Foreign Relations of the United States, 1951, Europe: Political and Economic Developments, Volume IV, Part 2

No. 745

764.00/2–152

Summary of Political and Economic Developments in Hungary in 1951, Prepared in the Legation in Hungary¹

[Extracts]

confidential

Budapest, February 1, 1952.

Summary

The year 1951 was for Hungary a period of grim struggle to carry the crushing burden of the augmented Five Year Plan, marked by a steady decline in the standard of living, and tighter controls over all classes of people with rigorous suppression of any elements of resistance; all accompanied by a crescendo of propaganda designed to extract the last ounce of effort from the city and farm workers and create an atmosphere of continual crisis arising from the threats of the “imperialist warmongers” led by the United States.

While the great bulk of the people were sullenly resentful, little active spirit of resistance seemed to remain except among the landholding peasants. These, without leaders or organization, appear helpless to avoid the eventual liquidation openly promised them. The organized resistance of the Catholic Church collapsed with the trial of Archbishop Grosz.

There were no important changes in the governmental organization or personnel. The year may be considered as one of consolidation in Party organization and control, marked by progress in the conversion of the Churches to state controlled organizations, the deportation from the chief cities of the remnants of the bourgeoisie, the reorganization of the city and county governments along Soviet lines, and the reorganization of the youth movement.

In the economic sphere, the fulfillment of the Plan was claimed and considerable increases in production over 1950 were undoubtedly achieved, but it is obvious that serious failings occurred, particularly in coal mining, investment and recruit of manpower. Ideal weather produced bumper crops which eased the food situation during the latter months although crop collection remained a problem.

Foreign relations strictly followed Soviet directives and policies with greatest emphasis on the various ramifications of the World Peace Movement. Relations with the United States eased somewhat with the release of Vogeler in April, but took a new slump with the Grosz trial and the expulsion of several members of the Legation staff in June. Another brief honeymoon ended with the Soviet inspired uproar over the MSA appropriation featured by the publication of the Hungarian White Book. This happened to coincide with the seizure of the American Army plane and crew, the repercussions of which left relations at the year’s end at an all-time low.

i. international political developments

A. United States

As the year 1951 drew to a close, the United States’ already poor relations with the Hungarian People’s Republic hit an all-time low. In direct answer to the Hungarian Government’s preposterous trial of four United States airmen, the United States Government, on December 28, 1951, ordered for the second time in 23 months the immediate closing of Hungarian Consulates in Cleveland and New York, and invalidated passports of private citizens for travel to Hungary. In the heat of abuse hurled at the United States during 1951 by the Hungarian press, radio and official comment, the Hungarians accused the United States of fomenting an insurrection; using diplomatic establishments as espionage centers; enacting legislation to legalize the recruitment, training and despatch of “diversionists” and saboteurs against people’s democracies. To substantiate its allegations, the Hungarian Government expelled three U.S. Legation personnel as an outcome of the Grosz trial which “unmasked” a Legation-directed conspiracy; issued a “White Book”² which attempted to prove the United States’ interference in Hungary’s domestic affairs “beyond the shadow of a doubt;” staged a farcical and painfully humiliating “court-martial” of the four U.S. airmen who accidentally landed in Hungary, and demanded $120,000 ransom for their freedom. At the same time the Hungarian Government engaged the United States Government in an exchange of formal correspondence in vitriolic language unprecedented in the annals of peace-time diplomatic usage.

1. Vogeler Case

The single positive element, if it may be called such in United States-Hungarian relations during 1951 was the release of American businessman Robert Vogeler from his 15 year prison sentence on April 28, 1951, although the Vogeler case had plagued U.S.-Hungarian relations as the number one sore point since November 1949. The chief concessions for Vogeler’s release have already been canceled in reprisal for the inhumane treatment of the four U.S. airmen. The United States has closed anew the Hungarian Consulates in the United States, invalidated American passports for private travel to Hungary, and commenced using Munich as a transmitting relay station for Hungarian language VOA broadcasts. By the final conditions of Vogeler’s release, the Hungarians were permitted to send a Mission to the American Zone of Germany to arrange for the restitution of Hungarian property “declared available for restitution.” They were much dissatisfied with the property available and in a series of notes charged the American Government with the violation of the agreement. As far as the United States is concerned, the work accomplished by the Hungarian restitution mission in Germany during the summer of 1951 settled the Hungarian claims. There is no restitutable noncultural war booty belonging to the Hungarian Government in our zone of Germany.

