740.00119 Control (Germany)/3–548: Telegram

The Ambassador in Czechoslovakia (Steinhardt) to the Secretary of State 1


296. As it seems most unlikely that Czechoslovak Communist dominated government will voluntarily give serious consideration to payment for American nationalized or seized properties, in order to place ourselves in a position to force a settlement by only means that has had any measure of success in dealing with Communists, Department may wish give consideration to the immediate temporary suspension of reparations deliveries to Czechoslovakia from Germany while at the same time temporarily suspending shipment under contracts from US of products of heavy industry on which several million dollars of advance payments have been made, thereby indirectly impounding these funds.2 Although detailed figures not available to me, I under impression that value of reparations deliveries from Germany not yet made and advance payments made under contracts for products of heavy industry in US about equal the initial payment we had contemplated seeking under a global settlement for American nationalized properties. There is the further element as pointed out in one of my recent telegrams that certain of the products of heavy industry for which orders have been placed in US and down payments made are critical items of rehabilitation of Czechoslovak steel industry which we are now on notice is to operate exclusively for benefit of Soviet Union. Thus for example, I would regard it as most inadvisable to permit delivery of strip mill for which contract was entered into by Czech Government with [an American firm] as I am informed that output of mill would contribute materially to production of tanks for Soviet Army.

  1. The Department replied to this telegram 417, March 25, to Praha, summarized in footnote 1, above.
  2. Documentation on United States reparation policy is included in volume ii .