611.60F31/9–2346: Telegram
The Ambassador in Czechoslovakia (Steinhardt) to the Secretary of State
us urgent
[Received September 24—6:29 a.m.]
1702. In my opinion the Czechoslovak Government should not be [Page 226] permitted to use the suspension by Secretary Byrnes of the negotiations for an Export-Import Bank reconstruction loan as a pretext for deferring an agreement regulating the economic and commercial relations between the two countries.
Since the end of the war the Czechoslovak Govt has entered into agreements regulating its economic and commercial relations with no less than 20 governments without, insofar as I am aware, obtaining loans or credits from any of these Governments as a consideration therefor. I can therefore see no valid reason why Czechoslovak Government should not regulate its commercial and economic relations with the United States without a credit or loan as a condition precedent or simultaneous therewith.
On the assumption that negotiations to regulate our economic and commercial relations with Czechoslovakia will continue without being contingent on a loan, I offer the following comments with respect to Department’s 1104, September 7.
- 1.
- No commitment that might be obtained from Czechoslovak Government to stimulate trade with United States would be of any value as long as the Communist Minister of Finance declines to make an appreciable amount of dollars available for purchase in the United States. While he has of course made some dollars available and while the Czechoslovak Government undoubtedly suffer from an insufficiency of dollars, there is reason to believe that in the furtherance of the policies of Communist Party, control of all dollar exchange available to Czechoslovakia is being and will continue to be exercised more along political than economic lines.
- 2.
- I feel strongly that we should not grant most-favored-nation treatment unless we receive it.
- 3.
- In reply to Department’s request for further details concerning US importers who allege failure of Czechoslovak manufacturers to fulfill their contracts, a survey of American importers in Praha indicates that the maximum deliveries on firm contracts with specified dates of delivery have not exceeded 30 percent. It is still too soon to determine whether the failure to deliver is attributable to excessive optimism concerning the rapidity of industrial recovery, inefficiency because of nationalization or a deliberate favoring of eastern European market by a preponderance of Communist national administrators.
- 4.
- I am at a loss to understand why the assurance to make adequate and effective compensation for property already or hereafter nationalized or requisitioned should be mutual. I do not know of any Czechoslovak property that has been nationalized or requisitioned by the Government of United States nor of any such intention. Under [Page 227] these circumstances an assurance by Government of United States to compensate Czech nationals for property that has been or may be nationalized or requisitioned can only lead to the Leftist press in Czechoslovakia citing the agreement as evidence of the intention of Government of United States to nationalize or requisition Czech property, thereby justifying the nationalization program of Czechoslovak Government.
- 5.
- Insofar as concerns Department’s thought that it may be necessary to justify a delay in the granting of an Export Import Bank credit, I do not feel that it should ever be necessary for the Government of United States to justify withholding a loan or credit to a foreign government.