Office of the Historian

740.00119 E.W./10–1344: Telegram

The Acting Secretary of State to the Chargé in the Soviet Union (Kennan)

Washington, November 2, 1944—5 p.m.

2585. The Department’s position on the reparations article of the Hungarian armistice terms having been omitted from our comments on the Soviet draft text and instructions transmitted to you in the Department’s 2498 October 21, 8 p.m., there is quoted below a re-draft of article 13 and Annex E which you should propose and support in your discussions with the Soviet and British representatives.62

  • “1. Article XIII. Losses caused to the Soviet Union and the other Allied states and their nationals by military operations and by the occupation by Hungary of territory of the Soviet Union and other Allied states will be made good by Hungary to the Soviet Union and other Allied states, but, taking into consideration that Hungary has not only withdrawn from the war but has declared war and in fact is waging war against Germany, the parties agree that compensation for the indicated losses will be made by Hungary not in full but only in part, namely the amount of 300 million United States dollars, payable over 6 years in commodities. The amount of compensation to be paid by Hungary to the Soviet Union will be 200 million United States dollars. The amount of compensation paid to the other Allied states will be 100 million dollars, the share of each other Allied state claiming compensation to be determined by consultation among such Allied states and to be notified to Hungary through the Allied Control Commission to be established in Hungary.
  • “2. E. Annex to Article XIII. The precise nomenclature and varieties of commodities to be delivered by Hungary to the Soviet Union and to the other Allied states in accordance with Article 13 of this Agreement, and also the more precise periods for making deliveries each year shall be defined in special agreements with Hungary negotiated through the Allied Control Commission.
  • “3. As basis for accounts regarding payment of the indemnity foreseen in Article 13 of the Agreement the American dollar is to be used at its gold parity on the day of signature of the Agreement, i.e. $35.00 to one ounce of gold. The value of commodities to be delivered by Hungary in terms of United States dollars will be determined by the Allied Control Commission.
  • “4. The Allied Control Commission to be established pursuant to Article 19 and the Annex thereto of this Agreement will establish a special organ or section to be entrusted with the execution of the various functions of the Allied Control Commission relating to compensation to be paid by Hungary pursuant to Article 13 of the Agreement. The special organ or section to be established for this purpose shall include representatives of the Soviet Union, the United Kingdom and the United States of America. Subsequent to the establishment of such special organ or section and when circumstances should require, there may be included as members of such section representatives of other Allied Governments having substantial reparations claims against Hungary.”

Your instructions regarding the manner in which you should present our position on this article in the tripartite discussions were transmitted to you in the Department’s immediately preceding telegram.

Sent to Moscow, repeated to London.63

Stettinius
  1. Numbered paragraphs quoted below were sent out of order for security reasons but are here printed in their proper order.↩
  2. Repeated as telegram 9155.↩