2. Closing of the USIE Library

Upon the release of Vogeler, the Legation experienced a brief honeymoon which had the surface appearance of good relations with the Hungarian Government; even the charges of non-observance of the restitution terms failed to be more than momentary distractions. However, this period was shortlived. On June 19, 1951, a Bill of Indictment, drawn up against Archbishop Joszef Grosz, Head of the Catholic Church in Hungary, and eight others including Alajos Pongracz, a USIE local employee who was arrested in March 1951, charged the defendents with conspiracy, sabotage and other crimes of violence. At the public trial to which it was necessary to have tickets, the prosecution implicated certain U.S. Legation Officers as fomenters of the “abortive rebellion” and recipients of political, cultural and military information. Archbishop Grosz and his codefendants confessed their guilt and identified various Americans as abetting their “anti-state” activities. The burlesque trial was designed to demoralize the Bench of Bishops, to end the Catholic Church’s organized resistance to communism, to liquidate the USIE Library, which was already operating on borrowed time (Legation Despatch 553, February 2, 1951, enclosure page 13³), and to hamper the Legation’s activities even further. FSO Albert W. Sherer, Jr., Second Secretary; Attaché Ruth Tryon, Information Officer; and FSS Maryo Eich were declared personae non gratae July 5, 1951, and ordered to leave the country within 24 hours. The United States Government vigorously rejected all accusations brought against the Legation, and retaliated for the expulsions by declaring the presence of two Hungarian Legation personnel in Washington as “no longer agreeable.” Excepting the flyers’ trial, which can hardly be termed as espionage trial in traditional Iron Curtain style, there have been no other trials in Hungary during the reporting period which involved Americans; it would appear that the Hungarians are lagging behind their satellite neighbors, where on the average an anti-United States trial-spectacle is staged every six to eight weeks. Perhaps the need for “bread and circus” is greater in those countries.

3. Mutual Security Act Controversy

For approximately one month after the Grosz trial, the Hungarian Press thundered against the Legation, its personnel, and diplomatic establishments of the United States the world over, particularly in “peoples democracies,” fumed that these installations were “spy centers” whose personnel were carefully selected so as to be prepared to carry out acts of espionage and sabotage against “peaceful” democracies. A recapitulation of these allegations and a host of earlier charges appeared in a thirteen page Declaration delivered to Foreign Missions and the press on November 24⁴ and the White Book, which appeared in English, French and Russian on December 6. The Declaration, a condensed pilot model of the White Book, lists U.S. “criminal acts of aggression” against Hungary and “interference” with Hungary’s domestic affairs, which include U.S. refusal to extradite war criminals, fulfill restitution agreements, admit Hungary to United Nations membership, U.S. “sponsorship” of VOA and RFE activities, and “recruitment” of “fascist” refugees in West Germany to be sent “to overthrow” Hungarian democracy. The Declaration and the White Book were obviously designed to provide Soviet Foreign Minister Andrei Vishinsky with “ammunition” in his attack at the December UN session on the 100 million dollar appropriation clause of the Mutual Security Act of 1951. These two documents were also designed by the Hungarians to undercut the effect of the United States’ Human Rights Violation Petition. Following the pattern set by Moscow and in similar language, the Hungarian Government formally protested the promulgation of the MSA in a note of December 1. The United States replied on December 29 by dismissing the note as a Moscow-inspired document and forwarding a copy of the note sent to the Soviet Government December 19 in answer to the Soviet note of protest.

