Nazi Germany and the Role of the US in the Fate of Czechoslovak Monetary Gold 3031387570, 9783031387579

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Nazi Germany and the Role of the US in the Fate of Czechoslovak Monetary Gold Slavomír Michálek

Nazi Germany and the Role of the US in the Fate of Czechoslovak Monetary Gold

Slavomír Michálek

Nazi Germany and the Role of the US in the Fate of Czechoslovak Monetary Gold

Slavomír Michálek Institute of History Slovak Academy of Sciences Bratislava, Slovakia

ISBN 978-3-031-38757-9 ISBN 978-3-031-38758-6 (eBook) https://doi.org/10.1007/978-3-031-38758-6 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Preface

The stirring history of Czechoslovakia’s monetary gold began being written at the end of the 1930s, at the time of the breaking up and divvying up of Czechoslovakia, when the gold was forcibly and unlawfully seized by Nazi Germany. At the end of the Second World War, it was found by American armed forces in the salt mines of Merkers, and for almost 37 years, it became a part of complicated Czechoslovak–American relations, of economic–trade and political–ideological international disputes and conflicts. Only in February 1982 was a sufficient portion of the gold returned to the vault of the Czechoslovak State Bank. Reconstructing the fate of Czechoslovakia’s monetary gold in reality traces the principles and fundamental events of the country’s development, and in a broader context, it must be interpreted as part of the solution to international problems. While in 1938–1939, this gold was a more bilateral Czechoslovak–German question, from 1939 to 1945, it was a Czech–German and Slovak–German issue. After the war, it became more of an international problem and from the mid-1950s, a sovereign Czechoslovak–American one. Such a loosely defined working division of the story of Czechoslovak monetary gold does not represent a solidly built structure but is more a small supplementary crutch in the background of the “large” Czechoslovak history. After the end of the Second World War, Europe and the entire world stood before a new war—this time a Cold War—as well as a great many

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open questions and issues. These questions and issues were both fundamental and secondary; they were international (multilateral and bilateral) and internal (within any country, including the restored Czechoslovakia). Among the major open international issues of Europe and the whole world, settling the consequences of the war and establishing a new order that would minimize the outbreak of a new worldwide conflict. Today, we know that, after the defeat of a common enemy, the world did not take the road of cooperation but of bipolar confrontation from the superpower position of two ideologically different regimes—the USSR and the US—with two sets of values. After the war, many international questions managed to get resolved, but some remained open and unresolved, particularly for political reasons. They rambled on for decades and were also reflected in the level of bilateral relations. Among those that affected postwar Czechoslovakia was the so-called “Tripartite” Czechoslovak monetary gold. Although this was not the dominant issue, it played more than a negligible role, particularly in Czechoslovak–American relations. I have divided the issue of Czechoslovak gold into four basic spheres. In the first, I follow the fate of the gold from the founding of Czechoslovakia, as well as how it fell into the hands of Germany, or what took place on the ground of the so-called Tripartite Gold Commission (TGC— the Tripartite Commission for the Restitution of Monetary Gold, or the Tripartite Gold Commission). In the second, I focus on explaining several specific issues in Czechoslovakia’s bilateral relations with the US, namely because they permanently appear as a part of the “gold” issue in the period that followed. The basic aim is that the reader knows the “American” background and context when I examine in the third area the issue of Czechoslovak-American negotiations on the return of gold from the 1950s to the 1980s. The fourth area maps the physical transport of the gold from the US and the UK to the vaults of the national bank in Prague. The foundation and source of the presented monograph on the fate of Czechoslovak gold in the years 1938–1982 comprises archival documents from several archives and collections in the Czech Republic and the US.1

1 The first part of the issue of Czechoslovak monetary gold involves documents from the Archives of the Czech National Bank (collection of Národná banka cˇ eskoslovenská— ˇ NBCS) and the Archives of the National Bank of Slovakia (Národná banka slovenská) ˇ (collection of the NBCS—Regional Institute Bratislava), while in the second part these materials overlap with documents of the Archive of the Ministry of Foreign Affairs of the Czech Republic (collection of the International Law and Territorial Department of the

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I consider sources from the Tripartite Gold Commission to be the most important. When examining and shedding light on our past, the historian often relies on the period press, memoirs or other available literature. In the case of Czechoslovak monetary gold, such resources are literally minimal, or even rare. Although the history of the Czechoslovak monetary gold is not the primary topic of modern Czechoslovak or international history, it should not be undervalued. Slovak and Czech historiography has not yet fully addressed this issue, but it has not avoided it either. Several studies have been written that follow the story of the Czechoslovak gold at least marginally, or focus on 1939 alone. Scholarly work from the pen of a historian who would capture its complete history from the perspective of Czechoslovak–US relations and with the use of available and relevant sources, does not yet exist.2 It is equally absent from Western historiography. With the exception of David Blaazer’s work from 2005, US) and National Archives and Records in the US (especially, those of the Tripartite Gold Commission). In the third part, the studied issues are tracked mainly using documents from the National Archives of the Czech Republic (collections of the Central Committee of the Communist Party, the Ministry of Foreign Trade and the Ministry of Finance), National Archives and Records (collections of the Legal Advisor and the Tripartite Gold Commission) and again the mentioned collections of the Archive of the Ministry of Foreign Affairs of the Czech Republic; the fourth part is almost exclusively covered by the Archive of Security Forces in Prague and the Archive of the Ministry of Foreign Affairs of the Czech Republic. 2 Among the historians who map a certain segment of the given issue with the use of primary sources are in particular the Czech authors Jan Kuklík (Do poslední pence..., Prague, 2007), who focussed in his monograph on Czechoslovak–British relations and related financial and trade issues; then Vít Smetana (Britain and Czechoslovak Gold. In Soudobé dˇejiny 4/2001), Eduard Kubu˚ (Czechoslovak Gold Reserves and their Surrender to Nazi Germany. In Nazi Gold. London, 1998) and Jan Krejˇcí (Nˇekolik poznámek k historii navrácení cˇ eskoslovenského mˇenového zlata. In Právnik, 7/1996). The latter three mentioned are scholarly studies that concentrate mainly on questions of the extent of the British government’s responsibility for handing over part of Czechoslovak gold to Germany in 1939. Among the available literature that should map the issues around Czechoslovak monetary gold, or the broader context of Czechoslovak–American relations—at least by name—is the work of Justine Faure (Americký pˇrítel, 2006). Unfortunately, this is not the case; this is a book that only captures the Czechoslovak political developments after 1945 through the eyes of a Western author. On the other hand, Bohuslav Chnˇ oupek, a former Czechoslovak Minister of Foreign Affairs, focusses on Czechoslovak gold in his memoirs (Memoáre in claris, 1998). Here, it should be noted that he, understandably, focussed more on his own personal participation, even though it is evident by the facts provided that he had ministerial documents available.

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which, however, deals only with the limited period of 1939, the issue of Czechoslovak monetary gold has been only marginally addressed.3 This is specifically why the idea came about to eliminate this deficit at least in part with the use of the source base. The blocked monetary gold of Czechoslovakia after Second World War was not only a bilateral issue between the US and Czechoslovakia. It also reflected the broader bipolar (Soviet–US) relationship, as well as several nuances of the Cold War. This is true for the entire period under review. The book clearly shows who was the winner and the loser of the “golden” dispute. Or, was it a win-win situation after all? I don’t think so. The first period of the Cold War (1945–1975) represents rather a humble and isolated attempt of the Czechoslovak foreign policy to seek seemingly distinct positions on certain bilateral issues of international politics in the context of its relations with the West, not in open conflict, of course, but primarily under the wings and with the blessing of the Kremlin. This hesitant, solitary attempt, continuously confirmed until 1982 by the tripartite gold question, can be divided into Stalinist, Khrushchevist and Brezhnevist periods. In the post-war Stalinist period, within the forming Soviet bloc, such an attempt was understandably unreal and unrealistic. Moscow needed and received Czechoslovak uranium and industrial goods, and did not even stumble over the blocked Czechoslovak gold issue. After Stalin’s death, in the so-called Khrushchev era, constants other than the monetary gold played a key role in the bipolar world. These continued to be, in particular, a divided Germany, the Hungarian Revolution and the Cuban escalation of tensions. As if there was no time, appetite or energy left for Czechoslovakia and its gold, which remained on the sidelines. From an international perspective, a completely marginal In terms of content, the most beneficial work dealing with Czechoslovak–American relations, including the issue of the gold, comes from Zdenˇek Trhlík, a former Czechoslovak ˇ diplomat. It was published in 1988 under the title “Spojené státy a Ceskoslovensko. Vztahy v létech 1918–1988” [The United States and Czechoslovakia. Relations in the years 1918– 1988] in the Prague Institute of International Relations and is imbued with old clichés about evil Western imperialists longing for the destruction of the USSR and its allies. However, ignoring the contemporary terminology and ideological interpretation, it is a factually valuable publication related to the subject at hand. 3 Blaazer, David. Finance and the End of Appeasement: The Bank of England, The

National Government and the Czech Gold. In Journal of Contemporery History, Vol. 40, No. 1 (Jan 2005), pp. 25–39.

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problem. In the bipolar world, the subsequent general easing of tensions (détente) represented a far more important and convenient element for both players, the USSR and the US, compared to the conflict over 18.4 tonnes of Czechoslovak monetary gold. (Paradoxically, Washington, London and Paris found no common ground here, and the tough and uncompromising US stance basically confirmed a well-known fact—the decisive “Atlantic” player was indeed “Uncle Sam”). What could a small Soviet satellite do, in such a geostrategically disadvantageous international position? Basically, just blindly repeat the propaganda and rhetoric of peaceful coexistence of its Eastern protector. And how did Prague approach its own blocked gold during this period? Although it could have been a very explosive and suitable topic for propaganda purposes, it received less attention in the Czechoslovak propaganda than the Colorado potato beetle, an “imperialist weapon” for starving the republic. Also, from the domestic perspective, there were other priority topics vis-a-vis the West—the lack of foreign exchange for the purchase of high-quality raw materials or technologies, the withdrawal of the mostfavoured-nations clause, the national administration over IBM assets, the blocked broadband rolling mill, the imprisoned William N. Oatis and the nationalized assets of the Czechoslovak emigration all hung in the air. If we look at the post-war reality of the Cold War from Moscow’s perspective, and this also applies to the long Brezhnev period, Moscow had no intention to prioritize the solving of semi-problems of its satellites. It is worth mentioning that Prague, while being a pawn of Moscow, acted rather independently for that time and international context in the negotiations about its monetary gold with the Atlantic power, free of open interference or directives from the USSR. Available archival documents confirm this. Paradoxically, the initiative to engage Kremlin was initiated by Prague, not by Moscow. Prague, as Moscow’s faithful and stable ally, tried to break away from the eastern bloc only once during the Cold War, when attempting to establish socialism with a human face, made impossible by USSR’s tanks in August 1968. Using the doctrine of limited sovereignty within its bloc, Moscow practically blocked all attempts of the Czechoslovak path to democratization of the regime and society. And how did the democratic West, led by the US, react to the August invasion of the USSR troops (and of four other members of the Warsaw Pact) into Czechoslovakia in the summer of 1968? They evaluated it as an internal matter of the Soviet bloc and basically, apart from verbal condemnation, did not get involved in favour of Czechoslovakia, occupied by the troops

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of the Warsaw Pact. Several factors contributed to this attitude: West considered Czechoslovakia to be the Kremlin’s firmest ally, and further, Czechoslovakia was the third largest exporter of military equipment and weapons to North Vietnam (after the USSR and China). The intra-bloc Czechoslovak obedience of Moscow and its subordination to the interests of the geopolitical superpower came fully to surface also here. Additionally, at this time, nothing tied the Atlantic power to Prague, although at the beginning of the 1970s, several key bilateral problems between the two countries persisted, lingering as unresolved and interconnected issues. The 1970s in the world did not only bring chaos, oil crisis and peripheral war conflicts. It was as if the bipolar rivalry could not escape the stereotype of the previous period, unable to find the light at the end of the tunnel. Thus, the blocked Czechoslovak gold remained on the sidelines again and again. Unexpectedly, it was not a bipolar consensus that brought the solution, but rather a permanent and increasing pressure on American citizens, pushing to resolve the long-promised and delayed adequate and effective compensation for their nationalized property in Czechoslovakia. Thus, their representatives (a small group of influential US senators and congressmen) pushed Prague to the wall. The tough conditions put forward by Congress, as the dominant American centre of power, regarding compensation for nationalized property were naturally on the table and could not be ignored. In the end, there was no win-win situation—Prague was forced to accept the dictated conditions, the so-called “one hundred cents on the dollar”. Still, Czechoslovakia did “earn” something with its returned gold. Namely, the 18.4 tonnes of gold had a much higher financial value in 1982. The price of gold skyrocketed after the release of its peg to dollar in the early 1970s. From a Czechoslovak perspective, this changed the passive Czechoslovak–American trade balance to an active one. Put differently, the monetary gold, originally valued at around $22 million, was suddenly worth over $200 million. However, when talking about the Czechoslovak gold, blocked by the Americans, and returned only in 1982, it should be repeated that this problem would not have arisen if the gold had not been unlawfully seized by Nazi Germany at the beginning of the Second World War. Do the milestones of the return of Czechoslovak gold copy those of the Cold War? They do in many ways, but of course not entirely. When tracing the fate of the Czechoslovak monetary gold, the question of the international position of Czechoslovakia during the Cold War

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arises, especially in the context of the two superpowers thesis, accepted by many historians (criticized by others). What room for manoeuvre did a “small state” (in this case, Czechoslovakia) have, in relation to both the enemy superpower (US) and its protector (USSR)? Very small. Czechoslovakia was no equal partner to the US, and its hopes for greater involvement of the USSR did not materialize. Logically, this means that Moscow was never interested in the partial problem of its satellite. The Cold War was not an abstract concept, rather, it had its concrete manifestations, stages and protagonists. One can certainly agree that the Czechoslovak monetary gold also represents a part of the story. History never takes place randomly, in isolation, but rather in contexts, and mostly with an “internal logic”. It never follows a straight line, as confirmed by the story of Czechoslovak monetary gold during the height of the Cold War. Bratislava, Slovakia

Slavomír Michálek

Contents

Part I Divide et Impera 3

1

The Gold in the Hands of Nazi Germany

2

The Tripartite Commission for the Restitution of Monetary Gold

35

The Gold (Brussels and Washington)

71

3

Part II The US–Czechoslovak Differences 4 5

Compensation for Nationalized Property, the US Surplus and Rolling Mill

101

The Oatis Case, IBM in Czechoslovakia and the Augsteins’ Case

137

Part III The US Congress as a Hammer 6

Prague Gold vs the State Department Until 1968

171

7

The Position of Washington up to 1980

215

8

Final Negotiations

247

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CONTENTS

Part IV The Gold at Home 9

Operation “Return 82”

283

Conclusion

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Index

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PART I

Divide et Impera

CHAPTER 1

The Gold in the Hands of Nazi Germany

How and when did the Czechoslovak gold reserve actually arise? What was its basis? Shortly after the founding of the Czechoslovak Republic, it was essential to secure and resolve all of its economic, financial and currency issues. Here, the plan for currency reform prepared by Finance Minister Alois Rašín in February 1919 played a key role. The plan assumed economic independence from Vienna and Budapest, and the first steps were the stamping of existing banknotes, obtaining a loan (a four-per cent foreign currency loan) and the efforts to reduce inflation. The Czechoslovak koruna (crown) was established as a paper (a state note, banknotes with forced circulation) currency. It was introduced as the monetary unit of the new state in April 1919, and a gold reserve was created to cover it in several ways. The primary method during the period of interwar Czechoslovakia was the free purchase of precious metals, particularly gold, by the state.1 Another consisted of delimiting 1 What exactly was considered to be monetary gold, or the gold reserve of a state, and what was its role? Generally speaking, various valuable and precious metals, particularly gold owned by the state, were considered to be state monetary gold. These metals took the form of gold bars, coins and various golden fragments and objects. Their owner was the state, their administrator a central bank or a currency issuing institution with the task of supervising the state’s financial sector. The main role of monetary gold, i.e. the state’s currency reserve, was protection against the threat of potential bankruptcy by the state

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Michálek, Nazi Germany and the Role of the US in the Fate of Czechoslovak Monetary Gold, https://doi.org/10.1007/978-3-031-38758-6_1

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the banking sector assets and gold reserves of Austria–Hungary, which was done in two stages from 1919 to 1924. The mentioned delimitation represented 12.4 tonnes of gold after the liquidation of the Austro-Hungarian Bank. The first purchase of monetary gold for the Czechoslovak state was made by the Banking Office of the Ministry of Finance (Bankový úrad ministerstva financií—BÚMF)2 and took place in early 1920. Prior to that, gold and other precious metals were purchased for the state on the “State Currency Treasury Depot” account, and only on 13 December 1920 did this depot pass to the balance of the BÚMF. At the end of that year, the BÚMF showed a reserve of precious metals worth 152,818,875.59 Kˇc (109.206 million crowns in gold, 43.513 million crowns in silver). The pure weight of the actual store of precious metals, minted or unminted, at that time included: unminted gold—641.6 kg, minted gold—5816 kg (total gold 6457.6 kg), unminted silver— 40.565 kg and minted silver—324.190 kg (total silver 364.755 kg).3 These metals, aside from state purchases, were gifted, sold or provided as loans by the citizens of the republic. For example, among them were 94,000 gold coins. Unminted metals were supplied in particular

and covering the value and stability of a state’s currency in regard to other countries. Due to its specific characteristics, gold still today satisfies this function of the reserve of all reserves. What’s more, it has its own specific attributes, and the basis for defining its concept is purity. This value is given in thousandths. The lowest allowable value of purity for monetary gold is 995/1000. As of July 1944, monetary gold became the basis of the Bretton Woods monetary system. Together with the world’s first reserve currency (the US dollar since 1934), it formed the basis of a system of fixed exchange rates (a troy ounce for 35 USD). Given the unsustainability of the fixed price of monetary gold and the external imbalance of the US balance of payments, exchange rates based on the “US dollar-monetary gold” tandem were abolished on 15 August 1971 by a unilateral decision of President Richard M. Nixon. The cancellation of the free exchange of the US dollar for gold ended the era of fixed exchange rates, which were replaced by freely floating exchange rates. Today, monetary gold serves as collateral when lending in the event of a global financial crisis. It is not a subject of trade, with the exception of trading between central banks or with international monetary institutions, e.g. the International Monetary Fund. 2 The BÚMF was a special body of the Ministry of Finance (the temporary bank of issue since 1919), which was entrusted with handling monetary policy until the standard ˇ bank of issue—the National Bank of Czechoslovakia (NBCS)—began to operate. The ˇ was created in 1925 and started its activities the following year. NBCS 3 Archive of the Czech National Bank (ACNB), ˇ ˇ Prague, f. NBCS, sign. NB-PXVII, no. 71/337.

