Foreign Relations of the United States, 1946, Eastern Europe, The Soviet Union, Volume VI

740.00119 Council/8–3046: Telegram

The Acting Secretary of State to the United States Delegation at the Paris Peace Conference

top secret
us urgent

Washington, September 24, 1946—6 p.m.

5060. Secdel 979. For Matthews. Re proposed transfer by Zecho to Rumania of surplus property as contemplated in protocol reported Praha’s topsec 1686 Sep 18 repeated to Paris and Bucharest in Dept’s immediately following telegram. Transaction considered further reason for policy set forth in Delsec topsec 877 Aug 30 and Deptel topsec 4653 Sep 6⁷³ repeated to Praha as 1101. Although coming into force of protocol would not violate specific provisions of US surplus property contract with Zecho, and although we would not object to casual resales, the proposed resale of a substantial proportion of purchased surpluses in the manner contemplated weakens the justification of surplus credit to Zecho which was to furnish surpluses for reconstruction and rehabilitation that country.

Re Steinhardt’s proposal to cancel unused balance surplus property credit further action to accomplish this purpose is believed unnecessary.

1. Bonner, Central Field Commissioner for Europe, OFLC Paris, has been instructed as of Sept 6 to avoid all commitments to Zecho where legally possible.

2. We are informed that value of goods delivered or unavoidably committed may not exceed 10 million dollars. In this case denial of additional contracts would make it impossible for Zecho to carry out protocol in full if it is minded to disregard US objections.

Accordingly if Secretary approves we think Steinhardt should be instructed reply FonOff note withholding US consent and indicating that substantial diversion of property by such method would be inconsistent with intent of the surplus credit arrangement.⁷⁴

Sent to Paris as 5060 Secdel 979; repeated to Praha as 1169, and to Bucharest as 626.

Acheson

73. Telegram 4653 not printed, but see footnote 60, p. 217.
74. Telegram 4841, Delsec 997, September 26, from Matthews in Paris, stated that the Secretary approved the instructions to Steinhardt. The Secretary wished to maintain cancellation of the entire unused portion of the Czechoslovak surplus credit, irrespective of the contemplated Rumanian-Czechoslovak agreement. (740.00119 Council/9–2646)