4. The Four Flyers

Four U.S. airmen who wandered off their course while flying to Belgrade from Munich in a C–47 were forced down in Hungary November 19, and detained in solitary confinement for thirty-nine days, first by the Soviets, later by the Hungarians. The unfortunate timing of this event further encouraged the satellite case against MSA. Fortified with the presence of four U.S. flyers borne to Hungary on a magic carpet, so to speak, unwittingly to serve the cause of communist propagandists, Moscow and Budapest exploited the affair to the utmost by associating the airmen and their paraphernalia with “diversionist” activities “chartered” under the MSA. (For the details of the airmen’s imprisonment and trial see Weekas 49, 50, 51, 52.⁵) After a hopeless series of notes demanding the airmen’s and plane’s release, the United States Government made a very strong démarche in Moscow and Budapest on December 22. The Hungarians rushed through a quick “court-martial” for them on December 23, abandoning the charge of espionage and sentencing them only for violation of the Hungarian Frontier. The men were each given a 360,000 forints fine or a choice of three months each in jail. The United States Government paid the fine-ransom, under protest, and obtained the men’s expulsion from Hungary on December 28. The Legation informed the Hungarians of its willingness to pay on December 25, but had been forced to wait on the grounds that no “competent authorities” were available over the extended Christmas holidays. The reprisals for the plane affair have already been described. The Legation’s effort to obtain a transcript of the trial proceedings has been unrewarded. The Department is preparing a formal charge against Hungary with regard to its conduct in the plane affair.

5. New U.S. Minister to Hungary

Christian Magelsson Ravndal arrived in Budapest December 20 to assume charge of the Legation. He succeeds Nathanial P. Davis who left Budapest May 18 and resigned from the service while on home leave.

6. Travel Restrictions

On January 19, the Hungarian Government informed the Legation that effective January 22, “all foreign nationals who are on duty at diplomatic missions” would be obliged to obtain permits to travel beyond a thirty kilometer radius from the center of Budapest. The Hungarian press took up the cry that this measure would curtail the “chief hobby,” collecting intelligence, of certain Western missions. The United States Government reciprocated this “inconvenience” by limiting the Hungarians to within 18 miles of Washington. Travel permits have very rarely been granted for interior travel in Hungary. However, all requests for necessary documentation to transit Hungary in the direction of Vienna or Belgrade were quickly honored. Other Western Legations have met with similar or even stricter treatment.

7. Miscellaneous

Other events of 1951 which had bearing on U.S.-Hungarian relations were: the arrest of three Legation employees, Istvan Szecsi (January 19); Alajos Pongracz (March 24); Otto Fernbach (April 17); and the deportation of Frederick Karg (July). The Legation protested these incidents in vain as the Foreign Office had not bothered to forward any explanations. The stabbing of Miss Ida Gyulai, Counselor of the Hungarian Legation in Washington on January 10 was denounced as “provocatory” by the Hungarian Government, although the act was committed by a demented Hungarian awaiting return to Hungary. On February 24 a single engine Yak training plane bellylanded in the U.S. Zone of Germany. Its crew of two requested and was given asylum in Germany. The United States served notice of its intention to abrogate the Consular and Commercial Treaty of 1925 on July 5, 1951, unless the Hungarian Government would agree to cancel the Treaty’s “most favored nation” clause, which they refused to do. They capitalized on this action as further evidence of U.S. hostility.

. . . . . . .

E. Trade and Economic Relations with the United States

1. Trade Relations

United States exports to Hungary were insignificant; incomplete data available to the Legation indicate that they were about $300,000 in the first six months of 1951. This low figure was due to United States export controls on strategic items and to Hungarian Government reluctance to spend dollars on anything but strategic items.

According to the Legation’s invoice records, Hungarian exports to the United States increased to $1,737,567, compared to $1,484,574, in 1950, and $1,432,966 in 1949. Bed feathers remained the most important item, accounting for about half the total. The next most important export was seeds, which rose to $324,765, compared to $201,129 in 1950. Sales of basketware and wearing apparel to the United States also increased significantly.