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by Zlatodul ˚ Roudný (the Roudný Gold Mine), the state central office in Pˇríbram and the Czechoslovak Legion Bank (Banka cˇ eskoslovenských légií, or Legiobanka) from its reserves, in total around 425 kg. Placing a value on metals based on the prices of that time is meaningless, because Czechoslovak currency was still in development and the prices were constantly fluctuating.4 The crucial factor was the pure weight of the precious metals making up the so-called gold reserve, and it was very low during this period, only around 6.5 tonnes of gold. The first collection of precious metals for the backing gold coverage of circulation began in the autumn of 1919 and was carried out in several places—aside from the BÚMF, where the depot account was called the “Gold Reserve of the Czechoslovak Republic”—the Assay Office was entrusted with the receiving of donations (it mainly received valuables and precious stones) as well as the Zemská banka, and after the assassination of Minister of Finance Alois Rašín, all post offices (the so-called Second national collection). The BÚMF bore the primary responsibility. It issued guidelines to the Assay Office on 16 October 1919 on how to handle the deposited items, and which and in what form it should transfer them to its main institute. Another BÚMF document from 25 April 1921, addressed to the Ministry of Finance, was a catalogue of all the donations and a request for consent to “take them into its ownership and report them together with the precious metals which had been freely purchased, by which the golden gift would be placed at the beginning of the path of its determination”.5 The Ministry of Finance agreed with the presented step on 23 November 1921. The second wave of the national collection for creating the state gold reserve, which took place after the death of Minister Rašín in early 1923, had a more psychological–political importance than monetary. The further development of the Czechoslovak gold reserve was, in fact, dependent on the state’s monetary policy, mainly on its current balance of 4 This fact is confirmed by the internal balance of BÚMF precious metals at the end of 1921, when the Czechoslovak Republic reported their purchase value in the amount of 552,288,583.78 Kˇc. 5 The status of the gifts was as follows: gold (cast and coins)—272 kg; silver (cast and coins)—7000 kg; gold valuables and objects—3 kg; silver valuables and objects—54 kg; copper fractions—17.6 kg; nickel fractions—0.335 kg; gems in the estimated amount of 3000 Kˇc; foreign paper values converted according to the exchange rate of 22 April 1921 for 75,715 Kˇc; cash in the amount of 42,684.90 Kˇc; stamped and unstamped banknotes ˇ ˇ sign. NB-PXVII. (Rubky) in the amount of 5914.50 Kˇc. ACNB, f. NBCS,

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payments. It had developed positively, and the state reserves had increased commensurate to it. The total proceeds of the first collection in 1925 amounted to 11,816,614.98 Kˇc (the BÚMF managed this on its account, and in 1926 it was transferred to the National Bank of Czechoslovakia’s account), and the second collection totalled to 1,103,078.02 Kˇc (this amount was managed by Zemská banka).6 At the beginning of 1929, the National Bank of Czechoslovakia ˇ asked the Ministry of Finance to have the second collection for (NBCS) the state treasury transferred to its account from the account in Zemská banka. This took place on 15 March 1929, when this amount became ˇ “State gold reserve” account. a part of the NBCS The statistical data presented in the footnote confirms the already mentioned fact that the collections for the state treasury actually made up a fractional part of the republic’s gold reserve. In 1920, the republic’s gold reserve totalled only 6.5 tonnes, and one of the first sources of money for the young state was the so-called National Liberty Loan. In the mid-1920s, the main source for increasing Czechoslovakia’s gold treasury was good management and large exports of sugar and coal. In 1925, state reserves totalled nearly 41 tonnes of gold, in 1930 almost 69 tonnes, and in 1933 over 76 tonnes.7 In September 1938, shortly before the Munich Agreement, the total reserves of Czechoslovak gold were almost 95 tonnes.8 However, at that time, almost all of the state’s gold, exactly 88,433 kg, was stored abroad, mainly in Switzerland, Belgium and the UK. The immediate and primary motive for depositing Czechoslovak state gold abroad was the increasing international tension in Europe caused by Adolf Hitler’s rise to power in 6 ACNB, ˇ ibid., p. 3. 7 Vencovský, František – Jindra, Zdenˇek – Novotný, Jiˇrí – Pulpán, ˚ Karel – Dvoˇrák, Petr.

ˇ et al. Dˇejiny bankovnictví v Ceských zemích [A History of Banking in the Czech Lands]. Prague: Bankovní institut, 1999, p. 221. 8 Data on state gold reserves in 1925, 1930, 1933 and 1938 can also be supplemented with the status at the end of 1948: gold bars deposited in Basel, London, New York and Amsterdam weighed a total of 21,374 kg (including 6.1 tonnes of gold coins, returned by the Tripartite Commission in May 1948 from New York). In addition, 2682.5 kg that were lent to state-owned enterprises to cover international trade and 876.333 kg of gold in the vault of the Prague National Bank must be added to this. Thus, in 1948, ˇ ˇ sign. the Czechoslovak monetary reserve totalled 24,932 kg of gold. ACNB, f. NBCS, ˇ Leopold Chmela from 30 NB-PXVII-332. Report of the General Director of NBCS November 1948.

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early 1933, the growing aggression of Nazi policies in Germany and the impending threat of military conflict. The Czechoslovak Republic had most of its gold reserves deposited through the Swiss Bank for International Settlements (BIS),9 which was located in the UK. As of 15 ˇ had only coins weighing 6375.8588 kg in September 1938, the NBCS 10 its vaults. After the Munich Agreement, or after the annexing of the Sudetenland by the German Reich, the Reichsbank (RB) pulled Czechoslovak currency out of circulation from the affected area and replaced it with the Reichsˇ that the amount mark (RM). It then submitted a demand to the NBCS of this currency in the occupied border area be paid to it in gold and foreign exchange. This was a significant sum of money: 1250.2 million Kˇc ˇ rejected the claim in banknotes and 120.6 million Kˇc in coins. The NBCS ˇ then also for coins, as they were demonetized in the Reich. The NBCS excluded the so-called non-banknote German claim (i.e. treasury notes and small paper money), such that the claim for gold or foreign exchange payment from them was abandoned.11 Negotiations on compensation for the banknotes withdrawn from the Sudetenland were led uncompromisingly by the German side on the level of a categorical demand for compensation in foreign exchange. ˇ rejected the amount of the German claim, which led to a The NBCS 9 The BIS was founded in 1930 with its headquarters in Basel. Its mission was to share in the liquidation of German war reparations from the First World War. It represents the first attempt at cooperation (an “umbrella”) of banks of issue, and its founding members were the issuing banks of Belgium, France, Germany, Italy, the UK, Japan, the Netherlands, Sweden, Switzerland and the Czechoslovak Republic. After the rise of Nazism in Germany and the cessation of reparation payments, the BIS lost one of its primary tasks. However, it remained a centre for banks of issue, conducting short-term foreign exchange operations, and became a depository bank for gold trading. In Finanˇcní slovník [The Financial Glossary]. Prague: Nakladatelství Svoboda, 1973, p. 48. 10 Vencovský, František—Jindra, Zdenˇek—Novotný, Jiˇrí—Pulpán, ˚ Karel—Dvoˇrák, Petr. et al., p. 275. 11 The total amount of 1250.2 million Kˇc for treasury notes and small paper money was ultimately paid to the Reichsbank, so that the Czechoslovak government had to use 500 million Kˇc for the purchase of the industrial holdings of Prague banks in the border areas. Another half-billion was designated for payment for the portion of the armaments that the Germans were interested in. The use of the rest of this amount was to have been ˇ agreed on later. In Chmela, Leopold. Hospodáˇrska okupace Ceskoslovenska, její metody a dusledky. ˚ Znalecký posudek v procesu s K. H. Frankom [The Economic Occupation of Czechoslovakia, Its Methods and Consequences. An Expert Opinion in the Process with K. H. Frank]. Prague: Orbis, 1946, p. 41.

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threatening German tone in January 1939. After a change in the directorate of the Berlin Reichsbank, an ultimatum was sent to Prague on 23 February 1939. The Czechoslovak delegation, which arrived in Berlin on 28 February 1939, was called on to immediately hand over 513 million Kˇc in gold and foreign exchange. After the negotiations, the amount of the gold payment was set at 465,754,567.45 Kˇc. This sum represented the Czechoslovak gold at Interbank (a deposit of 47 gold bars in Brussels and 125 gold bars in Bern) and at Banque National Suisse in Bern (two deposits totalling 1013 gold bars), for a total of 1185 bars weighing 14,536.20005 kg, meaning a total of 465,754,567.45 Kˇc.12 Added to this was a share in foreign exchange of around 12.8 million Kˇc; thus, the total demand in foreign exchange and gold amounted to almost 478.6 million Kˇc. The agreement, which was approved by the government in Prague, was signed on 4 March 1939, and the Reichsbank received the first forced gold before the dissolution of the republic.13 As I have already stated, Czechoslovakia had the largest portion of its monetary gold deposited in the UK. In total, more than 55 tonnes were deposited in two portions at the Bank of England (BOE) in London. ˇ weighing The first comprised gold deposited in the name of the NBCS 26,763.7466 kg; the second weighed 28,309.3057 kg and was stored on a special sub-account in the name of the BIS. Both portions were in the ˇ the so-called gold deposit, with lists of numbers ownership of the NBCS, and the exact weights of the individual bars.14 After 15 March 1939, however, the German side was not satisfied with the amount of gold already obtained; therefore, special commissioner of the RB, Dr. Friedrich Müller, immediately after arriving in ˇ to transfer to the Reichsbank its gold Prague issued orders to the NBCS reserves deposited in the BOE in London in the name of the BIS. This was exactly 1845 gold bars15 with a net weight of 23,087.3040 kg and worth 739,740,596 Kˇc. This was a forced transfer, because it was not in

12 ACNB, ˇ ˇ f. NBCS, sign. NB-PXVII—103/9. Poznámky k menovému vyrovnaniu s Nemeckom [Notes on the monetary settlement with Germany]. Annex no. 4. 13 Chmela, Leopold, p. 42. 14 Krejˇcí, Jan. Nˇekolik poznámek k historii navrácení cˇ eskoslovenského menového zlata

[A Few Notes on the History of the Return of Czechoslovak Monetary Gold]. In Právník, Prague, vol. 135, 1996/7, p. 674. 15 The standard weight of a bar was about 12.5 kg.

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the interest of Czechoslovakia that a substantial part of its gold reserve be deposited in the Reichsbank. ˇ management16 The orders of Dr. Müller were deferred by the NBCS for three days. Finally, on 18 March 1939, the bank sent out two letters.17 In one, addressed to the Bank of England in London, it requested the transfer of 26,763.7466 kg of gold to the BIS; in the other, addressed to the BIS, that 23,100 kg of gold from the deposit of 28,309.3057 kg of gold kept in the sub-account at the BOE be transferred to the RB in London. The BIS and BOE carried out the second request, i.e. the transfer of 23.1 tonnes of gold to the Reichsbank account at the Bank of England.18 The BIS carried out this transfer, which was confirmed in a letter from 24 March 1939 (no. 913162).19 The RB confirmed the mentioned 16 The NBCS ˇ ceased to exist shortly after the collapse of the republic. Its competence on the territory of the Protectorate of Bohemia and Moravia was assumed on the basis of its own directive (from 31 March 1939 No. 96 Coll., which entered into force on 7 April 1939) by the National Bank for Bohemia and Moravia (NBBM) in Prague from 13 March ˇ continued to exist in this territory, but under 1939. From this, it followed that the NBCS ˇ accounts existed even after the disintegration of the republic a different name. All NBCS ˇ in Prague, or after 7 April 1939 by the on 15 March 1939 and were owned by NBCS ˇ In Slovakia, based on the NBBM. The NBBM was thus the successor bank to the NBCS. order of the Slovak government of 4 April 1939 No. 44 Coll., the Slovak National Bank (SNB) was established with its headquarters in Bratislava, and it assumed the assets and ˇ branches established in Slovakia. After the war, the NBBM again liabilities of all NBCS changed its name and became the National Bank of Czechoslovakia. The SNB continued its activities in Slovakia. With Decree of the President of the Republic No. 139 Coll. from ˇ and its headquarters in Bratislava 19 October 1945, the SNB was merged with the NBCS ˇ Thus, the competence of the NBCS ˇ again became the Regional Institute of the NBCS. stretched over the entire territory of Czechoslovakia. 17 ACNB, ˇ ˇ sign. NB-PXVII, cˇ . j. 19598 and 19599, letters from 18 March f. NBCS, 1939, signed by František Peroutka and Josef Malík. 18 The mentioned gold transfer caused several verbal skirmishes on the British domestic political stage. Vít Smetana provided a detailed analysis of these connections in the study “Britain and Czechoslovak Gold”. In Soudobé dˇejiny 4/2001. 19 National Archives and Records (NAR), College Park, MD, f. Rg-59, General Records. Office of the Financial Operations. Records Relating to the Tripartite Commission for the Restitution of Monetary Gold 1942–1962 (abbreviated TGC), box no. 17, text of the letter: “We would like to inform you that, in line with the instructions in your letter of 18 March 1939, registration number 19599, we have collected from the gold we are holding in our name but on your account at the Bank of England 1,845 gold bars (742,273.613 troy ounces in net weight), which we have transferred to the account of the Reichsbank in the Bank of England”.

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operation to the National Bank for Bohemia and Moravia (NBBM) in writing on 12 June 1939, adding that it had credited 23,087.2932 kg of pure gold to its account with the RB and had replaced the original castings with others totalling 1880 bars.20 Another unprecedented step by Germany was the transfer of gold coins from Prague to Berlin, where they were deposited. This move involved 6375.8588 kg of gold coins worth about 204.3 million Kˇc, and the transfer was confirmed by a protocol from 12 June 1940.21 These were old coins, St. Wenceslas and Kremnica ducats and Gdansk guilders, whose historical and numismatic value was significantly higher than the mere physical weight of the gold. Another loss of the Czechoslovak gold reserve occurred in the autumn of 1940, when the NBBM, under pressure from the Reich, transported an additional 1008.9146 kg of pure gold worth 32,262,418.25 Kˇc, which was originally deposited in the Škodove závody (the Škoda ˇ Works), a joint-stock company, and in the Ceskoslovenská zbrojovka Brno 22 (Czechoslovak Armoury Brno). Towards the end of the war, the Nazis hid their unused gold, forcibly obtained from several European countries, in the salt mines in Merkers in central Germany, not far from Frankfurt am Main. After its discovery and seizure by American occupation units, the aggrieved countries were called upon to quantify the loss of their gold reserves. Czechoslovakia calculated their total losses at 45,008 kg of gold. From the demanded, looted gold from European countries, only about 55–57% was immediately found in Germany. Shortly after the war, from 9 November to 21 December 1945, 18 Allied states met in Paris at a reparations conference.23 On the closing 20 Krejˇcí, p. 675. 21 Chmela, p. 44. 22 The documents that the Czechoslovak side submitted to the Tripartite Commission for the Restitution of Monetary Gold in 1947 speak of a value of 32,262,418.30 Kˇc (NAR, f. TGC, box no. 17, No. 989/48, Czechoslovak Delegate to the TGC, 3 June 1948), while Leopold Chmela states a higher sum (32,326,645.30 Kˇc) on p. 45 of his work. 23 Albania, Australia, Belgium, Czechoslovakia, Denmark, Egypt, France, the Nether-

lands, Greece, India, the Union of South Africa, Yugoslavia, Canada, Luxembourg, Norway, New Zealand, the US and the United Kingdom. The USSR did not take part in the conference on reparations, nor did it figure in the Tripartite Commission. At the Potsdam Conference in July 1945, the USSR relinquished all claims to gold regained by the Allies in the western zones of Germany. On the other hand, it made a claim on the

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day of the conference, its participants adopted the “Agreement on Reparation from Germany, on the Establishment of an Inter-Allied Reparation Agency and on the Restitution of Monetary Gold”.24 It was signed on 14 January 1946 and entered into force 10 days later. Part III of this agreement contained, in one article divided into seven points, the conditions for claims for the restitution of monetary gold. It stated that all the monetary gold found by Allied troops in Germany as well as gold found in third countries where it had been shipped to from Germany (including gold coins other than coins of numismatic or historical value, which were to be returned directly, if it was possible to identify them) would be put into a common pool for distribution as returned assets among the affected countries, and that these countries will share in this amount in proportion to their respective gold losses suffered by looting or unlawful removal to Germany. At the same time, without prejudice to claims for reparations for returned gold, each of the states with participation in this amount will accept the portion of the monetary gold that it receives as full satisfaction of all its claims towards Germany for the return of monetary gold. A proportional share of the gold will be allotted to each state participating in this agreement on the return of monetary gold, assuming it can demonstrate that a certain portion of the monetary gold held was looted by Germany or unlawfully taken into German territory after 12 March 1938. The agreement further stated, in point “D”, that the question of possible participation of states not represented at the conference (Austria, Italy) in the said division would be resolved later by a decision of the Allied governments. In point “E”, it further obliged the individual countries taking part in the division of assets to provide to the governments of the US, the UK and France, as the relevant occupying powers, detailed and verifiable data on their gold losses. The governments of the US, the UK and France committed themselves to take all measures needed to carry out the distribution of gold.25

so-called the spoils of war, which it applied in the countries liberated by his army and in its zone of Germany. In the Final Report. Tripartite Commission for the Restitution of Monetary Gold. Brussels, 13 September 1998. 24 The Reparations Agreement entered into force on 24 January 1946. Austrian entered into it later (4 November 1947), as did Italy (19 December 1947) and Poland (6 July 1949). 25 ACNB, ˇ ˇ f. NBCS, sign. NB-PXVIII, reparations 1939–1947 or Benešovy dekrety. Sborník textu˚ [The Beneš Decrees. A Collection of Texts], CEP, no. 18/2002, p. 88.

