864.50/3–546
The Chargé in the Soviet Union (Kennan) to the People’s Commissar for Foreign Affairs of the Soviet Union (Molotov)32
Excellency: I have been directed by my Government to communicate the following to you:
It will be recalled that the interest of the United States Government in the future economic stability of Hungary, particularly from the standpoint of enabling that country to make a useful contribution to European recovery in general, was repeatedly emphasized during the tripartite discussions which preceded the presentation of armistice terms to the Hungarian Government in January 1945, and in his letter to you of January 20, 1945, at the time of the signing of the Hungarian Armistice, Ambassador Harriman reserved the right of the United States Government to reopen the question of the execution of the reparation arrangements “if it is found that American interests are being unwarrantably prejudiced.”33 Only a few days later, you will recall, in the Yalta Declaration on Liberated Europe, the statesmen representing the three participating countries at the Yalta Conference agreed “to concert the policies of their three governments in assisting … the peoples of the former Axis satellite states of Europe to solve by democratic means their pressing political and economic problems.”34
In accordance with the above, the United States Government has subsequently pressed for a greater degree of tripartite collaboration with a view to assuring Hungary’s economic rehabilitation and enabling [Page 266] Hungary to contribute to the rehabilitation of liberated countries in Europe. The various suggestions put forward by the United States Government along these lines have met, however, with no favorable response from the Soviet Government or its representatives on the Allied Control Commission in Hungary. Offers on the part of the United States Government to assume greater general responsibility in the Allied Control Commission have also not been favorably received. The United States Government has not even been kept adequately informed by the Soviet authorities concerning the plans and policies of the latter with respect to Hungary’s economic future. In these circumstances the United States Government has had very little opportunity to contribute to Hungary’s rehabilitation or even to influence the course of economic events in that country.
Meanwhile these events, according to reports received by the United States Government, have taken a course highly detrimental to Hungary’s own economic recovery and consequently to European economic stability as a whole. Not only has Hungary, once an important exporter of food products, proved unable since the armistice to make any substantial contribution to the solution of general European economic problems, but the internal economy of the country has deteriorated to a point where there is now imminent danger of complete economic and financial collapse. It is clear that this situation is due in a very considerable degree to the over-burdening of the country with reparations, to requisitions, to the maintenance of very large occupying forces, to the interference of the occupying authorities in economic matters, and to the failure of those authorities to take energetic measures to combat inflation and other undesirable economic tendencies.
The United States cannot remain indifferent to this state of affairs. It has very extensive supply commitments to European countries, both directly and through its part in the United Nations Relief and Rehabilitation Administration. Anything which operates to reduce the contributions which European countries can make to the general rehabilitation of the continent tends to increase demands on the United States for the supply of European countries and is justly a source of concern to the American people. The United States Government, furthermore, does not view it as consistent with purposes of the United Nations that the economy of any defeated enemy country should undergo, while subject to an armistice regime imposed by victor powers, such serious deterioration as to jeopardize the maintenance of even minimum living standards for the people and to render them unable to play a useful part in world recovery. Finally, the people of the United States are genuinely concerned for achievement of “fullest collaboration between all nations in the economic field, with the object [Page 267] of securing, for all, improved labor standards, economic adjustment, and social security”, as set forth in the Atlantic Charter.35 The United States Government consequently cannot reconcile itself to a situation hi which the economic life of any defeated country falls under the exclusive influence of one of the victor powers, to the detriment of the internal economy of that country and of United Nations aims in general.
The United States Government is at present engaged in the promulgation of a broad program of international economic collaboration, designed to lead to the greatest possible freedom of international exchanges for all nations, great and small. It believes that this program will be mutually beneficial to all who participate in it, and wishes to see no nation deprived of these benefits. But it is self-evident that no nation can claim the benefits of broad international collaboration in the economic field unless it is willing to recognize corresponding obligations in its own international dealings: to refrain from seeking special privilege in particular areas and to use its best efforts, in collaboration with those of other countries, for the general promotion of world prosperity. Any other arrangement would be at once unfair to other countries and, in the long run, unfeasible. The United States will necessarily have to be guided by this fact in formulating its economic policies.
In the circumstances the United States Government is obliged to request that instructions be sent at once to Soviet representatives in Hungary to concert with the American and British representatives there not later than March 15 in devising a program which will not only put a stop to the present disintegration in Hungary but will also provide a framework within which the rehabilitation of that country and its early reintegration with the general economy of Europe will be possible.
The British Government is being informed of the request contained in this note.
Please accept [etc.]
- The source text was transmitted to the Department with despatch 2488, March 5, from Moscow, not printed. This text is substantially the same as that proposed by Kennan in telegram 497, February 20, from Moscow (864.60/2–2046). In telegram 356, March 1, to Moscow, the Department concurred in the proposed text, but suggested two additions which were included in the letter presented to Molotov (864.50/2–2046). Telegram 1900, March 1, to London, directed that the British Government be informed of the delivery of the note to the Soviet Government in order that appropriate instructions could be given to the British representative on the Allied Control Commission for Hungary (864.50/2–2046). Telegrams 810, March 14, from Moscow, and 3026, March 15, from London, reported that the British Government was in full agreement with the views of the United States as set forth in this letter from Kennan to Molotov. The British Chargé in Moscow informed the Soviet Government on March 11 accordingly, and the British Political Representative in Budapest was instructed to concert with his Soviet and American colleagues, not later than March 15, to devise an economic program for Hungary to halt the economic disintegration and to rehabilitate Hungary and integrate her economy with the general European picture (864.60/3–1446 and 864.50/3–1546).↩
- For text of Ambassador Harriman’s letter of January 20, 1945, to Molotov, see Foreign Relations, 1945, vol. iv, p. 800.↩
- For text of the Declaration on Liberated Europe, included as Part V of the Report of the Crimea Conference, February 11, 1945, see Foreign Relations, The Conferences at Malta and Yalta, 1945, p. 971.↩
- Joint statement by President Roosevelt and British Prime Minister Churchill, August 14, 1941; for text, see Foreign Relations, 1941, vol. i, p. 367.↩