A United States note of July 5 requesting termination of Article VII (most-favored-nation clause) of the 1925 commercial and consular treaty between the two countries was rejected on August 25 by the Hungarian Government and angrily denounced in the officially-inspired press. American export controls were the principal object of press attacks, suggesting that Hungary is experiencing a shortage of the strategic materials affected thereby. Since the Hungarian Government refused to consider nullification of the most-favored-nation clause, the entire treaty will be terminated on July 5, 1952; however, the effect on Hungarian exports will be negligible.

More important than exports in procuring United States currency were charitable dollar remittances. The American Joint Distribution Committee spent between two and three million dollars and Hungarian Government hard currency receipts from “Ikka” gift parcels probably exceeded half a million dollars. These dollars were essential to Hungary in buying strategic goods from Switzerland, Belgium and Lebanon as well as from various illegal sources.

2. Restitution

As part of the agreement for the release of Robert Vogeler in April 1951, the United States agreed to facilitate the delivery of all Hungarian goods in the United States Zone of Germany which had been found available for restitution. The shipment of all such goods was completed and receipts signed on July 27, 1951. The Hungarian Government has continued to protest that the goods restituted constitute only a fraction of what Hungary should have received, but the protests now appear to be motivated principally by propaganda aims and as a means of keeping a possible bargaining weapon against any future United States claims.

iii. conclusions and trends

An analysis of the past year’s events and developments shows the following general trends, most of which are not new but merely a continuation of those apparent in recent years:

1. Foreign relations were marked by complete subservience to the policies and interests of the Soviet Union. This may be expected to continue and be intensified during the coming year. There is thus no point in speculation by this Legation as to the future course of Hungarian relations with the United States (or any other country). The decision will be made in Moscow.

2. Nearly every phase of internal political, economic, social, religious and cultural activity showed a trend towards closer assimilation to the Soviet model which can be expected to continue until complete alignment is achieved. One exception was the slowing-up late in the year in collectivization of the land. How long this will last will also depend on Moscow, but it would appear that the necessity of continuing maximum production will insure putting off the final battle with the peasants with the temporary disruption which the Soviet Union knows so well will be a result.

3. The decline in the standard of living which has been an inevitable result of the exaggerated industrialization continued during the year, can be expected to be accentuated in 1952 since the Hungarian economic authorities admit that much of the enormous capital investment planned for this year will not produce any results until following years. Part of this lowering of the standard of living cannot be avoided under present economic policies, but part is believed to be a deliberate plan to reduce Hungarian standards to those of the Soviet people. Hungary may thus benefit by any improvement in the USSR.

4. The increase in the overall level of production continued in 1951, but it is becoming increasingly difficult to maintain the rate of increase and a crisis may occur in 1952 unless more Soviet assistance is offered—or there is less Soviet drain on the economy. Crop weather may play a decisive role; a poor harvest would bring certain crisis.

5. While resistance to the regime from the Church, bourgeoisie and intelligentsia declined during the year under review for reasons explained in the main body of this report, there was considerable evidence that opposition among the workers and peasants actually increased. This does not mean that there was any important organized resistance or acts of sabotage. It took the form of underlying non-cooperation which at certain times and in certain places amounted to a slow-down strike accompanied by sharp drops in the quality of work. While the causes for and inclination towards this type of noncooperation will certainly exist in the coming year, it is feared that the government’s measures to combat it will also be stronger. Thus, sterner measures to insure “labor discipline” are already being enforced, and crop collection measures have been made more stringent.

1. This paper, comprising 36 typewritten pages, was transmitted to the Department of State under cover of despatch 477 from Budapest, February 1, 1952. Together with the summary and conclusions printed here, it included the following sections: international political developments, domestic political developments, military developments, general economic situation, industry, agriculture, and foreign trade. Counselor of Legation Abbott prepared the summary and conclusions; Attaché William H. Balasz prepared the political sections; and Second Secretary Seymour M. Finger prepared the economic sections.
2. The “White Book” referred to here is the same as the Hungarian White Book.
3. Not printed.
4. For text of the declaration (or statement) under reference here, see Hungarian White Book, pp. 315–323.
5. None printed.