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The responsibility of the three countries for distributing the gold under the agreement is implied in the text. For this purpose, on 27 September 1946, the American–British–French Tripartite Commission for the Restitution of Monetary Gold (TGC)26 was formed with its seat in Brussels. It was made up of three commissioners, one from each great power. The TGC elected a rotating chairman, and its main task was verification of the “gold” claims of the states and the administrative handling of the gold’s return.27 A Czechoslovak delegation also took part in the mentioned negotiations in Paris in November–December 1945, which resulted in agreements on the division of German reparations from the three western German zones and from German assets abroad. For the most part, understandably, Prague did not determine the direction of developments, but it was a potential recipient depending, of course, on the possibilities and its own ability to provide data and promote its claims. The distribution of the gold lay in the hands of the three great powers. From the very start of preparing the machinery for dividing all the gold found, the assumption was that by creating a single gold “pool”, a kind of common package or so-called gold corpus, the key to proportional and fair allocation will be used in the division. Since the status of Czechoslovak monetary gold had a ˇ warned the Ministry of Foreign Affairs as early specific context, the NBCS as 6 December 1945 not to consent with the proposals at the reparations conference in Paris, i.e. that all the gold found in Germany be “pooled”. ˇ gold in Based on this view of Czechoslovak financial experts, the NBCS the Reichsbank comprised only the so-called forced deposit; therefore, it should not be included among the other gold found, which did not have the nature of a deposit and could therefore be “pooled”. The argument ˇ was that, pursuant to general international law, a deposit is of the NBCS ˇ insisted on never a part of the custodian’s property. Therefore, the NBCS

26 The Tripartite Commission for the Restitution of Monetary Gold commonly used the abbreviated name Tripartite Gold Commission (TGC). We will at times use this name and this abbreviation in this text. 27 The status of the Commission as an international institution, which in its official functions enjoyed the corresponding international privileges and immunities, was acknowledged by Belgian law on 1 August 1952. This law applied retroactively to 27 September 1946.

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the return of the whole deposit.28 Upon rejecting this expert position, the Czechoslovak delegation of the Ministry of Foreign Affairs accepted the position of the powers at the Paris conference. In essence, taking into consideration at least its own decision-making possibilities, it identified with the agreed conditions of the great powers, although the position of ˇ in the negotiations was diametrically different and significantly the NBCS more advantageous for Czechoslovakia. What were the total losses suffered by the Czechoslovak Republic through the forced transfers of the National Bank’s gold? Although I have already stated them in this work, a small recapitulation will not hurt. The highest item was gold that the National Bank had to deposit with the RB in Berlin. After the seizure of the balance of the truncated republic, the National Bank was ordered by Berlin to transfer its monetary gold deposited in the BIS (in London) to the RB’s account. These were the mentioned 1845 bars with a net weight of 23,087.3040 kg worth 739,740,596 Kˇc. The Reichsbank sent a statement to the NBBM by letter of 12 June 1939, in which it announced that it had credited 23,087.2932 kg of gold of pure weight to a special account (“Sonderlagerung”), thus replacing the original 1880 bars of gold. This explained the differentiation of 10.8 g of gold that arose at the time when accounting for this item. The serial numbers of the original bars could not be determined, and the serial numbers of the replacement 1880 bars were also not fully known. Only 1319 bars were identified, leaving 561 gold bars unidentified. From this volume of gold, the NBBM was forced to sell to the RB in the period from 15 May 1939 to 20 April 1940 exactly 12,768.9601 kg of pure gold worth 409,130,410.10 Kˇc.29 This was exactly the 1034 gold bars that could not be traced in the RB’s books. The National Bank in Prague had to sell this gold to the RB in order to obtain foreign currency, which was used to buy raw materials and goods abroad. The rest of the original amount of gold from the deposit in the Reichsbank was transferred to the already mentioned salt mines in Merkers and amounted to 846 bars with a net weight of 10,318.3331 kg. ˇ had another, already mentioned, substantial portion of its The NBCS monetary gold stored in vaults in Prague. These were coins with a pure

28 ACNB, ˇ ˇ box no. 50, precious metals and the liquidation currency fund, f. NBCS, item no. 2057. 29 ACNB, ˇ ibid.

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weight of 6375.8588 kg worth 204,288,971.50 Kˇc. Under the pretence that the vaults in Prague did not meet security standards, the NBBM was ordered to ship this gold to Berlin. This transfer was evidenced by a protocol from 12 June 1940, and in the RB’s books, the coins were listed in the “Depositum regulare” account. These coins, too, were found in Merkers. Between 30 October 1940 and 7 June 1944, the NBBM repurchased gold for foreign exchange in the Reichsbank; however, this purchased gold remained in Germany and was deposited in a “Separate depot” account. Not even these “golden” transactions were done to the benefit and interest of the national bank. This involved 800 gold bars with a pure weight of 9,630.6521 kg and coins of pure weight totalling 5.4094 kg, 59 bars of which, with a pure weight 718.7021 kg, were transferred on 5 August 1942 to the “Asservate Der” account, where the hidden reserves of the Reichsbank’s gold were accounted. On 1 September 1942, the gold bars from this account were brought to the Swiss National Bank (Banque Nationale Suisse) in Bern. The rest—741 bars with a pure weight of 8911.9500 kg and coins with a pure weight of 5.4094 kg were shipped to Merkers. The National Bank’s deposit in the Reichsbank thus represented 2680 gold bars with a pure weight of 32,717.9453 kg and coins with a pure weight of 6381.2682 kg,30 which meant a total 39,099.2135 kg of gold. From this, 59 bars with a pure weight of 718.7021 kg were sold to the Swiss National Bank, and 1034 bars with a net weight of 12,768.9601 kg were sold to the Reichsbank, and it was not possible to find out what happened to them. The balance was sent to Merkers and from there taken by the Americans to vaults in the Reichsbank building in Frankfurt am Main, where the American Foreign Exchange Depository was headquartered; in total, this was 1587 bars with a pure weight of 19,230.2831 kg and coins with a pure weight of 6381.2682 kg.31 Here, it is necessary to emphasize that in all of these cases, this was a regular gold deposit with the Reichsbank in Berlin, even though the transfers had been forced. However, this gold was only secured in the RB, and the right of disposal 30 Czechoslovakia originally declared that the gold coins taken from Prague weighed 6375.8588 kg, i.e. 5.4094 kg less. This difference in the weight of the coins can be reliably explained by the fact that it occurred due to the repurchase of the coins by the NBBM from the RB after October 1940. 31 ACNB, ˇ ibid.

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always belonged to the National Bank. It also needs to be noted that, in presented cases, this was in total only the gold that had been forcibly deposited in the RB and the identification of which could be securely carried out based on the numbers of the gold bars or flags on the coin bags. Aside from the already mentioned monetary gold, Czechoslovakia also demanded the return of gold with a pure weight of 15,012.00999 kg, ˇ had to transfer to the RB prior to the occupation which the NBCS of the republic as part of the gold cover for Czechoslovak banknotes taken out of circulation in the Sudetenland, as well as a pure weight of 1008.9146 kg, which the NBBM had to pay to the Reichsbank on the order of German officials in 1940. This was the decentralized portion of the gold reserves, which was managed by the Škoda Works and the Armoury within the so-called foreign exchange autonomy (thus the name, the so-called “autonomous gold”), which had been granted to them by ˇ 32 the NBCS. The Czechoslovak government’s first tentative steps to recover its gold date back to the spring of 1945, when in a letter dated 27 April 1945, the Foreign Minister of the Government in Exile, Hubert Ripka, asked Rudolf Schoenfeld in London (the US representative to the governments exiled from their countries by the Nazis) to notify the British government that the Czechoslovak government was claiming gold for the National Bank, which was (or will be) seized by Allied troops. This was because the Germans had forcibly removed part of the National Bank’s gold reserves from the Prague vaults and compelled the National Bank to ship part of it to the Reichsbank in Berlin as a share in the gold cover for circulating German banknotes in the border area. Independently from this, on 11 May 1945, the National Bank asked the Minister of Finance to take steps to secure the gold deposited at the RB in Berlin. Another impetus for the steps of the National Bank was an article in the American Army’s newspaper The Stars and Stripes in Europe on 31 July 1945, the author of which was Col. Bernard Bernstein, Director of the Finance Division of the American Army in Europe. In it, Bernstein said that gold seized by Allied armies in Germany would probably be used for reparations and ˇ ordered restitution. Therefore, the interim administration of the NBCS

32 ACNB, ˇ ibid., sign. NB-PXVII-79, box no. 326.

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its inspectors to travel to Germany.33 They left for Berlin on 5 August 1945, and after negotiations with the American and Soviet occupation authorities, they discovered that the seized gold was in the vaults of the RB in Frankfurt. They then negotiated further in Frankfurt, first with Col. Cragon, then with other American financial officials. They also had the opportunity to look over the cellars of the former RB, where gold, silver, platinum and crown jewels were stored, that is, the articles that the Germans had looted from occupied countries. They then had the opportunity to verify the detailed identification of each gold bar as well as the coins and to look over the Reichsbank’s books. An official of the American Financial Administration in Europe, P. Dunkel, informed them that, based on an examination of the RB’s records on Czechoslovak gold, he found that the documents on the state of the coins deposited by the Czechoslovak Republic in Berlin agreed in weight with the Czechoslovak records. He further informed them that the status of the gold bars, which in its time the National Bank had purchased from the Reichsbank (the “Separat Depot”), agrees with the records of the National Bank. However, certain documentation problems arose around the transfer of the 1845 bars that were deposited in the name of the BIS in London and ˇ had been forced to send to the RB deposit in Berlin. The that the NBCS identification of the bars transferred to the RB at the beginning of March 1939 from the BIS in Basel and from the Swiss National Bank in Bern to cover currency in the Sudetenland, totalling around 14,536 kg, was not problematic, because the Czechoslovak delegation provided a list of them to the American inspection authorities. It also delivered lists of gold bars from the Škoda Works and the Armoury.34 After these August negotiations in Germany, the American side promised that the Czechoslovak National Bank would soon be informed through the US Embassy in Prague about the identification of the individual gold bars and coins in the vaults of the Reichsbank in Frankfurt. Since no word was from the US in the months that followed, Ing. Rudolf ˇ repeated his business trip to Germany. He Kroc, entrusted by the NBCS, negotiated with Richard Fox, the new head of the Finance Division of the American Army in Europe. According to his relatively general report 33 The NBCS’s ˇ Czechoslovak delegation to Germany was made up of director Dr. Kopfstein and inspectors Václav Pokorný, Josef Janˇcek and Ing. Rudolf Kroc. 34 ACNB, ˇ ˇ sign. NB-PXVII-332, reclamation for the return of NBCS ˇ gold, f. NBCS, item no. 159/425, p. 4.

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for Gen. Lucius D. Clay, the Czechoslovak gold had not been remelted but remained in its original state and composition and had been transported from the salt mines to Frankfurt.35 With this general statement, the question of verifying the Czechoslovak monetary gold moved forward only minimally. Uniform criteria for distributing gold, or returning it to all the aggrieved countries, were then accepted by the Allies at the previously mentioned reparations conference in Paris in November–December 1945. To facilitate an understanding of the complex accounting transfers and to clarify the position of the Czechoslovak monetary gold deposited abroad, the issue needs to be divided into two basic spheres—the socalled Basel and the so-called London gold. Thus, a second recapitulation follows, supplemented by an additional fact. ˇ had 28,309.30572 kg of gold As of 31 December 1938, the NBCS deposited in the BIS in Basel (i.e. the Basel gold), which it effectively had deposited at its BOE deposit in London. By its letter of 18 March 1939 (signed by directors František Peroutka and Josef Malík), sent under German pressure, it ordered the BIS to transfer gold bars weighing about 23.1 tonnes from its deposit kept at the Bank of England (BOE) in London to the Reichsbank Directorate in Berlin. The BIS confirmed the carrying out of this order to the National Bank by letter of 24 March 1939, according to which 23,087.3040 kg of gold in pure weight were transferred. In line with the statement of the then-BIS President Johan W. Beyen, it was clear to the BOE that this was Czechoslovak gold. Shortly ˇ Beyen was contacted by teleafter receiving the order from the NBCS, phone by Roger Auboin, the Director General of the BIS, who notified him that the Governor of the Banque de France had been informed that a BIS order was expected to transfer Czechoslovak gold to the RB or that he is waiting for information about what Beyen intends to do. Beyen had decided not to comply with this order, if he receives a telephone message that the governor of the Banque de France wishes that the decision to execute the order be submitted to the Board of Directors.36 Another phone call from the General Director to Beyen said that the governor of the Banque de France had discussed the matter with a colleague from the

35 ACNB, ˇ ibid., p. 6. 36 Taber, George M. Chasing Gold. New York: Pegasus Books, 2014, pp. 112–113.

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BOE, who did not want to intervene in the matter; therefore, even he— the governor of the Banque de France—did not want to make a decision on this matter himself. From the telephone conversation, Beyen further learned that only two members of the bank’s board of directors had objections in fulfilling the order; however, they did not want the execution of ˇ the order to be suspended. Therefore, the NBCS’s order was carried out. So, long as this was Czechoslovak property in the UK, the British government took measures to prevent it from falling into German hands, although, as it turned out later, this was more about securing British claims against Czechoslovak subjects. Already on 15 or 16 March 1939, the Prague Ministry of Finance had asked the BOE to not make transfers of Czechoslovak gold without first notifying the British government. On 17 March 1939, the BOE, on the request of the British government, informed British banks and other monetary institutions holding securities ˇ or other or gold for the former Czechoslovak government, the NBCS persons in the former Czechoslovakia, that the government considers as desirable not to make payments from these accounts, or to not issue securities or gold without the consent of the British Treasury. This measure was legalized by the Czecho–Slovakia (Restrictions on Banking Accounts, etc.) Act, 1939, of 27 March 1939.37 Both the British government and the BOE, when they fulfilled the BIS order to transfer about 23 tonnes of gold to the RB Directory in Berlin, knew that it was Czechoslovak gold. In parliamentary debates, then-Treasury Secretary John Simon, on 23 May 1939, first argued that he had learned indirectly from a continental source of the planned transfer and that it could not have been prevented because the BOE had to obey its client, the Basel Bank. He then said on 5 June 1939 that the BOE managed gold for the BIS from time to time, but that it did not know whether the gold was owned by the BIS or someone else. Later, on 15 June 1939, he acknowledged that the French government had turned to the British government with a request to consider whether effective steps could be taken to prevent such a transfer. The British government replied that this must be resolved and decided by the BIS itself. On 20 June 1939, Minister Simon replied to a question in a parliamentary debate that the French Government had intervened on 24 March 1939, and on 27 June 1939, he announced that the British members of the BIS Board had been 37 ACNB, ˇ ibid., Record on the fates of Czechoslovak gold from the beginning of the occupation in 1939 to the end of the war in 1945.

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notified of the British Government’s decision on the same day. On that ˇ 38 day, 24 March 1939, the BIS carried out the order of the NBCS. ˇ According to NBCS records, after the transfer of 23.1 tonnes to the Reichsbank, 5222.00172 kg of Czechoslovak gold remained in the BIS depot at the BOE, 2628.68285 kg of which was redeposited to the BIS depot in Bern on 6 September 1939, and on 29 September 1939, exactly 2593.32488 kg to the BIS depot in Amsterdam.39 The British government did nothing to prevent the transfer of 23.1 tonnes of Czechoslovak gold to the RB, namely for the reasons given by Sir Simon in the parliamentary debate on 5 June 1939 as follows: (a) The British government cannot undertake any steps to prevent the BOE from obeying an order given by a client (BIS) to transfer gold within the meaning of the order, as the terms of protocols from 1930 to 1936 prevent it from doing so. (b) The Czecho–Slovakia (Restrictions on Banking Accounts) Act, 1939, does not prohibit the BOE from making such a transfer without the consent of the Treasury. (c) And even if that were the case, it would be a breach of international agreements for the Treasury to withhold its consent. This British argument certainly did not lack logic. On the other hand, if the British government were able prior to 15 March 1939 to hinder the handling of Czechoslovak property in the UK, it could have found a way, in good faith and willingness, to prevent Czechoslovak gold from falling into German hands. The stated position of His Majesty’s government was associated with the dilemma of London regarding the (un)recognition of the occupation of the Czech lands by Nazi Germany. At the same time as the transfer of the so-called Basel gold, the Germans also attempted to get hold of the so-called London gold, which

38 For the sake of completeness, it needs to be mentioned that in September 1939 the NBBM ordered the BIS to send to Prague the remaining Czechoslovak gold, which was deposited in London through the BIS. The BIS notified the Reichsbank that it would not carry out the order, and the Reichsbank then forced the NBBM to change its order to send the gold to Amsterdam on behalf of the BIS. This did happen, and this gold was ˇ after the war. returned to the NBCS 39 ACNB, ˇ ˇ f. NBCS, sign. NB-PXVII, A record on the fate of Czechoslovak gold from the start of the occupation in 1939 to the end of the war in 1945.

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ˇ had deposited in the BOE. Following pressure from Berlin, the the NBCS ˇ NBCS sent another letter signed by František Peroutka and Josef Malík, on 18 March 1939, ordering the BOE to transfer its deposit consisting of 2106 gold bars to the BIS in Basel. It also notified the BIS of this requested transfer, adding that it held gold on the account of the RB ˇ order Directorate in Berlin. The BOE did not comply with this NBCS due to the ban that Sir Simon spoke about in the parliamentary debate on 16 March 1939. Therefore, the gold remained in London. Prior to ˇ had a total of 26,763.74662 kg of gold the outbreak of war, the NBCS deposited in the BOE. This gold was first blocked as Czechoslovak property under the previously mentioned Czecho–Slovakia Act (Restrictions on Banking Accounts, etc.). Act, 1939, and after the outbreak of war, it was blocked as enemy property under the Trading with the Enemy Act, 1939, from September 1939.40 Czechoslovakia’s total loss of gold in the four main “cases” (covering the banknotes circulating in the border areas after Munich, the “Basel” gold transferred to the RB after the breakup of Czechoslovakia, the gold coins from the vaults in Prague in 1940 and the “autonomous” gold administered by the Škoda Works and the Armoury) was calculated after the war by the Czechoslovak side to be 45,484.08739 kg41 in pure weight worth nearly one and a half billion crowns, exactly 1,457,356,212.80 Czechoslovak crowns (Kˇcs), or after correction regarding purchases and sales to 41,632.47589 kg of pure weight in the amount of 1,333,946,680.40 crowns.42 These were the facts of the recent past. What procedure did Prague anticipate in the near future? On the initiative of the Minister of Finance, ˇ elabthe legal department of the Interim Administration of the NBCS orated a solution on how to proceed in requesting the return of the 40 During the Second World War, the British administrator of enemy property sold this gold to the BOE and blocked the proceeds of the sale. After the war, the UK returned ˇ the sum of 7,227,981 pounds sterling to the NBCS. 41 The presented weight of the gold, however, is not stated in the Czechoslovak request for the restitution of monetary gold addressed to the Tripartite Commission. On 28 May 1947, the Czechoslovak Republic declared to the commission a claim on the ownership of gold weighing 45,008 kg. 42 The calculation was based on parity in 1938. If parity in 1947 were taken into consideration, then the loss of gold would have a value of 2,559,105,776.70 crowns, or ˇ ˇ box no. 78, sign. IV/A, Interim Report of 2,342,399,631.70 crowns. ACNB, f. NBCS, ˇ “Negotiations on the Issuance of Czechoslovak Gold Deposited in Frankfurt the NBCS, am Main” of 15 April 1947.

