860F.51/5–2846
The Foreign Liquidation Commissioner ( McCabe ) to the Czechoslovak Ambassador ( Hurban )
My Dear Mr. Ambassador: Representatives of your Government have expressed an interest in the purchase of United States surplus property. I am glad to inform you that the Office of the Foreign Liquidation Commissioner has surplus property available which may be acquired by your Government. The quantities and types of such surplus property, the prices thereof and other terms of sale, including provision for exchanges of property, are matters for agreement between the Office of the Foreign Liquidation Commissioner, or its Field Commissioners, and the representatives of your Government. For the purposes of any purchases which are made by your Government prior to January 1, 1948 of surplus property made available by the Office of the Foreign Liquidation Commissioner, we would be willing to extend a line of credit to your Government for an aggregate amount not in excess of $50,000,000 subject to the following conditions and terms of payment:
(1) A sum in United States dollars, equal to the total purchase price of individual sales of such surplus property shall be paid in twenty-five (25) equal annual installments beginning on July 1, 1952 and continuing thereafter on July 1, of each year up to and including July 1, 1976, subject to the provisions of paragraphs (4), (5) and (6) of this letter.
(2) Interest shall accrue from the respective dates specified in the individual sales contracts for the taking of delivery by the Government of Czechoslovakia, and shall be paid on the outstanding unpaid balance of the total purchase price. The rate of interest shall be two and three-eighths percent (2⅜%) per annum, payable on July 1 of each year, the first payment to be made on July 1, 1947.
[Page 201](3) Except as otherwise provided herein, all payments of principal and interest shall be made in United States dollars to the Treasurer of the United States, through the Federal Reserve Bank of New York.
(4) (a) In the event the Government of the United States wishes to receive local currency of the Government of Czechoslovakia for the payment of any or all expenditures in Czechoslovakia of the Government of the United States and its agencies (but not including expenditures of or for its armed forces, except by mutual agreement of both governments), the Government of the United States may request at any time or times, and the Government of Czechoslovakia agrees to furnish at such time or times, Czechoslovakian currency at an exchange rate as provided in sub-paragraph (4) (b), in any amount not in excess of the net outstanding balance of principal (whether or not then due in United States dollars) plus interest (then due in United States dollars) payable under the terms of this letter; provided, however, that the amount of local currency which the Government of the United States shall be entitled to receive in any single calendar year under the terms of this paragraph shall be limited as provided in subparagraph (4) (c). In the event that local currency is received by the Government of the United States under the terms of this paragraph, the United States dollar equivalent of the amount received shall be credited first to past due interest, if any, and then pro rata to all remaining unpaid installments of principal.
(4) (b) The exchange rate shall be that established by the International Monetary Fund, provided that, if no such rate exists, the rate shall be that rate most favorable to the United States which was used in any Czechoslovakian Government transactions with any party during the preceding twelve months period.
(4) (c) Except by mutual agreement between the Government of the United States and the Government of Czechoslovakia, the Government of the United States shall not be entitled to receive in any single calendar year under the terms of this paragraph (4) and paragraph (6) any local currency or property the combined total value of which is in excess of an amount to be computed as follows:
| In 1946 | No local currency or property. |
| In 1947 and in each year thereafter. | $200,000,000 or 10 percent of the total purchase price of individual sales, whichever is greater. |
(5) The Government of Czechoslovakia may anticipate the payment, in United States dollars, of any installment of principal, or any part thereof, provided that this right of anticipation may not be exercised when any installment of principal or interest is past due and unpaid.
(6) When the Government of the United States wishes to acquire any property, real or personal, tangible or intangible, or to improve any property in which it has an interest, at the expense of the Government of Czechoslovakia, the Government of the United States will request at any time or times and the Government of Czechoslovakia agrees at any such time or times to enter into negotiations with the Government of the United States and to use its best efforts to consummate without any undue delay appropriate contracts by mutual agreement wherein the Government of Czechoslovakia will furnish to the [Page 202] Government of the United States the properties or improvements it desires or which its representatives have selected. Representatives of the Government of the United States may at their discretion conduct discussions directly with owners of property or with contractors for improvements as to fair terms and price prior to the acquisition of such property or improvements by the Government of Czechoslovakia for delivery to the Government of the United States. When performance of any such contract is made by the Government of Czechoslovakia, the Government of the United States shall credit the Government of Czechoslovakia with the United States dollar equivalent of the fair value received at an exchange rate as provided in sub-paragraph (4) (b), such credit being applied first to past due interest, if any, and then pro rata to all remaining unpaid installments of principal. The total value of property to be delivered by the Government of Czechoslovakia in any calendar year shall be subject to the annual limitations specified in sub-paragraph (4) (c).
(7) It is understood that the provisions of this letter do not restrict the right of the Government of Czechoslovakia to regulate, in a nondiscriminatory manner, expenditures within Czechoslovakia.
(8) If these terms are agreeable to your government it is requested that you indicate its acceptance thereof by signing and returning to me the enclosed duplicate original of this letter. When this has been done I shall inform my Field Commissioners as to the terms in order that they may be appropriately incorporated or referred to in any contracts for the sale or exchange of surplus property which may be executed between my Field Commissioners and representatives of your Government.
As we have explained in our informal discussions with representatives of your Government, the purpose of this letter is to facilitate our surplus property transactions by arriving at an overall understanding as to a maximum line of credit, credit terms and exchanges of property.
It is understood that upon your acceptance of the terms outlined in this letter, the existing arrangement whereby the Government of the United States has agreed to accept up to $10,000,000 in Czechoslovakian crowns in payment for surplus property will be terminated immediately, any Czechoslovakian crowns which may have been received thereunder by the Government of the United States will be returned to the Government of Czechoslovakia and any purchases of surplus property which may have been made under such prior arrangement will be paid for in United States dollars or otherwise credited in accordance with the terms of this letter (in which case the exchange rate used in computing the United States dollar obligation of the Government of Czechoslovakia shall be the same rate which was used in computing the original obligation in Czechoslovakian currency).
[Page 203]My letter to you dated February 12, 1946 regarding a dollar credit agreement for surplus property sales is hereby withdrawn.
Sincerely yours,
Special Assistant to the Secretary of State and Foreign Liquidation Commissioner
The terms of the foregoing letter are hereby accepted.
V. I. Hurban
(Date) 28 V 46.