860F.00/6–1947: Telegram

The Ambassador in Czechoslovakia (Steinhardt) to the Secretary of State


740. Following résumé of conditions in Czechoslovakia may be of interest to Department:

There is adequate supply of food. General public is receiving well balanced diet including 7 percent beer. While there will be a shortage of wheat flour during next 30 days and until harvest begins, there will be sufficient supply other bread grains to make good deficiency.
Increasing tendency of Social Democrats to make common cause with Moderate parties continues to weaken Communist influence in—government. While differences within Communist party have not thus far lessened its political effectiveness, in course of time these differences may oblige less radical Communist leaders to seek a measure of assistance from Moderates. In Parliament as well as within Cabinet Moderates have become more articulate and somewhat more aggressive. At same time Communists while launching periodic attacks have lost initiative they held for about a year and a half and are now on defensive. As long as the National Front continues these developments should operate to restrain Communists without giving rise to concern that they may take matters into their own hands. There is little probability of a dissolution of the National Front in the near future. Quite the contrary, with possible exception of Slovak Democrats, none of other parties desire its dissolution. Thus considerable degree of political equilibrium has been reached after 18 months during which Communists dominated government. While a few Communist leaders are unquestionably prepared to take their orders from Moscow I doubt that others or vast majority of members of the party would approve of or even submit to seizure of government on instructions from Moscow. There is no evidence in Czecho that any such coup is contemplated in near future. In this connection as Slovakia is the most vulnerable part of country to a Communist coup I regard it as most unfortunate that Department has not yet seen fit to open a consulate general in Bratislava.1
Improvement in general economic conditions continuing but at somewhat slower rate. This is primarily due to difficulties which nationalized industries are encountering. These difficulties [arise?] out of inadequate manpower and skilled labor resulting from expulsion of Sudeten Germans; inexperienced, incompetent and wasteful management; obsolescent machinery and shortage raw materials resulting in low and irregular production of poor quality at high cost.

On other hand privately owned industry although harassed by Communist officials in government who blatantly favor nationalized industries is making substantial progress. Recent discontinuance of raw material shipments by UNRRA is bringing home even to Communists imperative necessity of obtaining credits from the west and while attacks on American “dollar diplomacy” in Communist press have been resumed with as much violence as ever Communists in Government are to my knowledge more anxious to obtain American credits than are their non-Communist colleagues. This brazen hypocrisy is readily explained.2 American credits which would of course be made available by Czech Government only to nationalized industries would permit Communists by the necessary bookkeeping to demonstrate to Parliament and country at time of next election the outstanding “success” achieved by nationalized industries under Communist direction. Failure to receive necessary credits might and probably would oblige Communists to seek very large appropriations to cover deficits of nationalized industries from a Parliament which is already showing itself to be critical of deficits and is struggling with an unbalanced budget in hope of bringing it into balance next year.

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Under those circumstances and bearing in mind that Czecho is not in present danger of famine or an economic collapse and that political stability of country not in danger at this time, and that there remains a great deal of private industry in country which is backed by Moderates while nationalized industries are backed by Communists, Department may wish to give consideration to advisability of encouraging extension of both private and public American credits for Czechs re disposition of textiles produced from cotton purchased present extension of credits directly to Czech government with exception of certain commodity credits which are at present under discussion.3

  1. Telegram 778, June 24, from Praha, not printed, reported that Slovak officials had emphasized in the strongest terms the importance which they attached to the early opening of a United States Consulate General in Bratislava. Ambassador Steinhardt commented additionally as follows:

    “As Department knows, I have long believed it important that, in view of degree of autonomy exercised by Slovaks, special character of Slovak problems, and strategic location of Bratislava, US should be represented there as are Soviet Union, Great Britain and France. Such representation has, in my opinion, in view of current developments Eastern Europe in general and Slovakia in particular, now become matter of urgency. Not only would Consulate General Bratislava provide most useful observation post at this juncture, but I am convinced that our failure to respond to repeated requests by principal Slovak officials may come to be interpreted by Slovaks generally as indicating lack of interest by US in their fate. Such an impression, of course, cannot help but have some effect on their political attitudes.” (125.225H/6–2447)

    Vice Consul Claiborne Pell was assigned to Bratislava on September 18. The American Consulate General in Bratislava was opened to the public on March 1, 1948.

  2. In telegram 741, June 19, from Praha, not printed, Ambassador Steinhardt commented further on the Communist press campaign against American “dollar diplomacy” and he made the following recommendation:

    “To put an end to this double game I recommend Dept seek an occasion to inform one of junior members of Czechoslovak Embassy in Washington that until responsible members of Czechoslovak Govt and Communist press in Czechoslovakia discontinue biting hand that about to feed them it would be difficult for Dept to give active consideration to granting of credits to Czechoslovakia including new cotton credit.” (860F.51/6–1947)

    The Ambassador’s recommendation was considered for some time by officers of the Department of State in late June and early July, but no action was taken.

  3. Telegram 597, June 10, to Praha, not printed, had stated that the Department did not perceive objection to the Export–Import Bank giving consideration to small credits to finance American exports to Czechoslovakia; the Department considered that such credits might accelerate the orientation to the West of Czechoslovak trade. In telegram 742, June 19, from Praha, not printed, Ambassador Steinhardt replied that he also favored the extension of small Export–Import Bank credits to finance Czechoslovak imports from the United States (860F.51/5–947, 6–1947).