Office of the Historian

740.00119 Council/9–1746: Telegram

The Acting Secretary of State to the Secretary of State, in Paris

top secret
Washington, September 21, 1946—2 p.m.

5017. Secdel 966. For the Secretary. Reurtel 4658, Delsec 957, Sept. 17. For your consideration, status Eximbank credits Czecho, granted or pending, as follows.

1.
$20 million cotton credit approved Board Directors Eximbank May 29. Loan agreement signed July 3.
2.
$2 million Eximbank credit for purchase tobacco approved Board Directors Eximbank Aug 2, Dept concurring, prior urtel 4368 Delsec 877 Aug 30. Loan agreement signed pursuant above authorization Sept 16, as this represented prior commitment on part Eximbank and Dept.
3.
Aug 26 Czecho Emb applied to Eximbank for $2 million credit for purchase aircraft material, largely C–54 Skymasters to be operated in conjunction PAA on route NY–Praha. In view Delsec 877 and since this represents new credit request, Dept advised Eximbank to take no action this request. If you concur, Dept will advise Bank to reject application.
4.
Pending Eximbank $50 million reconstruction credit has been in process of negotiation with Czecho Emb since Sept 1, 1945, when Czecho Govt requested reconstruction loan of $300 million. NAC approved $50 million loan Jan 29 on Dept’s motion. Board Directors Eximbank approved credit May 9, subject to notification by Dept that related negotiations satisfactorily concluded. Negotiations involved commercial policy questions and compensation for American properties nationalized by Czecho Govt. Sept 4 Dept and Hanč reached agreement on text of notes to be exchanged this connection. (Draft note and memo conversation sent letter 126 Sept 19 Catudal to Rein-stein.)71 Re compensation for American properties, draft note provides that Czecho Govt will make adequate and effective compensation to American nationals with respect to their rights or interests in properties which have been or may be nationalized or requisitioned by the Czecho Govt. Dept advised Hanč that loan agreement could not be concluded until negotiations in Praha re compensation for American properties have begun and made substantial progress. Hanč cabled substance note and above reservation to Praha. To date Dept has not heard from Hanč.

I believe above negotiations with Hanč, while they have not reached stage of legal commitment to make loan, do imply moral commitment if Czechs meet conditions mentioned above.

Clayton
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