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monetary gold. In its analysis, it stated that the legal basis for resolving the issues around the monetary gold, seized and unlawfully sent to Germany, was laid down in Part Three of the Paris Reparations Agreement of 1945. The agreement was ratified by all interested countries, including Czechoslovakia, but with the exception of Greece and Egypt. The agreement approved the mentioned principle of a “pool” made up of all the monetary gold found by the Allied armies in Germany, as well as monetary gold that could be obtained from the third country to which it had been transferred by Germany, including gold coins, with the exception of those of historical and numismatic value (these would be returned directly, if identifiable). The “pooled” gold would be collected into a common reserve and distributed to the admitted states to share proportionally the amount of gold lost as a result of German theft or wrongful transfer to Germany. At the same time, the question of the potential participation in this division of countries not represented at the reparations conference (other than Germany, but including Austria and Italy) was restricted. The counter-value of what would make up the sum of the shares that these states would have received had they been admitted to this division was to be reserved according to how the three Allied governments concerned decided. Soon, however, a change occurred in the status and assumptions under which the agreement was concluded and signed. This was mainly the fact that both Austria and Hungary were given a substantial portion of their gold.43 Another wartime ally of Germany, Italy, also found itself in a favourable position. As the daily Il Mondo reported on 29 January 1947, the Allied powers decided to return to Italy all the gold taken by the Germans. How was Czechoslovakia in all of this? A substantive part of the stolen Czechoslovak monetary gold was found and identified. When immediˇ began searching, it learned that ately after the end of the war the NBCS all the gold found by the Americans in Germany was concentrated in Frankfurt. Although its own officials failed to identify the found gold (bars or coins), it followed from the aforementioned US report, which ˇ official was able to read, that Czechoslovakia’s gold had not an NBCS been remelted and therefore could be safely identified. But it was not clear from this American report that all the Czechoslovak unminted gold had been found and identified (gold removed after Munich to 43 In the case of Budapest, this was the so-called “Hungarian Gold Train”, which for the most part contained assets stolen from Hungarian Jews.

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cover currency in the Sudetenland and the decentralized “autonomous” gold of the Škoda Works and the Armoury). Gold was found, however, and identified in coins weighing 6381.2682 kg according to the flags attached to the sacks (the coins were repackaged in American sacks when found, with the original flags attached to them). The biggest problem was caused by the question of the identifiability of the gold transferred to the RB in March 1939, of which 1587 bars with a pure weight of 19,230.2831 kg were found in Frankfurt. Thus, according to this American report, 25,611.5513 kg of Czechoslovak monetary gold were located in Frankfurt, which corresponded to about 56%, or 61% of the losses of the amount of 45,484.08739 kg or 41,632.47589 kg of pure weight. In ˇ it was possible to identify the mentioned 1587 the opinion of the NBCS, bars. For this reason, the above analysis of the procedure, elaborated by ˇ considered it appropriate to request a revision of the third the NBCS, part of the Paris Reparations Agreement. If the Czechoslovak government were to set off on the path of this revision, then a return in kind should be requested, i.e. the actual restitution of gold weighing 25,611.5513 kg, which was identifiable, and only in regard to the balance of 19,873 kg in pure weight, or 16,021 kg, which corresponded to 44%, or 39% of the total losses of Czechoslovak monetary gold, should a solution be sought in the “pool”, from which this loss would be proportionately covered.44 This meant that only the losses of gold bars which could not be identified would be satisfied by a pro rata compensation, provided in gold from the common core formed of found and unidentifiable gold. According to the Czechoslovak view, this would be not only a just solution, but one also having a basis in generally accepted valid legal principles. Perhaps the ˇ can be described as maximalist, and thus tactical; position of the NBCS however, bearing in mind the overall situation and the requirements of other countries for compensation for gold losses, Prague, too, probably considered this to be relatively unrealistic. ˇ propose for What legal argument of Czechoslovakia did the NBCS ˇ had such a process? According to recognized legal principles, the NBCS a claim to the return in kind of gold as its own property, whether the construction that this was the gold seized and taken Germany unlawfully or a returned deposit was already accepted or not. Its ownership right ˇ never absolutely endured as a right, and this gold belonging to the NBCS

44 ACNB, ˇ ibid., pp. 6–7.

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should have fallen among the assets of Germany, which seized or unjustifiably transferred the gold to itself or forced it to be kept with it. The ˇ conveyed this position to the Czechoslovak Ministry of Foreign NBCS Affairs when it learned that according to the American proposal at the Paris Conference on Reparations, all monetary gold found in Germany should be collected into a common sum (a “pool”), from which the damage caused by Germany to individual states would be proportionally compensated for their monetary gold. Czechoslovakia, however, despite the expert opinion of its own national bank, fully accepted the American proposal to establish a common “pool”, particularly under the influence of American pressure that the US could, under the 1907 Hague Convention, consider all gold found in Germany as its war booty. The overall tone of the reparations conference also had a major impact on Czechoslovakia’s acceptance of the “pool”, as following from it, all losses and damages, or their payment, be made as evenly as possible in the interest of solidarity of all states and especially those states most damaged by the war. ˇ which did not want to give up its arguments, rejected The NBCS, the American opinion on the US’ right of booty in the matter of Czechoslovak monetary gold for the following reasons: 1. Czechoslovak monetary gold found in Germany is the invioˇ i.e. the Czechoslovak bank of issue, lable property of the NBCS, according to Act No. 347/1920 Coll., and although its activities to a great measure are subject to state control, it is the owner of all its “proprieté priveé” (private property) in the sense of the Agreement of the Second Hague Conference on the Laws and Customs of Ground Wars (within the meaning of Article 46 (2)) and therefore could not be affected, keeping in mind the other text of that Agreement (Art. 53) or under the rules of international war law. 2. By signing the common Declaration by United Nations of 1 January 1942, which is in its content a treaty of alliance, Czechoslovakia also became even formally, a full-fledged ally of the powers that were at war with some of the Axis states or satellites.45 According to the

45 The mentioned declaration was signed on behalf of Czechoslovakia by its ambassador in Washington, Vladimir S. Hurban. It spoke of the unconditional surrender of Germany and used the term “United Nations” for the first time.

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principles of international law, the right of booty to one ally does not pertain to the property of another ally. 3. At the Paris Conference on Reparations, the US itself maintained that all monetary gold that entered Germany after 12 March 1938 is to be considered as stolen by Germany, that is, the property of states violated by Germany. 4. The US cannot consider this stolen Czechoslovak gold as the property of Germany, which would have acquired it by the right of booty in March 1939, because this gold, as “proprieté priveé”, is excluded from the right of booty. Furthermore, it was the US whose government expressed in a protest note on 29 March 1939 and later repeatedly confirmed that it never acknowledged the factual situation created in the Czechoslovak Republic by German aggression.46 Although it was not the National Bank’s job to deal with the issue of gold from a political point of view, it still pointed out in its analysis that there was great inconsistency and contradiction between the efforts of the Conference on Reparations to evenly distribute compensation for war damage and losses and the practice of dealing with gold that Germany had stolen, that one of the main pillars that the adopted solution was based on had disappeared: i.e. the states that, in addition to Germany, were most to blame for the war (Hungary, Italy and Austria), had already had their gold, or a substantial part of it, returned (Hungary, Austria) or at least promised (Italy). On the other hand, the Czechoslovak Republic— an ally—ended up adopting the principle of a “pool” in the role of an ordinary bankruptcy creditor, although it was—disregarding Austria—the first victim of German aggression, and furthermore, Czechoslovak gold had been found and identified. ˇ analysis went even further in criticizing the state of the The NBCS situation around the monetary gold when it presented the view that the Paris Agreement is incorrectly named “Restitution of Monetary Gold”, as restitution (meaning the return of the same thing in kind) is not taking place, aside from gold coins of numismatic or historical value. In reality, this was to be proportional compensation that was to be provided in gold. The fact also remained that by accepting the agreement from

46 ACNB, ˇ ibid., pp. 8–9.

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Paris, Czechoslovakia gave up the ownership right to its own monetary gold weighing 45,484.08739 kg, or 41,632.47589 kg, from which 25,611.5513 kg of pure weight was found at the time, and it was satisfied that it would get only an aliquot of the common amount at that time, still unknown, and at the reparations conference reference was made to a quota of 43–44%. With its signature under that agreement (paragraph “B”), it effectively acknowledged expressly that it accepted the share of the common reserve that accrued to it as a complete and final settlement of all claims against Germany by virtue of the restitution of the monetary gold. By accepting the agreement, the Czechoslovak Republic had relinquished the right to request an assessment of its monetary gold case, mainly from the viewpoint of principles of the Czechoslovak legal system, which were in accordance with the principles of the legal systems of other states, including those of Germany. If this had not happened, the Czechoslovak reasoning could have been summarised in three main points: 1. If the Czechoslovak monetary gold in Germany is considered to have been seized by Germany (according to the Conference on Reparations, all monetary gold found in Germany was considered to have been seized), then it must therefore insist on in-kind restitution of the gold found, to the extent that it is identifiable, because the ownership of seized items belongs to the owners of the items, and the Czechoslovak side was to be satisfied with proportional compensation in gold only with regard to the balance. If Germany’s actions are judged, according to which the monetary gold was carried to Germany as an international offence, then the sooner and more urgent it is necessary to insist on the return “in natura” as a so-called absolute right. The abandonment of this obvious absolute right to restitution “in natura” only reduced the extent of the injustice committed. 2. If the full fact in issue of theft was not a given, then the ways that Czechoslovak gold got into Germany could be considered illegal transfers. There was no dispute that the several times mentioned four cases of gold transfers to Germany carried out only by forcing the National Bank (which evoked an unjust and well-founded fear) were therefore invalid, and therefore a natural right arises to the Czechoslovak side to demand the return of gold “in natura”.

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3. The National Bank’s gold that was transferred illegally to Germany and identified should not be included in the “pool” and should be ˇ 47 directly returned to the owner, i.e. the NBCS. Keeping in mind these three arguments of the National Bank, the only correct solution was that Czechoslovakia should receive by virtue of identified ownership 25,611 kg of gold in pure weight and the balance of 19,873 kg, or 16,021 kg of pure weight, was to be acknowledged as part of the common pool of gold. On this basis, Czechoslovakia would achieve a higher payment (around 34 tonnes) than it was to get according to the “pool” principle. Further, the claim to restitution of gold found in the future, if it were identifiable, would be maintained. Here, it needs to be noted that, in addition to this, the issue of the fault or complicity of third states in carrying out the illegal transfer of Czechoslovak monetary gold was left aside in this matter, particularly in regard to transfers immediately after the break-up of the Czechoslovak state. Via facti, it must be stated that a detailed and critical expert analysis by the National Bank did not change the position of the Czechoslovak Republic regarding the issue of restitution of the monetary “Tripartite” gold. In fact, with the acceptance of the concept, i.e. the “pool” terms, this did not even come into consideration. The answer to the question of why Czechoslovakia’s political representation at this time, in the spring of 1947, did not fully defend its own national-state interests, in the absence of primary sources, can only be hypothetical, theoretical and consisting of several factors and influences. Certainly, the fear of impairing trade and economic relations with the democratic West as well as the need for raw materials and machinery and obtaining credit and loans, etc., played a role here. And linked to this, to not free up the space of Czechoslovak communist representation for an immediate closer political and economic-trade orientation to the Kremlin. Furthermore, a cautious and non-confrontational position on the issue of restitution of monetary gold was commanded or dictated by the overall international political situation, when the idea of the cooperation of the anti-fascist coalition collapsed not only from a political but also from economic and trade points of view. Another determining factor on the Czechoslovak side was

47 ACNB, ˇ ibid., p. 10 et seq.

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the knowledge of its own position as a small, essentially insignificant player on the chessboard of world politics. To shed light on the overall situation in terms of international development and relations, let us return with a few comments on the results and facts of the Paris Conference on Reparations, which led to the signing of the aforementioned “Agreement on Reparation from Germany, on the Establishment of an Inter-Allied Reparation Agency and on the Restitution of Monetary Gold”. In its third part, this agreement, adopted on 21 December 1945, formulated the issues of gold restitution in a single article and in seven points. The reparations agreement entered into force on 24 January 1946. The Czechoslovak side acceded to it with the consent of the Provisional National Assembly on 30 January 1946 and signed it on 27 February 1946 (Ambassador Jindˇrich Nosek signed the agreement in Paris on behalf of Czechoslovakia). On 17 May 1946, President of the Republic Edvard Beneš and the Minister of Foreign Affairs Jan Masaryk also approved it. The TGC itself was established on 27 September 1946 by the US, the UK and France. In a press release that day, it stated that it had been established to implement Part Three of the Paris Agreement on German Reparations, i.e. to ensure the restitution of monetary gold stolen or taken by force in the Allied nations attacked by the Germans during the war. At the same time, it also stated that this was the gold found in the Merkers salt mines, as well as gold “which was during the war in Germany demonstrably transferred to another country. It is not yet certain how much gold will be available for distribution, but it seems now that its value could exceed several hundred million dollars ”.48 Delegates to the Inter-Allied Reparations Agency (IARA)—Russell H. Dorr for the US, Desmond Morton for the UK of Great Britain and Northern Ireland and Jacques Rueff for France—were as members of the commission.49 Under the Paris Reparations Agreement, gold was to be returned to the looted countries in an

48 Archive of the Ministry of Foreign Affairs of the Czech Republic (AMZV ˇ CR), f. Medzinárodno-právny odbor (MPO, International Law Department), Dokumenty k otázke cˇ eskoslovenského menového zlata, diel I. [Documents on the Issue of Czechoslovak Monetary Gold, Volume I], 1946–1948, Press Release on the Establishment of the Tripartite Commission for the Restitution of Monetary Gold of 27 September 1946. 49 NAR, f. TGC, box no. 1.

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amount proportional to the total gold loss of each country, regardless of whether the gold allocated could be identified with the stolen gold. This departure from the principles adopted in the case of restitution of other types of property found in Germany was necessary, according to the press release, because the Germans arbitrarily melted or otherwise destroyed the marks identifying the amount of gold they had seized and also because all the seized gold had not been found. Therefore, the commission labelled it as unfair for one state to take advantage of the others over the fact that the Germans accidentally or deliberately forgot to destroy the original identification codes on the stolen gold. The Tripartite Commission (TGC) designated as its first task in the press release the collection of details on the losses of countries from which Germany had confiscated gold. On this basis, the commission would then determine the share to which each state has a claim.50 According to the TGC’s statutes, the working languages of the commission were English and French. Brussels was selected as the seat of the commission, which was to meet independently of the Inter-Allied Reparations Agency. The commission was entrusted to negotiate with delegates accredited to the IARA. The statute also formulated the basic tasks of the TGC: 1. To request the submitting of claims and to receive claims from governments asserting the right to participate in the distribution of monetary gold found in Germany, or the return of gold from a third country to which it was transferred from Germany, for the restitution of gold stolen or wrongly transferred to Germany, documented by detailed and reliable data relating to these losses. 2. To examine in detail the claims received and determine the share of each applicant government in the sum of the monetary gold to be distributed by restitution under Part Three of the Paris Reparations Agreement and any other possible agreements. 3. To announce in due course the total value of the sum of monetary gold that will be available for distribution in the form of restitution. 4. After receipt of all restitution claims and their decision, to notify each state that is entitled to a share in the monetary gold of how 50 AMZV CR, ˇ f. MPO, Dokumenty k otázke…, diel I., 1946–1948, Press release declaring the founding of the Tripartite Commission for the Restitution of Monetary Gold from 27 September 1946.

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much of the aggregate monetary gold intended for restitution it will receive. 5. To assist in the distribution of the monetary gold to be returned by all other means stipulated by the three governments making up the commission. 6. To perform such administrative acts that will be necessary to carry out the tasks already mentioned, without prejudice to the general nature of the foregoing, the opening and maintaining of bank accounts and the concluding of contracts for the performance of the necessary services. The expenditures of the TGC associated with the performance of its tasks will be the first burden on the monetary gold fund to be distributed.51 The first official document that the TGC addressed to Czechoslovakia, or to the Czechoslovak delegate at the IARA, was dated 13 March 1947. This document not only informed or explained the basic constants of the commission’s work, but also took the form of a call, with criteria on how to proceed with the request for the return of monetary gold. Its information section mapped out the basic aims of the commission’s work in agreement with the official announcement of September 1946, i.e. why it was established, what its goals were, where it would be based, who sat on it and so on. At the same time, the document explained that the phrase “loss due to theft by Germany or illegal transfer to that country”, to which the TGC referred, followed generally from the “InterAllied Declaration Against Acts of Dispossession Committed in Territories Under Enemy Occupation or Control” of 5 January 1943 on expropriation acts committed by Axis members, further from the “Declaration by United Nations” on gold of 22 February 1944 and Resolution VI of the Final Protocol of the United Nations Monetary and Financial Conference of 22 July 1944 in Bretton Woods.52 In connection with the submitting of a request for the return of stolen gold, the commission adopted its definition as follows: “…all gold which, 51 AMZV CR, ˇ f. MPO, Dokumenty k otázke…. Statutes of the Tripartite Commission. The two final articles of the Statute state that the decisions of the Commission will be made with the unanimous consent of its members and that the stated text will be published in the London Gazette, in the Department of State Bulletin and in the Journal Official de la Republique Française. 52 NAR, f. TGC, box no. 1.

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at the time of its looting or wrongful removal, was carried as part of the claimant country’s monetary reserve, either in the accounts of the claimant Government itself or in the accounts of the claimant country’s central bank or other monetary authority at home or abroad”.53 In consequence of this, the members of the Tripartite Commission called on the Czechoslovak government to provide detailed and verifiable information on losses of monetary gold, as defined, and which the Czechoslovak state suffered after 12 March 1938. The request for gold was to be formulated by the Czechoslovak government or central bank, or another monetary office of the Czechoslovak Republic. The commission further advised that it did not have the mandate to examine a request submitted by one government on behalf of another government or on behalf of a central bank or other monetary authority of another country. In order for the restitution to be given the necessary legal basis, the Tripartite Commission asked that this documentation be submitted in the form of an official declaration of the Czechoslovak government with the signatures and confirmations of the relevant authorities. To facilitate and speed up its work, the commission proposed that the documentation provided by countries requesting the return of gold be drafted in a uniform manner. The commission would then examine the documents, and if it deems appropriate, would request new and additional documents. The circle of information requested concerned: • transfers of gold resulting from looting by Germany or wrongful removal to that country, • the recovery of gold which was either under the control of Germany or one of Germany’s Allies, • all other transfers of monetary gold which took place during the period of hostilities.54 The Tripartite Commission identified the need to request such extensive documentation as essential for a thorough reconstruction of the movement of gold from its looting up to the current location of its

53 NAR, f. TGC, box no. 1. Definition of Monetary Gold as contained in Questionnaire. 54 AMZV CR, ˇ f. MPO, Dokumenty k otázke…, diel I., 1946–1948, document from 13 March 1947, pp. 28–29.

