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

811.516 Export-Import Bank/7–1647: Telegram

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

secret   urgent

Budapest, July 16, 1947—6 p. m.

1197. This morning when I made my courtesy call on Rákosi he stressed the importance of Exim Bank cotton credit (Legtel 1195, July 17¹) and asked whether any final decision had been taken in the matter. I was obliged to tell him that the Legation had no recent information. Rákosi elaborated how contrary to American belief the Hungarian Communist Party very much desired to develop Hungarian trade with west as well as with east, that while it was, of course, possible for Hungary to obtain some cotton from Russia he, Rákosi, very much preferred the cotton from US.

In a statement which coming from other than a high ranking Hungarian Communist would be classed ingenuous, Rákosi expressed the hope that balance of surplus property credit could still be made available to Hungary. In the course of an official call on the MinFin yesterday, Nyárádi had also expressed this hope. I replied on both occasions that I had seen no evidence of eagerness as expressed by the Hungarian press for further financial assistance under this heading. As to the approach I suggested that this might more properly be taken up by the Hungarian Legation in Washington rather than here.² Rákosi stated that the Hungarian technical delegation in Paris³ was remaining on in the hope that the US Govt would, mindful of Hungary’s serious economic problem, reconsider its suspension of the credit but expressed the hope that some definite news could be given to the Hungarian Government.

Rákosi pointed with pride to the recent action of the Hungarian Government in permitting MAORT to reduce oil production and said that he believed that not only MAORT but the Vacuum Oil Co. could continue operations in Hungary with profit (Legtel 1196, July 17⁴).

Chapin

1. Not printed; it reported that the Hungarian Government was pressing the Hungarian General Credit Bank to request a positive statement from the Export-Import Bank as to whether the $7 million credit for cotton purchases was available or not. The telegram added:

   “In order obviate attack by Communists against Credit Bank and Hungarian Commercial Bank as well US Govt because of suspension of cotton credit, Legation suggests Export–Import Bank allow American exporters accept contracts at present for deliveries in February 1948 with reservation in mind that should the situation not improve by that time the deliveries would be withheld.” (811.516-Export–Import Bank/7–1747).

   Telegram 811, August 1, to Budapest, not printed, replied that the Legation’s proposal was not practicable (811.516 Export–Import Bank/7–1747).

2. In a note to the American Legation dated July 19, not printed, the Hungarian Foreign Ministry formally drew attention to the suspension of sales of American surplus property. The note stated that approximately $15 million of the $30 million credit had not been used and requested that the suspension of sales of surplus property be removed. In reporting upon receipt of the note in telegram 1244, July 25, from Budapest, not printed, Minister Chapin stated: “Do not consider that conditions prompting suspension of credit have altered except for worse and do not recommend removal of suspension at this time.” (864.24 FLC/7–2547)
3. The Office of Foreign Liquidation, which was responsible for the disposal of surplus property, maintained its European regional headquarters in Paris.
4. Not printed.