860F.51/8–2946: Telegram

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

secret

1075. In meeting Aug 13 Hanč stated several reservations Zecho Govt re proposed notes to be exchanged re Eximbank credit. Memo conversation being sent pouch.55 Zechs object to inclusion properties “otherwise taken over” re compensation, wish implication future additional Eximbank credits included note, and raise several commercial policy questions. Dept intends maintain position re compensation or restitution properties otherwise taken over and will not agree implication additional credits. Thus conclusion loan agreement obviously delayed month or two by Zecho objections. Urtels 1436 and 1437, July 30.56

Dept considers attitude Praha, as distinct attitude Hanč, definitely intransigent and indicates no urgency concluding loan agreement Zecho part. Dept therefore intends maintain position all major questions as stated Deptel 912, July 19, and while not increasing conditions or adding additional conditions, will not reduce any major conditions, which it believes extremely reasonable.

[Page 216]

Would appreciate your efforts have compensation negotiations begin Praha soonest possible. Urtel 1214, July 3,57 stated Zecho promised negotiations would start before Aug. 3. Absence Masaryk and Clementis not believed obstacle starting negotiations with other Zecho ministries interested compensation question. Please advise urgently status negotiations.

Acheson
  1. Not printed.
  2. In telegram 1436, July 30, from Praha, Ambassador Steinhardt expressed his conviction that determined action by the Czechoslovak Government could have resulted in the return of “confiscated” American properties (as distinguished from nationalized properties). Steinhardt went on to make the following recommendation: “I attribute the failure of the central government to take action in most of the cases of illegal or improper seizure to an unwillingness to create the impression locally that it is defending ‘American capitalistic interests’ and I think it should be required to take the necessary action to restore these properties to their American owners before the reconstruction loan is made available. Our failure to insist on such action, which if taken would have a salutary effect throughout the country in many other respects, will be regarded by Zecho Government as a signal of weakness and will in my opinion have unfavorable repercussions in the negotiations for compensation for nationalized properties.” (860F.51/7–3046)
  3. Not printed, but see footnote 44, p. 206.