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storage or after its direct or indirect recovery. Governments (including the Czechoslovak government) must submit such documents to the commission in 12 copies (six in English and six in French), and the documents must be accompanied by the same number of certified translations into these languages with each document in another language which is submitted to justify the request. The Tripartite Commission set the deadline for doing so as 30 April 1947.55 After the mentioned first official appeal made by the commission on 13 March 1947, a carousel of correspondence began between it and the authorized Czechoslovak representative—the IARA delegate— and between him and the Czechoslovak government.56 In this period, however, none of the interested parties anticipated that the return of monetary gold to Czechoslovakia would be a truly long-term process, if not a never-ending story. To complete the overall situation on the activities of the TGC, several facts need to be summarized. The US Department of State’s press release on the preliminary redistribution of gold announced that the commission had consented to proportional return, and after a thorough investigation would decide how much each country would receive. The State Department further announced that, although there were enormous technical and legal issues to be addressed, it had instructed its representative in the commission to make allocations from the gold pot no later than by 15 October 1947. The commission agreed with this. According to the statement of acting US Under Secretary of State Robert A. Lovett, the return of a substantial part of monetary gold is critical for individual European countries and will help them overcome their current problems. He said that at that time that about 260 million dollars in gold from Germany and about 70 million in gold salvaged from third countries is prepared for distribution.57 Ten countries sought the return of gold within the deadline set by the commission: Albania, Belgium, Czechoslovakia, Greece, the Netherlands, 55 NAR, f. TGC, box no. 1. Tripartite Commission for the Restitution of Monetary Gold, No. 0011, 13 March 1947. 56 The Czechoslovak delegate to the IARA and the authorized representative of the Czechoslovak Republic in negotiations with the Tripartite Commission for the Restitution of Monetary Gold was Celestýn Šimr. 57 NAR, f. TGC, box no. 1, Statement of Robert A. Lovett “Preliminary Distribution of the Gold Pot” for the Press, No. 765, 24 September 1947.

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Yugoslavia, Luxembourg, Poland, Austria and Italy, requesting together a total of over 735.5 tonnes. After careful examination, the TGC confirmed 514 tonnes of this weight, which represented more than one and a half times the gold found. The “pool” of gold was nearly 336.5 tonnes, exactly a net weight of 336,446.966 kg.58 According to a rough estimate, the total amount of gold looted at the time was about worth about 700 million dollars. The redistribution of the found gold itself was carried out in three stages. The first took place from October 1947 to November 1950 and involved more than 80% of the “pool”. Belgium, Czechoslovakia, Yugoslavia, the Netherlands, Luxembourg, Austria and Italy received partial allocations totalling 266,212.156 kg. The commission approved the second, quasi-final redistribution on 9 June 1958, and gold weighing 33,050.155 kg was returned to Belgium, Greece, Yugoslavia, Luxembourg, Austria and Italy by June 1959. Czechoslovakia and Albania were missing from this redistribution, and the TGC approved an additional portion to the Netherlands only in May 1963; ten years later it received the remaining 4092.105 kg from the Bank of England and the Federal Reserve Bank of New York (FRB). Poland’s request was a special problem for the TGC. Its first application was rejected in its entirety. The second, in the case of gold originating in the free city of Gdansk, ´ was confirmed by the commission; however, in June 1958 it decided that the Polish government, and no other, had not shown that it is entitled to request this “Gdansk” ´ gold and so an aliquot of it would remain in the custody of the three governments (the commission members) until the problem is resolved. The Polish government protested against this. Not until June 1976 did the commission decide that, since no other claimant had come forward and as the Polish People’s Republic had been exercising state power in Gdansk ´ for more than 30 years, the gold should be handed over to Warsaw. Poland received 2474.767 kg of gold from the Federal Reserve Bank and the BOE in August 1976. The TGC granted the last allotment, weighing 1549.0822 kg, to Albania on 29 October 1996. Czechoslovakia received only 6.1 tonnes of coins in May 1948 and had to wait for the remaining 18.4 tonnes until February 1982. After allocating the last sum to Albania, less than 5.6 tonnes of gold remained in 58 Final report. Tripartite Commission for the Restitution of Monetary Gold. Brussels, 13 September 1998.

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the FRB and BOE deposits. Then, after deducting the overhead costs of TGC’s activities, which accounted for almost 1365 kg of gold in 52 years (i.e. 0.406%) of the total gold “pool”, about 4.2 tonnes remained to be finally distributed. The final allocations were made in April–July 1998. The commission itself ceased to exist on 9 September 1998.59

59 Final report, ibid.

CHAPTER 2

The Tripartite Commission for the Restitution of Monetary Gold

The marathon of negotiations and written dialogue between the Czechoslovak government and the Tripartite Commission for the Restitution of Monetary Gold (TGC) with the aim of resolving the return of the gold was initiated by the Czechoslovak delegate to the IARA, Celestýn Šimr, by letter on 30 April 1947.1 With this document, the Czechoslovak Republic officially applied for the restoration of its gold. In another letter, dated 28 May 1947, Šimr provided the commission with some photoˇ records in English and French, which documented the copies of NBCS bank’s ownership of gold weighing 45,008 kg. The US commissioner in 1 JUDr. Celestýn P. Šimr (Kašperské Hory, 1895–Calgary, 1981) began working in the Czechoslovak consular and diplomatic service in 1919. His first foreign post was as the Consulate General in New York, then the Consulate in Cleveland. After one and a half years working at the Czechoslovak Embassy in Washington, he continued at the start of 1924 at the Consulate in Pittsburgh. This was followed by work at the headquarters of the Ministry of Foreign Affairs in Prague, and in the years 1932–1937 the post of Consul in Chemnitz, Germany. He returned into the service of Czechoslovak diplomacy after the end of the Second World War and from March 1946 was appointed Ambassador Extraordinary and Plenipotentiary and Czechoslovak Delegate to the IARA in Brussels. He was also the chief Czechoslovak negotiator and diplomatic representative in negotiations with TGC representatives on the return of Czechoslovak monetary gold. In September ˇ 1948, he resigned from the post and emigrated to Canada. AMZV CR, f. Personnel files, Celestýn Šimr.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Michálek, Nazi Germany and the Role of the US in the Fate of Czechoslovak Monetary Gold, https://doi.org/10.1007/978-3-031-38758-6_2

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the TGC, Russell H. Dorr, agreed that the Czechoslovak side hand over at least unsigned copies of documents and annexes with the promise that it does so as soon as possible.2 The Czechoslovak side justified the delay in sending the signed documents with technical problems. What’s more, the Czechoslovak documents were not only unsigned, but also incomplete, which TGC General Secretary Michael Hirigoyen pointed out to IARA delegate Šimr on 10 July 1947, adding that under these conditions, it is not possible to examine the Czechoslovak requests, or that the commission is unable to set the percentage of the restitution which should be paid to Czechoslovakia.3 The commission itself responded to the Czechoslovak reply of 5 August 1947, by which the “gold” questionnaire of the commission was actually filled in,4 on two levels. In the first, from 11 August, it asked the Czechoslovak government to ensure that it will not submit any additional demands for gold. At the same time, it said that it will not take into account any claims that that are not submitted to it by 15 September 1947. The second level of the TGC’s response was the request of its secretary, M. Hirigoyen, from 6 October 1947 the submitting additional relevant documents and proofs relating to various types of looted Czechoslovak gold.5 The commission first requested the supplementing of the documents relating to the Czechoslovak claim of 6,375.8588 kg of pure gold in coins owned by the National Bank and seized by the Reichsbank on 12 June 1940. These were the following documents and proofs:

2 AMZV CR, ˇ f. MPO, Dokumenty k…, p. 41, m. no. 936/47/IARA. 3 AMZV CR, ˇ ibid, p. 43, letter of M. Hirigoyen to C. Šimr from 10 July 1947. 4 NAR, f. TGC, box no. 17, 5 August 1947. 5 The commission’s chairman and US commissioner Russell H. Dorr of the State Department in Washington informed about the request of the commission that the Czechoslovak government provide credible documents and papers on 2 October 1947. In it, he summarized the Czechoslovak request for 45,008 kg of gold (14,536 kg for covering the banknotes circulating in the Sudetenland after Munich; 23,087 kg from the account of the BIS—the so-called Basel gold; 6,376 kg of gold coins transported to Germany on 12 June 1940; and 1,009 kg of gold from the Škoda Works and the Armoury—the so-called autonomous gold). At the same time, he pointed out the insufficient justification of the Czechoslovak claims, which allegedly did not permit the commission to verify its own conclusions. NAR, f. TGC, box no. 17, No. 740.00119 EW/10–247.

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1. Proof of ownership and photocopies of the balance sheets and books of the National Bank which certified that the coins in question appeared on the bank’s accounts as its property. 2. Proof of the illegitimate transfer—photographic documents of the protocol of 12 June 1940, which would certify that the coins were in fact seized by the Berlin Reichsbank. At the same time, the TGC requested photocopies of translations of testimonies, if obtainable, of representatives of the NBBM, who received the oral order to hand over coins to the Reichsbank, as well as photographs and translations of a loan report issued by the Reichsbank when this minted gold was deposited on the “Depositum Regulare” account. The commission considered the submission of photocopies and translations of the protocol from 12 June 1940 as the most important and most urgent.6 The Czechoslovak reply to the request of the TGC on 30 October 1947 was a detailed analysis of the situation (proof of ownership and forced transfer), supplemented by copies of relevant documents and their translations. Among the documents on ownership, the Czechoslovaks submitted a photocopy of the balance sheet of the NBBM, prepared as of 31 December 1940. The first item listed on the balance sheet was cash-inhand in gold in the amount of 1,446,990,103.85 crowns. The details

6 AMZV CR, ˇ f. MPO, Dokumenty k…, p. 49, letter from the commission dated 6 October 1947, crom 113. In a letter from 29 October 1947, Šimr informed the Ministry of Foreign Affairs in Prague that the commission was fully aware of the importance of returning gold to the affected countries in the current economic situation, or that it will not wait with the release of gold until a decision is made on all applications received. At the same time, he informed the headquarters in Prague that by 15 September 1947, Albania, Austria, Belgium, Czechoslovakia, Greece, Italy, Luxembourg, the Netherlands, Poland and Yugoslavia had asked for the return of gold from the commission. On the basis of the completeness of the requested documents, it decided to provide immediately the “pool” gold to the following countries: Belgium 90,649.8374 kg, Luxembourg 1,929.4999 kg and the Netherlands 35,890.5740 kg. It further ordered that 26,187.2639 kg of gold be set aside for Austria (a former ally of Germany) and 3,805.3182 kg of gold for Italy (another German ally). This preliminary division was supplemented by the assurance that, in calculating the shares, the commission rememˇ bered to keep a reserve for satisfying still pending requests. AMZV CR, f. MPO, ibid, p. 53, letter of C. Šimr of 29 October 1947, referring to the letter of the commission of 6 October 1947, addressed to the Ministry of Foreign Affairs, no. m. 1819/47/IARA.

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related to this amount were stated in the written record of the “Purchase and sale of gold” account, drawn up as of 31 December 1940. One of the items here was “Gold minted – depot Berlin”, which listed the total weight of the pure gold coins, i.e. 6,380.90170 kg. The difference of 1.338 kg was due to the accounting principles: the National Bank always calculated for gold a hidden reserve of one per mille; thus, 6,380.90170 kg with the deduction of one per mille of the hidden reserve of 6.38090 kg, totalled 6,374.52080 kg, which was stated in the balance sheet as of 31 December 1940.7 After officially taking over the gold, the Germans transported it to Berlin on 12 June 1940. On that occasion, it was necessary to calculate the change in the Czechoslovak hidden reserve. According to the RB records attached, 6,375.8546 kg of pure gold was actually transferred. When its numismatic collection weighing 14.3719 kg of gold was returned to the NBBM, which the National Bank had to replace with a new shipment of other coins weighing 14.3761 kg of pure gold to Berlin, the mentioned amount was increased by 0.0042 kg of pure gold; thus, the actual weight of the coins held in the RB on the “Depositum Regulare” ˇ in 1947) was 6,375.8588 kg of account (and reclaimed by the NBCS pure gold, and this amount was kept in the treasury of cash in the gold of ˇ (NBBM) throughout the occupation and after the liberation. the NBCS ˇ submitted As proof of the unlawful transfer of these coins, the NBCS photocopies and translations of the protocol of 12 June 1940. As for the testimonies of NBBM representatives who received the oral order to hand over coins to the Reichsbank, here the Czechoslovak side submitted a document from 10 June 1940, issued by the Reich Protector for Bohemia and Moravia no. II./1–12.500/40, the content of which was as follows: Reich Protector of Bohemia and Moravia II./1–12.500/40, in Prague, on 10 June 1940. For the Prime Minister

7 The TGC accepted the explanation of Prague about the ownership of gold coins and their forced transport to Germany and recommended that this gold in the stated weight be recognized as legitimate Czechoslovak property and request. This was confirmed by Edmond O’Flaherty in Supplement no. 2 of the commission on the preliminary analysis of the submitted Czechoslovak documents, prepared on 7 November 1947 and the explanation of the difference in weight due to the inclusion of one per mille of the hidden reserve was also accepted. NAR, f. TGC, box no. 1, Addendum No. 2 to Preliminary Analysis of Czechoslovakia’s Reply to the Questionnaire dated 22 August 1947.

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Prague. In view of the serious events with far-reaching consequences that led to the arrest of Director (Václav) Sadílek and one of the chief controllers at the NBBM, it is essential to transfer the gold reserves deposited with the National Bank to the German Reichsbank in Berlin. I have asked the German Reichsbank to make the transfer [of the gold] immediately and to please notify the National Bank of this. Neurath.8

The Czechoslovak side further informed the TGC that it was not possible to determine when the content of the stated order was given to the NBBM. Reichsbank employees received the shipment of gold mentioned in this letter, based on the verbal order of the deceased Dr. Friedrich Müller, a high-ranking official of the RB and a representative of the RB’s interests at the NBBM. His official title was “Der Sonderbeauftragte der Deutschen Reichsbank bei der Nationalbank für Böhmen und Mähren” [Special Representative of the German Reichsbank at the NBBM]. The Czechoslovak side also attached a photocopy of the record of receipt of this order, prepared by the RB and addressed to its “Sonderbeauftragte”, as well as a photocopy of the letter by which it sent the mentioned record to the National Bank.9 The marathon of requests from the Tripartite Gold Commission to the Czechoslovak government continued. As early as 12 November 1947, 8 The original document:

Der Reichsprotektor in Böhmen und Mähren. II./1–12.500/40, Prag, den 10. juni 1940. Au den Herrn Ministerpräsidenten. Prag. Mit Rücksicht auf die schwerwiegenden Vorkommuisse, die zu der Verhaftung des Abteilungsdirectors Sadilek und eines Oberkontrollors bei die Nationalbank für Böhmen und Mähren geführt haben, ist die Verbringung des bei der Nationalbank liegenden Goldbestandes in den Gewahrsam der Deutschen Reichsbank in Berlin erforderlich. Ich habe die Deutsche Reichsbank aufgefordert die Ueberführung alsbald vormmnehmen, und bitte die Nationalbank entsprechend zu verständigen. Neurath. ˇ AMZV CR, f. MPO, Dokumenty k…, p. 57, letter of C. Šimr to the Tripartite Commission from 30 October 1947, no. m. 1654/47. 9 AMZV CR, ˇ ibid, p. 58.

