864.00/5–1347: Telegram

The Minister in Hungary (Schoenfeld) to the Secretary of State

secret   priority

791. I called on PriMin Nagy today in view of his departure tomorrow for vacation in Switzerland and my forthcoming departure June first1 prior to his expected return. He took this occasion to thank me on behalf of Hungarian people for all that US has done for Hungary.

He said that to inexperienced observer political trends in Hungary since liberation might have suggested that Smallholders have no comprehensive strategy and were systematically surrendering power and [Page 298] yielding ground to Communists. During this difficult period US might have taken less sympathetic view of political developments in Hungary which could easily have given rise to demands precipitating most serious crises. This would have been embarrassing and difficult for Hungarian Govt and for Nagy himself. He pointed out US Govt, however, has shown great understanding and generosity towards Hungary and graciously attributed this to my judgment concerning significance of Hungarian political developments and my appreciation of Smallholder efforts to establish genuine democracy in Hungary. For this he added overwhelming majority of Hungarians and he personally are especially grateful to US Govt and to me.

PriMin continued he hopes that following ratification of treaty, assumption of full Hungarian sovereignty, withdrawal of occupation troops and membership in UN, Hungarian Govt would more successfully represent natural wishes and desires of vast majority of people. Certain necessary changes would then have to be made including elimination of revolutionary institutions such as committees of Civil Service legitimation and Peoples Court; holding of elections by autonomous bodies; increasing scope for parliamentary govt as determined by national election and return to constitutional practices. He hoped these changes might be effected peacefully without evoking civil strife. It must be understood, he added, that since liberation large numbers of Hungarian individuals and groups have been neglected, discriminated against and humiliated. Many such persons see opportunity for revenge following withdrawal of occupation troops. Nagy stated, however, that he is anxious that even symptoms of internal disorder and civil war be prevented.

I inquired whether possibility exists that present seeming truce in Hungarian political life may be broken and, if so, when. Nagy stated that crisis might develop around two current issues, namely, Hungarian foreign policy and nationalization of the three great banks. He added firmly that Communist offensive on each of these issues would be repelled possibly amid considerable tension. He indicated no date for new crisis but his proposed absence for some weeks suggests it will not be precipitated pending his return to Budapest.

I inquired whether there were any new developments in Hungarian-Soviet relations. Nagy replied these relations are correct but there are indications Soviets are dissatisfied with policy of Hungarian Govt and this he considered unfortunate since it coincides in time with pending economic negotiations arising from Potsdam decision relating to Hungary.

I inquired further whether PriMin subscribed to view held by some observers that strain in Hungarian-Soviet relations was caused in part [Page 299] at least by efforts of Hungarian Govt to maintain economic ties with US. Nagy agreed this was unquestionably so and added it would be unrealistic for Hungary to sever economic ties with US which given so much merely for benefit of USSR which only takes. Intimating that certain circles seem to think that strained Hungarian-Soviet relations particularly in economic matters could be removed if Hungarian Govt were to give assurances that Hungary renounces all economic ties with US, I asked for his view on this. Nagy replied this was precisely what Smallholders were unwilling to do adding that although Hungary could exist without western economic ties these ties were necessary if Hungary is to achieve reconstruction and development. Hungary, he said, [did] not intend to renounce such possibilities.

I suggested that present phase in great power relations was widely interpreted as significant of inevitable conflict between economic systems of US and USSR and that local Communists seemed to consider present lack of agreement between Soviets and US as permanent. I added, however, that there were increasing signs that rehabilitation of European and of Soviet economy itself would not be effected without aid of those able to contribute effectively to that rehabilitation. Hence I added as economic pressures are brought to bear on Hungary he might be called upon in future to assess basic political trends and it would be tragic if Hungary were to give up its freedom of action and all possibility of maneuver on an assumption which future events may belie. He assented to this intimation and reiterated in conclusion his appreciation of our understanding attitude.

  1. Minister Schoenfeld relinquished charge of the Legation on May 31 to Donald F. Bigelow, Counselor of Legation, and departed from Budapest on June 1. Selden Chapin, the appointed Minister to Hungary, assumed charge of the Legation on July 8.