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

864.51/6–1246

Memorandum of Conversation, by the Secretary of State

secret

[Washington,] June 12, 1946.

Participants:	Hungarian Prime Minister, Mr. Ferenc Nagy;
	Hungarian Minister, Mr. Aladar Szegedy-Maszák;
	Secretary Byrnes.

The Prime Minister of Hungary, accompanied by the Hungarian Minister, called at his request.

The Prime Minister expressed his appreciation to the Secretary for making it possible for him and other members of the Hungarian Government to visit this country.¹⁹

The Secretary expressed the hope that conditions in Hungary were improving. The Prime Minister said that the process of consolidation was progressing. He added that the greatest trouble the Hungarian Government faced was that of inflation. At the present time, the Hungarian Government was able to afford the people only 22% of the standard of living which they were accustomed to before the war.

The Secretary said that last fall he had looked into the question and had concluded from information he had obtained from Hungary that the country was having a bad time because of inflation. He said he could appreciate the problems with which they were confronted.

The Secretary asked if Hungary had been able to increase production. The Prime Minister said that production was increasing daily, and that 90% of the land was under cultivation in spite of the fact that the peasants and farmers lacked implements for cultivation.

The Prime Minister stated that the output from factories was increasing daily, but that quite a number of the factories had been destroyed during the war. There was a total lack of raw materials for production. These raw materials had formerly been supplied by Czechoslovakia, Yugoslavia, Russia and Greece.

The Prime Minister said that according to the decision regarding Hungary 3,000,000 Hungarians would be left outside the borders of Hungary proper.

The Secretary said that last fall in London he had proposed that we should follow the ethnic line so far as possible because he had in mind that it would be bound to affect some people and his proposal met with objection. The Secretary stated that he did not believe it was any secret that the Soviets had proposed that all of Transylvania should be transferred to Rumania. The Secretary said he had made a suggestion that Transylvania should go to Rumania, but that a provision should be made to permit direct negotiations between the Governments of Rumania and Hungary with the idea of arriving at an adjustment of the frontier so as to leave the smallest number of people under alien rule. The Secretary said that we were reluctantly forced to the view that the population in Transylvania was so intermingled that without an exchange of populations no adjustment of the frontier would provide a solution to the ethnic problem.

The Prime Minister said that until now, he was not aware of this situation and that he wished to express his thanks for the Secretary’s kindness.

The Secretary said that he had made the proposal with regard to the Italian-Yugoslav border that the line should be left to the Deputies and that consideration should be given first on an ethnic basis and secondly on an economical one.

The Prime Minister said that if the same decision would be handed, down now to Hungary as after 1919, it would mean upheaval of their political system.

The Secretary said that he realized that these questions could not be decided with any degree of perfection. He said that in Europe it was simply impossible with these lines to do what he suggested—to have a line which is truly on an ethnic basis.

19. Prime Minister Nagy and his party arrived in Washington on June 11, 1946, and departed from New York on June 19. For the statement regarding the visit issued by the Department of State on June 19, see Department of State Bulletin, June 23, 1946, p. 1091. In his own account of his visit to Washington in his book The Struggle Behind the Iron Curtain (New York: The Macmillan Company, 1948), pp. 225–234, Nagy states that his private conversation with the Secretary was followed by a meeting between the Secretary and the Hungarian delegation as a whole. No record of this latter meeting has been found.