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the secretary of the commission, M. Hirigoyen, informed Celestýn Šimr that the commission was actively studying the Czechoslovak materials submitted and that certain problems had emerged during the study of these documents, which will be the subject of its next request in the near future. At the same time, he also informed him, on behalf of the commission, that the commission would need documents and explanations regarding the gold managed by the Škoda Works and Armoury as soon as possible, as well as documents regarding the gold managed by the BOE under the BIS account.10 The commission requested that photocopies and translations of these documents on the gold managed by Škoda and the Armoury be submitted: ˇ and the Škoda Works – the agreements made between the NBCS through which management of this gold was entrusted to the Škoda Works within the limits of the autonomy granted to them by the National Bank, ˇ (or the NBBM), in which – records and balance sheets of the NBCS the gold managed by Škoda Works was held as the property of the National Bank before July 1940, – credit notices by which the National Bank notified the Škoda Works of the payment of the crown equivalent for the transferred gold, – records of the NBBM, which show the operations related to the transfer of this gold to the Reichsbank, – the notifications sent by the NBBM to the RB notifying of this transfer, as well as confirmation from the RB of receipt of this gold. The commission also requested the testimony of major NBBM figures, who had received the explicit order from the German authorities to transfer the gold, – all memoranda and reports written on this matter. In connection to the gold held by the BOE under the BIS sub-account, the TGC requested the same testimony of important figures from the ˇ or the NBBM, who received the explicit order from the German NBCS authorities to transfer this gold to the Reichsbank. It further asked for

10 ACNB, ˇ ˇ letter of the General Secretary of the Commission M. Hirigoyen f. NBCS, from 12 November 1947.

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photocopies and translations of all memoranda and reports written on this matter as well as photocopies and translations of letters sent: ˇ to the Bank for International Settlements from 18 – by the NBCS March 1939, giving orders for transfers to the Reichsbank account, – by the BIS to the National Bank from 24 March 1939, informing ˇ that its order had been carried out, the NBCS – by the RB to the National Bank from 12 June 1939, informing the NBBM that the RB had transferred the corresponding amount of gold on behalf of its “Sonderlagerung” account.11 The TGC raised additional new requirements regarding documents on the Czechoslovak gold on 8 and 11 December 1947. In a letter from 8 December 1947, it requested documents and explanations as soon as possible about the gold the Germans had demanded to cover Czechoslovakia paper currency removed from circulation in the Sudetenland. It ˇ actually owned the gold was again interested in proof that the NBCS and about its unlawful transfer. Therefore, it asked for photocopies and ˇ balance sheets and books in which the gold, transtranslations of NBCS ˇ It also ferred on 18 March 1939, was kept as property of the NBCS. asked the Czechoslovak government for an official declaration that the lists of gold bars sent within the so-called Sudeten Gold provide appropriate details of the bars that were held by the BIS and the Swiss National Bank and transferred to the Reichsbank. The TGC also requested photocopies and translations of documents that could demonstrate that the transfer of gold to the RB had been ordered and carried out by the ˇ under pressure from the German authorities and was also interNBCS ˇ ested in the text and translations of the telegrams by which the NBCS issued the transfer orders to the BIS and the Swiss National Bank. It was likewise necessary for the commission that the photocopies and translations of notifications of the carrying out of these orders sent by the Swiss National Bank and the BIS to the Czechoslovak National Bank, as well as

11 AMZV CR, ˇ f. MPO, Dokumenty k …, pp. 62–63, letter of M. Hirigoyen to C. Šimr from 12 November 1947.

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photocopies and translations of acknowledgements of their receipt from the RB, be supplemented.12 The second mentioned letter of the Tripartite Commission (dated 11 December 1947) actually followed loosely on the letter dated 8 December 1947. This time, however, the commission was interested in Czechoslovak documents on the acquisition of Czechoslovak gold by Germany during the occupation. Based on the materials the commission had available, it was able to classify the acquisition of this gold into three categories. The first was the buying of part of the gold recorded by the Reichsbank for foreign currency—after the transfer of the gold held by the BOE—to the “Sonderlagerung” account and transferred under pressure by the National Bank to the Reichsbank. This involved gold weighing 9,636.0615 kg registered by the Reichsbank on the “Separat Depot” account, while 718.7021 kg was sold back to the Reichsbank, thus leaving 8,917.3594 kg of gold in that account. The second category was the use of the assets of the “Warenkonto” clearing account, when Czechoslovak gold with a total weight of 4,102.5819 kg (1,604.0050 kg of which was transferred to Switzerland) was recorded by the Reichsbank on the “Depot Gratuit” (free deposit) account and another part, namely 3,397.77584 kg, was transferred by the Reichsbank to the account of the Slovak National Bank (SNB) in the Swiss National Bank. The third category of gold transfers consisted the shipment of 1,398.77576 kg by the Reichsbank to Switzerland from domestic Slovak gold extracted in the Kremnica mines and sold to the Reichsbank by the SNB.13 In an effort to ensure the exact movement of gold in the Czechoslovak affair, the TGC requested that the Czechoslovak side send copies of all financial operations registered during the occupation involving the “Sonderlagerung”, “Separat Depot” and “Depot Gratuit” accounts, the “Warenkonto” clearing account and the account of the SNB in the Swiss

12 Archive of the National Bank of Slovakia (ANBS), Bratislava, f. Národná banka ˇ ˇ Ceskoslovenská (NBCS), Regional Institute for Slovakia in Bratislava, Foreign Exchange Department, monetary gold of the former Slovak National Bank deposited in Switzerland, 1946–1948, letter from M. Hirigoyen to C. Šimr dated 8 December 1947. 13 Schvarc, Michal—Hallon, Ludovít. ˇ Kauza Karvaš [The Karvaš Affair]. Bratislava: Historický ústav SAV, 2014, p. 35.

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National Bank.14 At the same time, it asked that seven questions be answered: 1. What is the exact amount of gold recorded on the “Sonderlagerung” account which had to be sold to the Reichsbank? What foreign currency and in what amount did the Germans hand over in return for this gold? 2. Why did the Germans permit the NBBM to keep in the “Sonderlagerung” a portion of the gold that was transferred to this account, or what happened to the portion of the gold that was not sold? 3. Why did the Germans permit the National Bank to buy back 9,636 kg, when they had previously requested the selling of this part of this gold? Was this repurchase carried out using the foreign exchange obtained from the sale referred to in the first question? 4. Why was 718 kg out of the 9,636 kg of gold bought by the National Bank then, later resold? 5. What happened to the amounts of gold recorded by the Reichsbank on the “Separat Depot” account? 6. Has the National Bank again entered the free handling of deposits held by the Swiss National Bank on behalf of the former SNB? 7. To what degree did various German gold acquisitions take place in return for the goods supplied or for the services provided by the Protectorate of Bohemia and Moravia and the Slovak Republic to the Reich Government? According to the Tripartite Commission, this point in particular must be explained in detail for operations carried out using the assets of the “Warenkonto” clearing account.15 The Czechoslovak side replied to the TGC’s letter of 8 December 1947 in two stages, first on 12 January 1948 and then on 13 February 1948, in which it summarized that the gold in question—held in the BOE ˇ gold. under the account and name of the BIS—is NBCS The response on 12 January 1948 of the Czechoslovak delegate to the IARA, Celestýn Šimr, to the TGC focussed on two areas: the so-called

14 ANBS, f. NBCS, ˇ Oblastný ústav pre Slovensko v Bratislave [District Institute for Slovakia in Bratislava], ibid, letter of M. Hirigoyen to C. Šimr from 8 December 1947. 15 AMZV CR, ˇ f. MPO, Dokumenty k …, pp. 74–75, letter of M. Hirigoyen to C.

Šimr from 11 December 1947.

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autonomous and the so-called British–Czechoslovak gold. In his letter, ˇ had obtained, by virtue of Government Šimr explained that the NBCS Decree No. 46 of 1924, paragraph 15, the right to all foreign receivables obtained by the export goods or by other means.16 To allow the large Czechoslovak consortium to more flexible manageˇ issued a licence to the joint-stock ment its foreign receivables, the NBCS company Škodove závody (Škoda Works), which permitted it to keep credit balances on foreign currency accounts opened in its name in foreign banks. This licence was originally issued individually for different foreign countries, or for different foreign financial institutions, specified in advance. On 31 August 1932, however, the joint-stock company received a general licence, a copy of which was translated into English and French and sent by the Czechoslovak side to the TGC. On the basis of these licences, companies conducted arbitration in foreign currencies or these currencies for gold on the basis of previous approval given by ˇ telephone by the director of the NBCS’s foreign exchange department. ˇ The company in question was obligated to submit a report to the NBCS three times a month (every 10 days) on the status of its foreign receivables. The process or proof that the foreign exchange administered by so-called autonomous companies was always considered to be the propˇ clearly followed from a letter sent on 15 October 1941 erty of the NBCS by the NBBM to the joint-stock company Škoda Works. It contained details related to the above practice, common since 1932. Czechoslovakia sent photocopies and translations of this letter to the Tripartite Commission,17 and in a letter to the Tripartite Commission, Šimr further stated that 81 gold bars with a total gross weight of 1,020.76713 kg were at that ˇ time stored abroad for the Škoda Works, or for Ceskoslovenská Zbrojovka (the Armoury) in Brno, until the time when these bars were to be sent to Berlin on the verbal order of the Reichsbank representative at the NBBM.

16 Government Decree no. 46 from 1924 in paragraph no. 15 stipulates: “Payments obtained in foreign currency by export or the sale of goods or securities, as well as payments arising from work in Czechoslovakia in wages for foreigners, etc. (export foreign currency), let the acquirer, should be immediately upon being received submitted by the recipient, either directly or through some ‘bank’ to the National Bank of Czechoslovakia under the conditions set by the National Bank. By an official request, a creditor is obliged to demonstrate that it has done everything necessary for its foreign debtor to settle its debt without delay”. 17 AMZV CR, ˇ f. MPO, Dokumenty k …, pp. 80–81, letter of C. Šimr to M. Hirigoyen from 12 January 1948, no. 81/48.

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Therefore, there was no record of these bars in the NBBM books until July 1940. The mentioned 81 gold bars were recorded in the books of the NBBM ˇ (successor to the NBCS) only when the National Bank acquired their material ownership, i.e. on 31 August 1940. These photocopies were also part of this letter, as an appendix. The letter also included photocopies and translations of a letter of the NBBM from 20 August 1940, sent to the Škoda Works joint-stock company, as well as photocopies of deductions, which served as accounting documents. (This gold was kept on the books of the National Bank in an account called “Transitional settlement of assets abroad”.). The Czechoslovak “autonomous” gold, along with other gold that was still in Prague in 1940, was sent to the Reichsbank after the intervenˇ tion of its representative at the NBBM. Regarding this matter, the NBCS referred to a letter sent by the Reich Protector to the Prime Minister on 10 June 1940, a photocopy of which the Czechoslovak side handed over to the Tripartite Commission on 30 October 1947. The gold itself was packed up by the NBBM and delivered to the RB personally by Erich Šturn, the former German director of the NBBM, and Josef Jenˇcek, a bank employee. There was no written proof of the shipment, as Šturn reported to the Reichsbank by telex. There was confirmation of receipt of the consignment in the NBBM archives, however, issued by the Reichsbank, and a copy and translations of this were included in the annexes to this letter. Prague also attached in the letter translations of the statements of the employees of the NBBM who handled the shipment of this gold. The second part of the Czechoslovak letter to the Tripartite Commission was focussed on the gold held by the BOE under the BIS subaccount. Here the Czechoslovak side attached a copy and translations of ˇ letter dated 18 March 1939 which was addressed to the BIS. an NBCS This letter contained a request for the transfer of the gold held by that ˇ account in the BOE in London to the Reichsbank. bank from the NBCS ˇ and It further enclosed translations of a letter addressed to the NBCS dated 24 March 1939 in which it was notified that its order had been carried out. The Reichsbank confirmed receipt of this gold by letter no. II.a14995 on 12 June 1939 (this document was part of the accompanying annexes). The order to transfer Czechoslovakia’s “British” gold was ˇ František Peroutka and its signed by the General Director of the NBCS Foreign Exchange Director Josef Malík. Proof that they both were acting

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under duress lay in the content of a letter from Josef Malík, which he sent to the BIS President in Basel after his escape to Paris on 13 October 1939. This letter, as well as the reply to it, by which the President of the BIS confirmed its receipt on 29 October 1939, were a part of the annexes.18 Šimr’s letter of 3 February 1948, which was in fact the second part of the Czechoslovak side’s response to the Tripartite Commission’s letter of 8 December 1947, focussed on providing additional evidence that the ˇ and that its transfer was unlawful. “Sudeten” gold is owned by the NBCS ˇ As part of the proof, he attached photocopies of extracts from the NBCS books containing detailed information about the gold that belonged to this bank and about its transfer to the Reichsbank. This was gold stored in the BIS, specifically 125 gold bars with a total weight of 1,486.35684 kg (marks and numbers DO 235-1A), located in Bern, and 47 gold bars weighing 579.83230 kg (marks and numbers 6378–6424), located in Brussels. Furthermore, this was gold deposited with the Swiss National Bank, specifically 921 bars with a total weight of 11,218.26636 kg (marks and numbers B-13363–39) and 92 bars weighing 1,269.74455 kg (marks and numbers 496–515-4204). A part of the letter was also a photocopy and a translation of the declaration of the Minister of Finance of the Czechoslovak Republic, in which he confirmed the accuracy of the data.19 On the subject of the illegality of the gold’s transfer, Šimr stated that the transfer was one of the direct consequences of the Munich Agreement, when the RB demanded the transfer of gold under the pretext that it was part of the gold cover of Czechoslovak banknotes withdrawn from circulation in the Sudetenland. The amount of gold shipped to the RB was stipulated in Berlin during negotiations on the adjustment

18 AMZV CR, ˇ f. MPO, Dokumenty k…, pp. 83–84. 19 “Declaration. The Minister of Finance of the Czechoslovak Republic declares on behalf of

the Czechoslovak government that the lists of castings which the National Bank of Czechoslovakia sent to the Tripartite Commission for Restitution of Monetary Gold in Brussels as annexes to Form I-A-1 and which are related to the gold transferred to the German Reichsbank in Berlin in March 1939 for partial coverage of Czechoslovak banknotes withdrawn from circulation in the so-called Sudetenland thoroughly provide details on the 1,185 bars which were stored with the Bank for International Settlements and the Swiss National Bank and transferred to the German Reichsbank for the purpose just mentioned. In Prague on 21 January 1948. Jaromír Dolanský , Minister of Finance of the Czechoslovak Republic”. NAR, f. TGC, box no. 1, Declaration of the Minister of Finance of the Czechoslovak Republic, 21 January 1948.

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of financial relations between the Czechoslovak Republic and the Reich. The principles of this arrangement came from Munich, and according to the Czechoslovak side, the act itself was sufficient evidence that the said transfer took place under duress. J. Malík and the Deputy General Director of the National Bank, Václav Vanˇek, took part in the negotiations on the transfer of gold in Berlin on behalf of the Czechoslovaks. Neither of them was able to provide personal evidence to the Tripartite Commission because they were both already dead in 1948. Therefore, ˇ or the Czechoslovak side, asked the Tripartite Commission to the NBCS, accept Malík’s correspondence of 13 and 29 October 1939 with the BIS President as proof of the unlawfulness of the gold’s transfer.20 The second Czechoslovak response to the requests and questions of the Tripartite Commission from 11 December 1947 was submitted by the Czechoslovak delegate to the IARA on 16 February 1948. This extensive document consisted of an analysis of the acquisition of Czechoslovak “German” gold during the occupation and its deposit in various accounts of the Reichsbank and the responses to the seven cited questions. The “Sonderlagerung” account was opened on 15 May 1939 with the entry of 1,845 gold bars with a total net weight of 23,087.3040 kg. The Czechoslovak side provided details related to the transfer of this gold to the Reichsbank in a letter to the commission on 12 January 1948, but in that letter, it also attached an annex concerning the various “sales” of the gold to the Reichsbank. After the entry of the last of these “sales”—specifically 190.7192 kg of pure gold—the “Sonderlagerung” account showed a balance of 10,318.3331 kg of pure gold. The “Separat Depot” account was divided into two parts. The first contained records related to unminted gold, the second to minted gold, or gold coins. The total amount of pure gold purchased by the NBBM from the Reichsbank and booked on this account was 9,636.0615 kg. From this amount, entries on purchases, whose total weight on 9 October 1941 was exactly 9,607.8488 kg of pure gold, were located in the part of the account relating to unminted gold. A record of 22.8033 kg of pure gold, which the Reichsbank credited on 7 June 1944 on behalf of the NBBM to pay for the gold it had in Switzerland, was attached to this quantity. The operation was carried out under duress. The part of

20 AMZV CR, ˇ f. MPO, Dokumenty k…, pp. 94–96, letter of C. Šimr for the Tripartite Commission from 3 February 1948, no. 265/48H/Št.

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the account related to minted gold showed a purchase of 692.5 British pounds in gold coins with a total weight of 5.0471 kg of pure gold and the purchase of one exotic coin weighing 0.3623 kg of pure gold, making a total of 9,636.0615 kg pure gold.21 When the NBBM later had to sell 718.7021 kg of pure gold back to the Reichsbank, the banking operation was booked on this account in the “unminted gold” section, so that the balance of the entire “Separat Depot” account represented 8,917.3594 kg of pure gold, of which 8,911.9500 kg were kept in the “unminted gold” section and 5.4094 kg in the “minted gold” section. One of the essential requirements of the Tripartite Gold Commission was that the Czechoslovak side explain the use of the assets in the Reichsbank “Warenkonto” clearing account. Since this problem mainly ˇ involved Slovakia, the NBCS—Regional Institute for Slovakia in Bratislava provided an explanation to the commission by mapping all the purchases and sales that took place during the occupation between the former Slovak National Bank and the Reichsbank.22 The RB made exactly 724.8751 kg of pure gold available to the SNB on 23 December 1940, and then on 27 May 1941 exactly 1,151.2638 kg, on 15 June 1941 exactly 1,151.0669 kg, on 24 November 1941 exactly 1,075.3761 kg and on 26 July 1944 exactly 1,793.77584 kg. In summary, this represented 5,896.35774 kg of pure gold for 16,450,538.77 Reichsmarks. According to its records from 14 November 1941, exactly 1,003.3721 kg of pure gold was sold back to the Reichsbank, then on 19 January 1942

21 ACNB, ˇ ˇ box no. 165, NBCS ˇ document no. 01238 for the Office of the f. NBCS, IARA Delegate in Brussels from 3 February 1948. 22 The Slovak National Bank was established by Slovak Government Decree No. 44 of 4 April 1939. Although the Slovak side attempted to obtain a share of foreign exchange ˇ the Germans refused to negotiate on reserves and monetary gold of the former NBCS, this topic. The SNB was established as a participating company with registered capital of 100 million SKK (Slovak crowns), and the state owned 60% of the shares. The rest was owned by the German side through Deutsche Golddiskont Bank Berlin. The SNB was headed by a governor; the first of them was Imrich Karvaš. The bank’s problem was a lack of foreign exchange reserves, so the government announced a national collection for the so-called golden treasure. The republic in the years 1941–1945 gained through exports, transactions abroad, mining in Slovakia and collecting more than 7 tonnes of gold, which were then deposited in Switzerland. The bank’s activities were terminated by Presidential Decree No. 139 of 19 October 1945, according to which the SNB became part of the ˇ on 26 November 1945. For more on the issue of the Slovak National renewed NBCS Bank and Slovak trade with Germany and its satellites, see Schvarc, Michal—Hallon, ˇ Ludovít. Kauza Karvaš [The Karvaš Affair], pp. 28–38.

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exactly 398.1184 kg of pure gold, and on 20 January 1942 exactly 1,097.0864 kg of pure gold. The RB further, on 16 July 1941, transferred ˇ exactly to the Swiss National Bank, to the account of the former NBCS, 1,604.0050 kg of pure gold, and on 5 July 1944 exactly 1,793.77584 kg of pure gold. None of the gold remained at the Reichsbank.23 Here it is necessary to note that the account designated by the Reichsbank as a “Depot Gratuit” was not kept on the books of the former SNB; thereˇ could not submit any statement from this account to fore, the NBCS the Tripartite Commission. Some movements of gold were booked by the former Slovak National Bank on a collective “Purchase and sale of gold” account, while other movements were recorded in various auxiliary accounts. The purpose of this procedure could have been to make it more difficult to track the movement of gold and to obscure the true state of gold reserves as much as possible. Other supplementary data concerning the relationship between the two national banks, the Swiss and the Slovak banks, were provided by the Czechoslovak side to the Tripartite Commission in a summary form. Overall, the SNB’s account at the Swiss National Bank showed the following movements during the occupation: The Reichsbank made available to the former SNB in return for Reichsmarks the mentioned 1,604.00837 kg of pure gold from the “Warenkonto” account on 30 June 1941. Another move was 303.45047 kg of pure gold bought by the Slovak National Bank at the Swiss National Bank in Bern, exactly 1,006.77709 kg of gold on 4 September 1941 and exactly 1,000.65419 kg of gold on 17 June 1944. Additionally, an already mentioned transaction was the provision by the Reichsbank to the Slovak National Bank on 26 July 1944 of exactly 1,793.77584 kg of pure gold as consideration for the Reichsmark from the “Warenkonto” account. The Reichsbank further made first 995.90528 kg and later 402.87048 kg of pure gold available to the former SNB in exchange for 1,399.7859 kg of pure gold, and it compensated the SNB for the difference in weight of

23 Gold arising from domestic mining and delivered to the Reichsbank in exchange for the gold made available by the former SNB to the Swiss National Bank totalled ˇ Regional Institute for Slovakia in Bratislava, 1,398.7776 kg of pure gold. ANBS, f. NBCS, letter from the Foreign Exchange Department of the Regional Institute for Slovakia in ˇ for the Foreign Exchange Department of NBCS ˇ in Prague dated Bratislava of the NBCS ˇ 17 January 1948, or AMZV CR, f. MPO, Dokumenty k…, p. 113, letter of C. Šimr to the Tripartite Commission of 16 February 1948, no. 295/48-M/5.

