Foreign Relations of the United States, 1947, Eastern Europe; The Soviet Union, Volume IV

864.50/3–1447

The Department of State to the Hungarian Legation

Memorandum

The question of economic assistance which might be extended by the United States to Hungary to aid in meeting the most urgent needs for reconstruction has been the subject of several conversations between the Department of State and the Hungarian Legation. The series of eight informal meetings¹ which were arranged between officers of the Department and Mr. Alexander Szász, Financial Counselor of the Hungarian Legation, Mr. Jenö Korányi, Counselor in the Ministry of Commerce, and Mr. Miklós Szongoth, Counselor in the Ministry of Supply, to discuss problems of most immediate interest to the Governments of the United States and Hungary have been concluded. All of the topics on the agenda for these meetings, which included food supplies, credits, post-UNRRA relief, commercial policy, and treatment of American interests in Hungary, have been discussed in detail. Copies of summaries of these meetings, which, it is thought, may be of interest to you and your Government, are enclosed.² These summaries are designed only to indicate the views expressed on the several topics by the various participants and, therefore, should not be considered as committing either of the Governments concerned.

As a result of these discussions certain developments have taken place respecting these matters; their present status is as follows:

1. Allocations of grain.

In the course of the discussions, the representatives of the United States indicated that the grain requirements of various countries are approved by the IEFC, which is an international organization. Assurance was given, however, that the request of Hungary for allocations of grain would be given sympathetic consideration by the United States representatives. It is understood that the Executive Committee of the IEFC Cereals Committee has now recognized the following grain import requirements for Hungary: 5,000 tons of wheat seed, 35,000 tons grain or flour for food use and, if available in the United States Zone in Germany, 10,000 tons of barley for seed. 23,000 tons of wheat and flour wheat equivalent have been shipped or programmed as through April.³

2. Credits.

The Government of the United States has now extended to the Government of Hungary an additional line of credit of $15,000,000 for the purchase of surplus property in Europe,⁴ making a total line of credit $30,000,000. In addition it is understood that negotiations are now taking place between the Hungarian Legation and the Export-Import Bank regarding a credit for the purchase of cotton in the United States.⁵

With respect to a general credit, the United States representatives pointed out that it is not the present policy of the Export–Import Bank to grant general long-term reconstruction credits; it favors instead short-term credits for specific projects. They also suggested that questions regarding credits for projects designed to contribute to Hungary’s export potential be discussed directly with the Exports Import Bank.

3. Post-UNRRA Relief.

The President has submitted to Congress a request for an appropriation of funds to finance relief purchases, following the liquidation of UNRRA, for those countries in most urgent need.⁶ Until Congress has acted upon this request, it will not be possible to state what action can be taken upon the request of Hungary for such relief, however, the Department of State will be prepared to consider request by the Government of Hungary for relief assistance and to receive all information available respecting Hungary’s relief needs.

4. Transfer of Hungary from the “E” List to the “K” List.⁷

The Department of Commerce has transferred Hungary from the “E” category to the “K” category effective as of March 12, 1947.

5. Admission of Hungary as a Member of the IEFC

The IEFC has acted favorably upon Hungary’s application for membership in that body.

6. Commercial Policy and Treatment of American Interests In Hungary.

The representatives of Hungary in the course of the discussions agreed to bring to the attention of their Government the views expressed by the American representatives regarding these matters. These views are set forth in greater detail in the minutes for the two meetings on these subjects.

Washington, March 14, 1947.

1. The meetings were held between January 27 and January 31.
2. None printed.
3. On March 21, the Department of State issued a statement to the press regarding the decision of the Cereals Committee of the International Emergency Food Council to approve food grain import requirements for Hungary. For the text of the statement, see Department of State Bulletin, March 30, 1947, p. 585.
4. Regarding the extension of credit to Hungary, see telegram 126, February 11, to Budapest, p. 268.
5. On April 3, the Export–Import Bank announced that its Board of Directors had approved a credit of $7 million to the Hungarian Commercial Bank of Pest and the Hungarian General Credit Bank to finance the purchase of raw cotton in the United States. Agreements between the Export–Import Bank and the two Hungarian banks establishing the line of credit were signed in Washington on April 30. The texts of the two agreements were transmitted to Budapest as enclosures to instruction 900, May 15, not printed (864.515/5–1547).
6. President Truman had submitted to Congress on February 21 a recommendation for an appropriation of $350 million for a program of free relief assistance in the form of basic items such as food, medicine and agricultural items for Italy, Greece, Austria, Hungary, Poland, Trieste, and China. For the text of the President’s recommendation, see Department of State Bulletin, March 2, 1947, p. 395. The Joint Congressional Resolution for the program, H. J. Resolution 153, entitled “Joint Resolution Providing Relief Assistance to Peoples of Countries Devastated by War”, was enacted into law on May 31, 1947; for text, see 61 Stat. (pt. 1) 125.
7. Exports from the United States to the country on the Department of Commerce’s “E” List valued at more than $25 required special export licenses.All commodities not in scarce domestic supply could be exported, under general license, to a country on the Department of Commerce’s “K” List.