860F.51/7–1946: Telegram
The Secretary of State to the Ambassador in Czechoslovakia (Steinhardt)
912. Deptel 477, May 9. Negotiations on prerequisites Eximbank reconstruction loan approaching satisfactory completion. Texts of notes to be exchanged will be cabled shortly.
Note will cover points 1 through 5 Deptel 477, May 9, and (6) undertaking that Govt monopolies shall be influenced solely by commercial considerations in making purchases or sales; (7) declaration that bilateralism likely to restrict world trade if continued beyond transitional period and that ultimate objective is multilateralism; (8) agreement for nondiscriminatory application of quantitative import controls within limits of bilateral arrangements.
Re compensation for nationalized properties, note will contain undertaking on mutual basis to make adequate and effective compensation [Page 206] to nationals or corporations of one party whose property is nationalized or otherwise taken over by the other party. Dept proposes to add reference that US Govt pleased that negotiations on compensation will begin shortly in Praha (urtel 1214, July 344).
Dept considers that (1) granting of loan to Zecho desirable now as foreign policy objective; (2) conditions should not exceed those required of Poland re compensation question; (3) special conditions re compensation should not be attached to note, especially since Zechs have shown greater willingness to negotiate than Poland; and (4) conditions re compensation should not exceed those officially stated by Dept in negotiations with Zecho representatives Mar 21 (Deptel 245, Mar 28), Apr 25 (Deptel 477, May 9), May 29 (Deptel 675, June 10), June 24 (Deptel 813, June 27), and July 8.45 Dept concludes you agree with these conditions in view urtels 750, May 11; 894, May 27; and 1095, June 20.46 In view approval of loan by Board Directors Eximbank May 8 (Deptel 477, May 9) and pressure of other applicants on limited funds available, Dept believes undesirable to delay loan further after Czechs have met conditions stated by Dept.
Re urtel 1214, do you require further instructions or information re compensation negotiations? Dept considers announcement by Zecho that compensaiton negotiations will begin Praha simultaneously with announcement loan agreement Washington would be desirable.
- Not printed; in it Ambassador Steinhardt reported having agreed with Foreign Minister Masaryk and Deputy Foreign Minister Clementis that discussions regarding compensation for American property nationalized in Czechoslovakia would begin one month after the new Czechoslovak Cabinet assumed office (860F.5034/7–346).↩
- Telegram 245, March 28, to Praha, not printed, but see footnote 16, p. 184. Telegrams 675, June 10, and 813, June 27, to Praha, reiterated the Department’s position that the conclusion of the Export-Import loan to Czechoslovakia was contingent upon the ability of the Czechoslovak Government to meet the conditions outlined in telegram 477, May 9, to Praha, p. 196. (860F51/5–2746 and /6–2046, respectively.↩
- None printed. In telegram 1095, June 20, Ambassador Steinhardt sent the following appraisal to the Department: “Since election on May 26 there has been an unmistakable though indefinable tendency on part of some officials of Czech Govt to show increasing indifference towards western powers. This tendency unleashed by the election is being fostered by the satisfactory conditions that prevail throughout the country which result primarily from the more than sufficient UNRRA shipments of food, gasoline and other commodities, coupled with the official seizures of all of the property of the richest one-fifth of the population and the relatively small war damage sustained.” Steinhardt went on to emphasize the necessity of obtaining definite commitments from the Czechoslovak Government in connection with the proposed reconstruction loan “in view of the self-satisfied attitude which has developed in official circles where little credit is given to extensive assistance already received from US and British Empire.” (860F.51/6–2046)↩