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1.01014 kg in Swiss francs.24 The mentioned numbers showed that only two purchases were made from the debt of the “Warenkonto” account, on 30 June 1941 and 26 July 1944. During the occupation, no sale of SNB gold was recorded on its account in the Swiss National Bank. The total amount of Slovak gold in the Swiss National Bank was 7,107.44172 kg. For an easier understanding of its internal division and to capture all of its trades and movements in connection with the RB in Berlin and the Swiss National Bank in Bern, I will present a clear summary: The SNB purchased 5,896.35774 kg of gold from the RB for Reichsmarks from the “Warenkonto”. It then sold 2,498.5769 kg back to the Reichsbank for free Reichsmarks, i.e. the balance of gold that remained was 3,397.78084 kg. This balance was then transferred by the Reichsbank to the account kept for the SNB at the Swiss National Bank, which showed a balance of 0.00337 kg for the Slovak National Bank, i.e. thus exactly 3,397.78421 kg. To avoid the difficult transport options in 1944 for the transport of gold from its own Slovak production to Switzerland, the exchange was carried out such that Bratislava delivered 1,399.7859 kg to nearby Vienna and the Reichsbank made 1,398.77576 kg at the Swiss National Bank in Bern available for the SNB. Thus, together, the SNB received 4,796.5597 kg, located at the Swiss National Bank, from the RB. This store of gold, together with the gold purchased by the SNB directly at the Swiss National Bank weighing 2,310.88175 kg, represented a total of 7,107.44172 kg.25 The gold that the SNB purchased directly from the Swiss National Bank was a “product” of the payments for some particularly valuable goods (sugar, textiles and kerosene products), which were not paid for in the ordinary course of international trade. What are the above documents on Slovak–German financial or business transfers between the Slovak National Bank and Reichsbank, and on the purchases or sales of Slovak monetary gold, direct or through the Swiss National Bank testimony? They demonstrate that the Governor of the SNB, Imrich Karvaš, did not hide the true state of Slovak gold from Germany, which was not even possible, but on the contrary, he kept it secret from the Slovak government and President Jozef Tiso, which is in

24 ANBS, f. NBCS, ˇ Regional Institute for Slovakia in Bratislava, ibid, or AMZV CR, ˇ f. MPO, Dokumenty k…, p. 115. 25 ANBS, f. NBCS, ˇ Regional Institute for Slovakia in Bratislava, 17 January 1947.

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conflict with a generally well-known interpretation. It is at this moment that when assessing Karvaš’s activities as governor of the SNB during the Second World War it must be openly and explicitly mentioned: Karvaš made it clear through transfers of gold through the Reichsbank that he did not consider the Slovak state and its ideological and political exponents to be authorities that he would protect and defend. This actually served to protect the Slovak monetary gold. Aside from the above 7.1 tonnes of gold, Slovakia still had 1942 to 1945 200.568198 kg of gold in Switzerland, on an account at the BIS in Basel. According to the breakdown of the individual bonds, it was clear that they were held on behalf of the post office of the former Ministry of Transport and Public Works in Bratislava, or they were the profits from telephone, telegraph and parcel billing with various counˇ “Purchase and Sale of Gold” tries. This gold was moved to the NBCS 26 account in December 1945. In March 1947, Slovak gold weighing just ˇ for over 7.1 tonnes was returned by the Swiss National Bank to the NBCS 27 free handling. In regard to the clearing account of the Reichsbank, the 26 ANBS, f. NBCS, ˇ Regional Institute for Slovakia in Bratislava, 8 March 1949. 27 Czechoslovak-Swiss negotiations on the return of Czechoslovak gold themselves took

place from the beginning of 1946, and the issue of unblocking the so-called Slovak gold, which up to that time was still held in its account by the Swiss National Bank, was one of the main points of the discussions. The Swiss side considered it as obvious that the ˇ had the right to dispose of the gold deposited in the name of the SNB after NBCS the unblocking and that the restored Czechoslovakia of 1945 is the successor of the ˇ as the only emissive institute of the Czechoslovak pre-Munich Republic, i.e. the NBCS, Republic is the successor (legal successor) of the NBBM and the Slovak National Bank and as such own the monetary gold deposited in Switzerland. The mentioned initial negotiations were made tangible in specific intergovernmental acts. First, on 4 May 1946, the Czechoslovak Republic signed a trade and political agreement with Switzerland, which, however, only included the unblocking of the gold. After its approval by the Czechoslovak ˇ asked the Ministry of Foreign Affairs to request government on 7 June 1946, the NBCS the Departement Féderal (Federal Department) through diplomatic channels that the ˇ Swiss government order the Swiss National Bank to transfer the gold to the NBCS account. In its response on 6 November 1946, the Departement Féderal agreed with ˇ then subsequently requested the Swiss National Bank on 4 this procedure. The NBCS December 1946 to transfer the gold in question to its account, which it confirmed by letter of 10 December 1946. With the Protocol on the Transfer of Income from Swiss Capital Placed in Czechoslovakia and the Protocol on the Adjustment of Insurance and Reinsurance Payments between Czechoslovakia and Switzerland of 4 May 1946, approved by the Czechoslovak Government on 7 June 1946, the Swiss Government permitted the free handling the SNB gold deposited in Banque National Suisse (7,107.44172 kg) and in the Bank for International Settlements (200.568198 kg). With a note from 22 October

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“Warenkonto”, it needs to be noted that it was maintained throughout the occupation not only for the needs of the SNB, but also for the needs of the NBBM; however, only the former SNB managed to buy gold from the debt of this account.28 Since the “Warenkonto” account existed from October 1939 to May 1945, the Czechoslovak side was unable to provide the Tripartite Commission with all the photocopies of its financial operations. These were namely voluminous account books containing records that included the Slovak Republic’s economic relations with the Reich throughout the entire war. The final part of the Czechoslovak elaboration from 16 February 1948 comprised Czechoslovakia’s seven answers to the seven questions of the Tripartite Commission29 from 11 December 1947:

1946, the Czechoslovak Embassy in Bern requested the Swiss Federal Department of ˇ credit. Public Economy to issue instructions that this Slovak gold be placed on the NBCS It then did so on 6 November 1946. ˇ AMZV CR, f. MPO, Dokumenty k…, pp. 107–108, Note from the Czechoslovak Embassy in Bern of 22 October 1946 and the reply from the Swiss Federal Department of Public Economy of 6 November 1946. 28 Slovakia also traded with the Reich and with the Protectorate for Bohemia and Moravia through the above-mentioned “Warenkonto” account, and here the Protectorate acted on the economic side as a component of the Reich, even though Slovakia also had a special “Kapitalkonto” account for payments with the Protectorate. Ultimately, all territories controlled by Germany traded with Slovakia through a single common “Besetzte Gebiete” account—i.e. an “occupied territories”—through an accounting register in Berlin—the Verrechnungskasse or the Deutsche Verrechnungskasse. 29 The seven questions from the Tripartite Commission:

1. What is the exact amount of gold recorded on the “Sonderlagerung” account which had to be sold to the Reichsbank? What foreign currency and in what amount did the Germans hand over in return for this gold? 2. Why did the Germans permit the NBBM to keep in the “Sonderlagerung” a portion of the gold that was transferred to this account, or what happened to the portion of the gold that was not sold? 3. Why did the Germans permit the National Bank to buy back 9,636 kg, when they had previously requested the selling of this part of this gold? Was this repurchase carried out using the foreign exchange obtained from the sale referred to in the first question? 4. Why was 718 kg out of these 9,636 kg of gold bought by the National Bank then later resold? 5. What happened to the amounts of gold recorded by the Reichsbank on the “Separat Depot” account? 6. Has the National Bank again entered the free handling of deposits held by the Swiss National Bank on behalf of the former Slovak National Bank?

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1. The amount of gold that was registered in the “Sonderlagerung” account and was to be sold to the Reichsbank totalled 1,034 gold bars with a total weight of 12,768.9601 kg of pure gold, which was equivalent to 35,538,829.38 Reichsmarks. Various sales that were related to this were booked to the “RM—Account II—Devisen” and took place between 1 April 1939 to 16 May 1940. For this ˇ (and after period, however, the foreign exchange needs of the NBCS it the NBBM) amounted to 36,662,511 Reichsmarks. Despite the fact that these liabilities were the result of imports destined mainly ˇ (and for German factories and the German population, the NBCS after it the NBBM) had to cover them from its own resources; thus, the “RM—Account II—Devisen” account during this period showed a deficit of 1,123,681.62 Reichsmarks. To cover this deficit, the National Bank was forced to make 461,277 USD available at the Chase National Bank of the City of New York.30 The difference between the mentioned deficit and the amount made available to the Reichsbank was credited by the Reichsbank to the free account of ˇ called the “Hauptkonto”, which was originally used to the NBCS, ˇ and the RB settle foreign exchange transactions between the NBCS prior to the occupation. The total amount of foreign currency (free Reichsmarks) made available to the National Bank—35,538,829.38 Reichsmarks—has already been mentioned. 2. The “Sonderlagerung” deposit was considered to be the property of ˇ and as such was kept on its books. The NBCS, ˇ however, the NBCS did not know what really happened to this gold. 3. During the occupation, the foreign exchange resources of the Protectorate came from the export of goods to third countries. In the scope of economic autonomy—even though fictitious—the NBBM had the right to foreign exchange coming from this source. Thus, available assets were created in free Swiss francs, Swedish crowns and Dutch guldens on accounts that the NBBM maintained 7. To what degree did various German gold acquisitions take place in return for the goods supplied or for the services provided by the Protectorate of Bohemia and Moravia and the Slovak Republic to the Reich Government? According to the Tripartite Commission, this point in particular must be explained in detail for operations carried out using the assets of the “Warenkonto” clearing account. 30 ACNB, ˇ ˇ box no. 165, sign. NB-PXVII-103. f. NBCS,

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with its correspondents in the respective countries. These assets were then sent to exchange accounts, which the National Bank had to keep at the Deutsche Golddiskontbank in Berlin. During the course of 1941, imports for the needs of the German occupation administration in the Protectorate increased critically. Although the majority of these imports was intended for German companies and residents, the NBBM was forced to balance it with its own foreign exchange. In order to remove these foreign exchanges from the immediate availability of German authorities, the NBBM tried to convert them into gold, calling on the need to strengthen its gold cover. When carrying out this operation, the NBBM forwarded the above available assets to the Reichsbank, namely 20 million Swiss francs, 10 million Swedish kronor and 2,415,000 Dutch guldens, in addition to 5,977,653.92 Reichsmarks of its own creditor balance in the “Hauptkonto” account (payments made by third countries as consideration for Czechoslovak goods were recorded on this account, if these payments were made in free Reichsmarks). As countervalue for these transactions, the Reichsbank allocated a sum of 9,636.0615 kg of pure gold to the “Separat Depot” account created for this purpose in favour of the NBBM.31 4. The selling off of 718.7021 kg of pure gold had to be done because the NBBM needed a considerable amount of free Swiss francs on 12 August 1942. Their need at this time rose sharply due to increasing imports dictated by the German occupation authorities. This need could only be covered by the sale of gold. 5. In its books, the National Bank kept gold recorded on the “Separat Depot” account as monetary gold. It does not know, however, what really happened to this gold in the Reichsbank. 6. Gold held by the Swiss National Bank on the account of the former SNB with a total weight of 7,107.44172 kg of pure gold was ˇ in March 1947 and was freely available. returned to the NBCS 7. In regard to the Protectorate of Bohemia and Moravia, the gold of ˇ that it received from the Reichsbank had nothing the former NBCS in common with the goods delivered to the Reich, nor with the services provided to its government. Payment relations between the Czechoslovak Republic and the Reich resulted from the exchange

31 ACNB, ˇ ibid, p. 2.

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of goods or services, and from 1933 they were settled by clearing. From 1 October 1940, the Protectorate of Bohemia and Moravia was incorporated into the economy of the Reich. In relation to Slovakia, the situation was as follows: the active balance of the “Warenkonto” account of the former SNB with the Reichsbank was used during the occupation for five gold purchases (a total of 5,896.35574 kg of pure gold in the amount of 16,450,538.77 Reichsmarks). One of them, according to a Deutsche Verrechnungskasse document dated 29 December 1941, was first made in the weight of 1,075.3761 kg, i.e. 3 million Reichsmarks, from the “Warenkonto” account to the “Gironkontor der Reichshauptbank” account, and then on the same day, the “Gironkontor” account was debited by 3,000,299.32 Reichsmarks, representing the gold provided to the former National Bank. The attached copies of these documents, as well as photocopies of the Reichsbank letter of 29 December 1941 regarding the giro transfer from the “Warenkonto” to the “Gironkontor”, showed that the gold purchased by the former SNB in the Reichsbank was paid for by debiting the “Warenkonto” account, i.e. with goods or services shown by the Slovak Republic to the Reich.32 Not even the already mentioned detailed reply of the Czechoslovak side represented a source of final information for the Tripartite Commission, on the basis of which it would definitively conclude the issue of Czechoslovak monetary gold. It was soon shown that the correspondence between the Tripartite Commission and Celestýn Šimr for the Czechoslovak side, already in the position of Minister Plenipotentiary, would continue to fully occupy both sides. This written expert dialogue at the level of “question–answer” was not interrupted even by the Prague communist coup and the associated social change—the arrival of the communist regime in the Czechoslovak Republic. Regardless, when tracking the Tripartite monetary gold in this period, a partial shift in favour of Czechoslovakia can nevertheless be seen. On 16 February 1948, the Tripartite Commission informed the Czechoslovak representative C. Šimr that it was currently able to make further partial allocations to some countries, including Czechoslovakia, because it had

32 AMZV CR, ˇ f. MPO, Dokumenty k…, pp. 116–120, letter of C. Šimr to the Tripartite Commission from 16 February 1948.

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verified the validity of their claims. For Czechoslovakia, it set an allocation of 6,074.1564 kg of gold, while the other concerned countries were Austria and Albania.33 In the scope of this notification on the allocation of gold, the TGC asked the Czechoslovak government to announce the name of the authorized representative who will identify himself with documents confirming his authority. The TGC would then subsequently hand over the said 6,074.1564 kg of gold through the Federal Reserve Bank of New York, where the so-called gold account of the TGC was kept. At the same time, the Czechoslovak government had to undertake on behalf of its authorized representative that, with the receipt of the 6,074.1564 kg of gold, i.e. the amount representing the Czechoslovak government’s share in the preliminary distribution of the total monetary gold, it agrees, “that, from the receipt of its complete and final share of the total monetary gold, as definitively determined by the commission”,34 it shall fully waive any claims regarding either restitution of monetary gold looted by the Germans or illegally transferred to Germany, or compensation in the form of damages or in any other form against Germany or against third countries that obtained the gold in question from Germany. It also undertook to waive any claim aiming at either the restitution of monetary gold or compensation that could be made against the Tripartite Commission or its members—the US, the UK and France—in relation to the implementation of the mandate entrusted to them by the articles of the Paris Reparations Conference of 9 November–21 December 1945. The Czechoslovak government further undertook in a statement that it “is willing in response to the Tripartite Commission for the Restitution of Monetary Gold to offer, in proportion to the share which was admitted to the Czechoslovak government, such an amount of gold which would be required to satisfy all claims submitted to the commission by other countries by 15 September 1947, in the event that these requests were first rejected by the commission but would later be accepted by a competent court – if any – as valid and when the amount gold remaining in the mass of monetary gold and suitable for distribution would not be sufficient to satisfy of these

33 The commission earmarked 1,104.2606 kg of gold for Albania and 7,596.1363 kg

ˇ for Austria. AMZV CR, f. MPO, Dokumenty k…, p. 98, m. no. CC/Cz 231. 34 AMZV CR, ˇ f. MPO, Dokumenty k…, p. 130.

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claims”.35 Stated otherwise and more simply, the Czechoslovak side had to again confirm its original commitment not to claim additional gold. The physical transfer of six tonnes of Czechoslovak gold was made on 3 May 1948. Before that, however, the Czechoslovak side attempted to change the conditions of the first Czechoslovak gold ration, or to change the position of the Tripartite Commission on the issue of Czechoslovak gold coins, which had a high numismatic and historical value. In a letter dated 19 April 1948, it first thanked the commission for its decision to allocate the 6,074.1564 kg of pure gold. Subsequently, it noted that among the Czechoslovak government’s claims is one that related to 6,375.8588 kg of pure gold in gold coins, the numismatic and historical value of which is certainly higher than the value of the metal (it was generally acknowledged that this value, e.g. in St. Wenceslas ducats, was about 20% higher). The definitive loss of these coins was irreplaceable ˇ Here, the Czechoslovak government referred to the Paris for the NBCS. Reparations Agreement, Part III, paragraph “A” of the only article on the restitution of monetary gold, which stipulated that gold coins of numismatic and historical value will be excluded from the total amount of gold intended for distribution, provided that they are identifiable. This effort by Czechoslovakia further mapped the steps of the Czechoslovak side from the end of the war, the identification of coins in Frankfurt am Main by Czechoslovak officials Josef Jenˇcek and Rudolf Kroc in cooperation with American officials in Germany, Bernard Bernstein and Col. Cragon. In the opinion of the Czechoslovak side, these identified coins should have been excluded from the total amount of gold earmarked for distribution and thus returned directly and in the full amount to Czechoslovakia. Furthermore, the Czechoslovak side referred to its letter of 30 October 1947, in which it sent the commission proof of ownership and of the illegal transfer of these same coins. At the same time, it requested that these coins be part of the first delivery.36 The Tripartite Commission did not respond to this Czechoslovak demand for the immediate return of this minted Czechoslovak monetary gold at all.

35 AMZV CR, ˇ f. MPO, Dokumenty k…, p. 131. 36 AMZV CR, ˇ f. MPO, Dokumenty k…, pp. 156–157, letter of C. Šimr to the TGC

from 19 April 1948.

