864.00/3–646: Telegram
The Minister in Hungary ( Schoenfeld ) to the Secretary of State
priority
[Received 7 p.m.]
464. Mytel 449, March 4.43 Prime Minister called today. He said Leftist Parties have now served ultimatum on Smallholders that reactionary elements in Smallholders Party must be disavowed and eliminated under threat of withdrawing from Coalition Government. He said demonstrations on large scale are scheduled for tomorrow in Budapest and elsewhere following similar preliminary demonstrations throughout country in recent days in some of which there had been bloodshed. Prime Minister said it is essential to preserve Coalition since only two alternatives would be Smallholders Government which would be paralyzed by strikes in Communications and other vital areas or a Leftist Coalition Government which would be disastrous since it would follow the pattern of political development which led to Bela Kun regime in 1919. Consequently, it is his intention at all costs to preserve the Coalition.
He proposes to do so by making certain concessions to Leftist demands both in political and the economic fields. Politically, he intends to disavow and expel from Smallholders reactionary members of party including certain deputies and to establish a program for purging the Civil Service. On the economic side, he will adhere to joint policy declaration of political parties preceding November election conceding nationalization of coal mines and initiating discussions regarding nationalization of other sub-soil resources. Leftists also demand nationalization of principal plants producing for reparations but in this respect, Prime Minister intends to insist on close [Page 272] government supervision and not to take over these privately owned plants.44
Prime Minister says that while his policy in settling imminent crisis may put him in position of seeming to make excessive concessions to extreme Leftist view, his basic policy will remain democratic internally while externally seeking to preserve full confidence of the principal Allies. Forthcoming period of intense crisis, he admits, is due largely to loss of confidence on part of Soviets in sincerity of Smallholders Party and he thinks it is essential through measures now to be taken by Government to recover that confidence. He was anxious to have me understand, however, that he was at least equally interested in preserving confidence of the western world and specifically of the US. He said he believed present internal tension here is reflection to important extent of inter-Allied tension and that when latter diminishes it may be expected that there will be improvements in local situation.
- Not printed. In it Minister Schoenfeld reported that political tension within Hungary had continued to increase. Schoenfeld stated that the Hungarian Communist Party had undoubtedly scheduled a vigorous campaign to increase its power prior to the withdrawal of the Soviet Army and that there was a possibility that the Communists wished to create a state of insecurity in order to make an excuse for a prolongation of the Soviet occupation. Schoenfeld concluded his report as follows: “It appears doubtful, however, that it would be local Communist or Soviet intention to overturn present Coalition Government unless current objectives cannot otherwise be obtained. Shock to world opinion of nullifying November elections undoubtedly argues for restraint at least on part of Soviet power. In fact, stability of Coalition Government is probably more threatened by Right Wing Smallholders who now feel Nagy Government may be forced to sell out country’s economy in desire to maintain coalition and to avoid civil strife. Nagy has told us that both he and Tildy feel coalition must be retained at any cost. Right Wing Smallholders do not appear strong or able enough to take the chance of forming own government. While current issues remain unsettled, political tension will of course persist with attendant possibilities of political coups.” (864.00/3–446)↩
- Telegram 499, March 12, 1946, from Budapest, reported that the Smallholders Party had acceded to Leftist demands in terms described in this paragraph. In addition, the Executive Committee of the Smallholders Party decided to drop from membership 20 “so-called reactionaries” including Dezsö Sulyok and ex-Minister of Finance István Vásáry. (864.00/3–1246)↩