data substantiating need for credit and ability to repay. You are authorized to impress this fact strongly upon appropriate officials.

Dept urgently requests your comments on loan situation. Dept also awaits your comments on Deptel 82, Feb. 7.

Byrnes
  1. On February 13, 1946, officers of the Department met with William Diamond, Senior Economic Analyst of the American Embassy in Praha, who had just returned from Czechoslovakia, to discuss the proposed Export-Import Bank loan to Czechoslovakia in relation to other pending economic questions (860F.51/2–1946).
  2. Telegram 215, February 9, 1946, from Praha, listed the members of the Czechoslovak delegation to the inaugural meetings of the Boards of Governors of the International Monetary Fund and the International Bank for Reconstruction and Development, held at Savannah, Georgia, March 8–18, 1946 (800.515–BWA/2–946). Telegram 245, March 28, to Praha, stated that Mladek, Krai, and Pazman had met with Department officers on March 21 and had been informed of those questions regarded by the Department as important in connection with an Export-Import Bank loan, viz. information of Czechoslovakia’s international economic agreements and commitments, early conclusion of an interim commercial agreement between Czechoslovakia and the United States, and an agreement with Czechoslovakia on adequate and effective compensation for nationalized American properties (860F.51/3–2846). Jan Mladek was an officer in the Czechoslovak Ministry of Finance and Czechoslovak Governor on the International Monetary Fund. Julius Pázman was Governor of the National Bank of Slovakia and Czechoslovak Alternate Governor on the IMF. Alois Krai was an officer of the Czechoslovak National Bank and was Czechoslovak Governor on the International Bank of Reconstruction and Development. Joseph Hanč was Czechoslovak Counselor of Embassy in Washington and Czechoslovak Alternate Governor on the IBRD.