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To follow the issue further, it is necessary to return to the technical “questions-answers” negotiations, which were never actually interrupted. On 18 February 1948, the Tripartite Commission submitted to Prague a new request for explanation of certain facts around gold and relations within the Czechoslovak banking system during the war. It made reference to the Czechoslovak response of 12 January 1948 and requested additional information relating to the request for restitution of 1,008.9145 kg of gold managed by the Škoda Works and the Armoury. The commission examined this part of the Czechoslovak claim and entrusted its secretary to arrange for the sending of further detailed and accurate information on the compensation provided by the Germans in association with the illegal transfer of this gold. Namely, in regard to this matter the Czechoslovak side originally stated on the form (the commission’s questionnaire on gold No. I-A-1/II) that the Reichsbank ˇ (or NBBM), credited the value of this gold to a loan account of the NBCS which then reimbursed the value to the Škoda Works and the Armoury in crowns. In addition to this, a letter from the Reichsbank dated 6 September 1940 (attached to the Czechoslovak letter to the commission dated 12 January 1948) stated that the credits transferred by the Reichsbank to the NBBM cheque account were made in free Reichsmarks. Therefore, the Tripartite Commission demanded that the Czechoslovak side clarify as soon as possible: 1. whether and to what extent these free Reichsmarks could have been used by the NBBM to acquire gold and foreign exchange during the German occupation, 2. whether and to what extent the provisions of Art. 2, par. “D” of the Paris Reparations Agreement were applied after the war in regard to the possibility of providing the Czechoslovak government with a ˇ (the Czechoslovak drawdown from the giro accounts of the NBCS side’s response to these points needed to be verified by documents— photocopies and translations—relating to the potential wartime and post-war use of loans credited to the giro account of the National Bank in the Reichsbank), 3. regarding changes to this account during the war, the commission wanted to know under what conditions the NBBM and the Slovak National Bank were established, or in what way these institutions

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ˇ and could access the took over the assets and liabilities of the NBCS amounts credited to that bank’s accounts in the Reichsbank, ˇ receive the assets and liabilities 4. under what conditions did the NBCS of the NBBM and the SNB after the liberation.37 The reply of the Czechoslovak side to these four questions was submitted to the commission on 9 April 1948 and represented a detailed description and repetition of known and already sufficiently explained period facts and contexts. Thus, it is for the most part possible to see it again as a recapitulation. Regarding the commission’s first question, about whether and to what measure the free Reichsmarks could be used by the National Bank to acquire gold or foreign exchange during the German occupation, the Czechoslovak side replied that decisions on all operations of the National Bank in gold and foreign exchange, as well as all other acts, were at the time of the occupation in the hands of a special representative of the Reichsbank (Sonderbeauftragte der deutschen Reichsbank bei der Nationalbank für Böhmen und Mähren in Prag, Reichsbandirektor, Dr. Müller) and the representative of the Reich’s Ministry of Economy (Regierungsrat, Dr. Winkler). These two, whose offices were located directly in the NBBM building, ultimately decided on all of its operations with final authority. The bank’s gold and foreign exchange were a valuable source of financing for the Reich’s purchases abroad; therefore, the two mentioned representatives of the Reich kept watch over the use of this source in line with the interests of Berlin. Without their prior approval, no payments could be made abroad, whether as a transfer for the import of goods or for any other reason.38 Under these circumstances, it was clear that the possibility of convertibility of free Reichsmarks into gold had a purely theoretical value for the NBBM. Throughout the entire occupation, free Reichsmarks were used for the purchase of gold or foreign exchange only once. This was a transaction that the Czechoslovak side explained in detail to the commission in a letter dated 16 February 1948 (presented herein earlier in the text the so-called “Hauptkonto”—the sale of Swiss francs, Swedish crowns, Dutch guldens and Reichsmarks in 1941, i.e. payment by a third state as consideration for Czechoslovak goods).

37 AMZV CR, ˇ f. MPO, Dokumenty k…, pp. 136–137, m. no. CC/Cz 242. 38 NAR, f. TGC, box no. 17, No. 679/48, letter of C. Šimr to the TGC from 9 April

1948.

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In response to the commission’s second question, the Czechoslovak side stated that since the end of the war, Czechoslovak authorities had ˇ giro account in the RB because the Reichsbank not drawn from the NBCS had ceased to exist as a debtor. Another explanation of Prague on the third question of the commisˇ NBBM and SNB sion, i.e. what was the internal ratio of the NBCS, 39 banks, was also detailed and comprehensive. After the occupation of Czechoslovakia and the creation of the Protectorate of Bohemia and Moravia within the Reich and the Slovak state, the monetary or banking ˇ with relationship was adjusted as follows: the competence of the NBCS its seat in Prague was established by its own decree of 31 March 1939 no. 96 Coll. of Laws and Decrees, which entered into force on 7 April 1939. Paragraph 1 of this regulation provided that: ˇ (par. 54 of Act No. 347 Coll. from 1. the competence of the NBCS 14 April 1920 on Laws and Decrees on the Currency Issuing JointStock Bank) in the territory outside the Protectorate of Bohemia and Moravia is cancelled as of 13 March 1939. On that day, all rights and obligations of bank officials whose residence is located outside the territory of the Protectorate are considered to have expired; 2. the bank will bear the name “National Bank for Bohemia and Moravia in Prague”. ˇ existed even after 15 From the text above it follows that the NBCS March 1939 under the company NBBM in Prague and with competencies limited to the territory of the Protectorate of Bohemia and Moravia. All ˇ in Prague with its correspondent accounts kept on behalf of the NBCS banks abroad, including the account in the Reichsbank, remained after 15 ˇ in Prague or, after 7 April 1939, March 1939 the property of the NBCS the NBBM. On the territory of the Slovak state, as the Czechoslovak side explained to the commission, the Slovak National Bank, with its registered office in Bratislava, was established as a joint-stock company on 4 April 1939 by Slovak Government Decree No. 44 Coll. The SNB in Bratislava took ˇ branches in Prague over ownership of the assets and liabilities of all NBCS

39 ACNB, ˇ ˇ box no. 165, Doc. no. 5849 from 26 March 1948 for the Office f. NBCS, of the Delegate of the IARA in Brussels.

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ˇ established in Slovakia, in addition to the banknotes issued by the NBCS ˇ and circulating in Slovakia. The NBCS branches had no receivables or liabilities towards foreigners. After the withdrawal of banknotes issued by ˇ that were still circulating in Slovak territory, and then, as the the NBCS amount of compensation resulting from this title was determined by the ˇ or the NBBM in Prague, the SNB compiled a balance sheet of NBCS, receivables and liabilities of the NBBM towards the SNB. The question of liquidating the assets surplus of this balance on behalf of the SNB was settled by a special agreement. In its reply to the TGC, the Czechoslovak side further explained that ˇ account held by this bank with its the SNB did not take over any NBCS correspondents abroad. All of these accounts were in the ownership of the NBBM in Prague, which continued to keep records of them in its books. ˇ or the NBBM in Prague, was able to Regarding the extent the NBCS, use the amounts registered in these accounts in the Reichsbank, it needs to be said that it formally and theoretically could access these accounts without any special restrictions. However, given that all the management of the National Bank was in the hands of the Special Representative of the RB and the Reich’s Deputy Minister of the Economy, NBBM officials did not decide in practice how these accounts were used. Thus, the state after the liberation the Czechoslovak side explained to the Tripartite Commission (in their answer to question no. 4) that the NBBM again changed its name and again became the Czechoslovak National Bank, while the SNB continued its activities in Slovakia. By Decree of the President of the Republic No. 139 Coll. of Laws and ˇ Decrees of 19 October 1945, the SNB was merged with the NBCS and its headquarters in Bratislava became a Regional Institute of the ˇ Thus, the competence of the NBCS ˇ was again expanded over NBCS. the whole territory of Czechoslovakia. Paragraph no. 5 of Act No. 139 authorized the Czechoslovak government to move towards merging the assets of both parts of the currency issuing institute. On 11 March 1948, i.e. two weeks after the communist coup, the National Assembly of the ˇ according to Czechoslovak Republic ratified a new law on the NBCS, which the bank lost its character as a joint-stock company and became a state institution. Paragraph no. 39 of this Act of 11 March 1948 stipulated that from the date of its entry into force, all rights and obligations

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will be transferred on the basis of legal succession without any liquidation ˇ 40 to a new NBCS. A new request of the Tripartite Commission for additional information was submitted the day after the last Czechoslovak response, that is, on 10 April 1948. In it, understandably, the commission did not respond to the last Czechoslovak reply; this was not even possible for time and technical reasons, but it did refer to the Czechoslovak letter of 12 January 1948 (in which the Czechoslovak side provided information on 1,008.9147 kg of Czechoslovak gold managed by Škoda Works and the Armoury), as well as at its request of 18 February 1948, in which it sought further details on the compensation provided by the Germans in connection with an illegal transfer. In a letter dated 10 April 1948, the commission stated that the documents thus far delivered permitted it to state that the supply of gold by the Škoda Works and the Armoury to the NBBM, furthermore, the keeping of this gold in this bank and the additional depositing of this gold in the Reichsbank led to the performing of certain accounting formalities by the NBBM. The commission wanted to know in as much detail as possible the accounting operations that the NBBM was referring to, and several methods could be used for this: – either the gold was posted to the accounts normally held as an asset in the bank balance sheet (in which case what were these accounts and what was the counterpart in the balance sheet liabilities), – or the gold was entered on accounts not kept on the balance sheet, but these accounts were kept in duplicate, – or there were no entries in the accounts in the actual sense of the word for benefit or burden, but only entries in one or more books, normally serving to monitor transitional values, – or a mix of the mentioned methods was used. The Tripartite Commission requested an exact description of the method used, specifying the dates when the entries were made in the accounts or books. In addition, the commission stated, as was assumed from previous Czechoslovak documents, the payment of the consideration in gold (made in crowns by the NBBM in favour of the Škoda Works and the Armoury, and in the Reichsmarks by Reichsbank in favour of the 40 AMZV CR, ˇ f. MPO, Dokumenty k…, pp. 143–148, m. no. 679/48 H/Št.

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NBBM) was recorded on the NBBM’s accounts. And in this case, too, the commission requested exact information on all the entries made in this regard, as well as on the use of the debtor and creditor accounts and the dates of the debts and loans.41 Celestýn Šimr responded on 3 June 1948 on behalf of the Czechoslovak government to the commission’s request of 10 April 1948. He stated that the forced transfer of the “autonomous” gold first happened in three instalments to the NBBM account, one on 20 August 1940 (16,203,257.50 Kˇc) and two on 26 August 1940 (12,429,160.75 and 3,630,000.00), for a total of 32,262,418.25 Kˇc to the account named “Items not accounted for on a reciprocal basis”. Certification and verification of the exact weight of the gold then followed. Thus, the gold was transferred back into the property of the National Bank. Aside from this, the NBBM credited to the good the exchange value to the giro account of both companies (Škoda and the Armoury), which was recorded in their account books. Deposits in the Giro account representing a debit item (debits) for the National Bank were made at the same time as the credit item (gave).42 As Šimr again told the commission on 9 April 1948, during the occupation the Reich’s special representative at the NBBM had the exclusive right to decide and order all transactions relating to gold and foreign currencies. In this sense, as this gold was still in the possession of the Škoda Works and the Armoury, he previously gave instructions that it be delivered to the NBBM and then be issued by the NBBM to the Reichsbank as soon as it had been received. This clearly indicated that the account consisting of the relevant gold deposits at the NBBM was expressly intended for the Reichsbank in Berlin and that the gold was registered in a sub-account entitled “Temporary Settlement of Assets Abroad” (this happened on 31 August 1940) and from it to the “Unminted Gold” account. The exact amount was 32,327,776.05 Kˇc. The difference between the amount deposited with the Reichsbank versus the amount in the National Bank was due to the difference in weight when certifying the gold in question.

41 AMZV CR, ˇ f. MPO, Dokumenty k…, pp. 151–152, letter from the Secretary General of the Tripartite Commission, J. A. Watson, to the Plenipotentiary Minister, C. Šimr, dated 10 April 1948, no. CC/Cz 362. 42 NAR, f. TGC, box no. 17, No. 989/48, 3 June 1948.

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On 4 September 1940, the “autonomous” gold was moved to the Reichsbank in Berlin, and the Reichsbank gave the NBBM 2,729,079 Reichsmarks on the “Hauptkonto – Reichsbank” account as the exchange value of this forced transfer. Šimr ended his elaboration as follows: “Allow me to express the fact that the transfer took place on the basis of an order and under the control of an authorized representative of the RB in the NBBM, who gave the order verbally to the representatives of the National Bank. Given the fact that after the death of the director of the National Bank Dr. (Václav) Sadílek, the officials of the National Bank were monitored by the Gestapo, no detailed report on the transaction was possible”.43 If the Czechoslovak side hoped that the Tripartite Commission could soon end its “informational” requirements regarding Czechoslovak gold, namely in the belief that it had already submitted and explained all relevant information, the near future confirmed otherwise. As early as 5 May 1948, the new Secretary General of the Tripartite Commission, John A. Watson, addressed a new challenge to C. Šimr. In the introduction, he stated that the Czechoslovak side had provided additional documents related to the sale of 12,768.9601 kg of pure gold to the Reichsbank, withdrawn from the “Sonderlagerung” account, into which the RB had deposited 23,087.3040 kg of pure gold on behalf of the NBBM, which corresponded to the weight of Czechoslovak gold held in the BOE in London and transferred under the name of the RB to the BOE. In the view of the Tripartite Commission, it appeared from the documents provided that, in return for the sale of that 12,768.9601 kg of gold, the Reichsbank had registered 35,338,829.38 Reichsmarks to the good of the account “RM – Account II – Devisen” of the NBBM. This enabled the NBBM to finance from its own resources foreign exchange liabilities following from the import of goods, the majority of which were intended for the needs of German companies and the German population. The commission had examined all the Czechoslovak documents provided on this matter and, in order to decide responsibly on the matter, it requests additional detailed reports and verifiable documents from the Czechoslovak side:

43 NAR, f. TGC, box no. 17, ibid.

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– detailed and verifiable documents capable of proving that the foreign currencies (dollars, pounds, etc.) purchased to debit the “RM – Account II – Devisen” account were in fact fully spent on the importing of goods (specify exactly the goods in question), – detailed and verifiable documents capable of proving that the import of the said goods was made available to the German factories and the German population, – an estimate of the amount of free Reichsmarks withdrawn from the “RM – Account II – Devisen” account to cover imports for the needs of German factories and the German population, – exact data on determining the imports financed by free Reichmarks not included in this estimate. The Tripartite Commission further stated that according to the last statements of the Czechoslovak government, this estimate corresponds to the greater part, and not to the entire amount, of the free Reichmarks coming from the sale of 12,768.9601 kg of gold.44 After this request from the commission, the Czechoslovak side chose a different approach. It did not reply in writing; it requested a personal hearing instead. Therefore, on 10 May 1948, the financial expert of the Czechoslovak delegation to the IARA, Ing. Jaromír Hollmann, visited the previous Secretary General of the commission, Michael Hirigoyen.45 Hollmann patiently explained, referring to a Czechoslovak letter of 9 April 1948, in which it was stated that the NBBM was in German hands during the occupation, that import permits were issued by an office led by a German, that many of the imported goods paid for in foreign exchange never entered the territory of the Protectorate at all. If the goods or raw materials did arrive, their distribution was decided on by the German occupation authorities, without regard for the needs of 44 AMZV CR, ˇ f. MPO, Dokumenty k…, pp. 177–178, letter from the Secretary General of the Tripartite Commission, J. A. Watson, to the Plenipotentiary Minister, C. Šimr, dated 5 May 1948, no. CC/Cz 399. 45 Jaromír Hollmann resigned as financial expert at the IARA in Brussels in December 1949. His resignation was preceded by the fact that he refused to sign the greeting that the staff of the Czechoslovak Embassy and the Office at the IARA sent to J. V. Stalin. The embassy in Brussels cited his refusal to attend political training as the official reason ˇ ˇ report of Ambassador Dezider Rakšáni from for Hollmann’s emigration. ACNB, f. NBCS, Brussels on 10 December 1949 to the Ministry of Foreign Affairs in Prague, item no. 667/duv/49. ˚

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the domestic economy. Hollmann also recalled that the gold mentioned in the commission’s letter of 5 May 1948, was originally deposited in the BOE by the Czechoslovak National Bank, which tried to prevent it being transfer to the Reichsbank and informed the British ambassador in Prague in confidence about the forced order. In his view, this fact also showed that Czechoslovakia was not interested in selling its gold. Hollmann further sharply challenged the wording used by the commission that the foreign exchange obtained for gold actually allowed the National Bank to finance its liabilities with its own resources. It was the word “allowed” that troubled him, as it evoked the idea that the Czech side came out with the initiative of selling gold and, moreover, did so voluntarily. On the contrary, Hollmann claimed, it was forced to do this or was obliged to finance imports with its own resources.46 The TGC did not take the Czechoslovak arguments into consideration but further insisted on the delivery of detailed and verifiable documents. Furthermore, on 13 May 1948, it added three more demands, when, referring to the previous Czechoslovak declaration—“After long negotiations with the Reichsbank, the National Bank of Czechoslovakia could not enforce its objections to German demands, not even in regard to the National Bank’s overall obligation in relation to the banknotes or to the payment of these banknotes in gold” 47 —it requested exact information on the negotiations with the Reichsbank and on the objections raised by the National Bank. It also requested an explanation of the conditions and monetary consequences of the rejoining of the Sudetenland to Czechoslovakia after the war and the conditions and monetary consequences of the emigration of former Czech nationals from the Sudetenland to Germany after the war. Here, the Tripartite Commission requested photocopies and translations of official texts, laws and decrees, further supplemented by numerical data.48 The Czechoslovak side at first tried to explain its position again by negotiating on 19 May 1948 in Brussels on the grounds of the commission. The discussions took place in the “trio” of Hollmann—Watson—Hirigoyen. Hollmann demanded justification for 46 AMZV CR, ˇ f. MPO, Dokumenty k…, pp. 179–180, record of the discussion of Ing. Jaromír Hollmann with M. Hirigoyen from 10 May 194. 47 AMZV CR, ˇ f. MPO, Dokumenty k…, p. 185, letter from the Secretary General of

the Tripartite Commission, J. A. Watson, to the Plenipotentiary Minister, C. Šimr, dated 13 May 1948, no. CC/Cz 401. 48 AMZV CR, ˇ f. MPO, Dokumenty k…, ibid.

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these questions, because the Czechoslovak side had already demonstrated ownership of the requested gold as well as its unlawful transfer (the transfer as a direct result of the Munich Agreement, which was never recognized by the US government and declared “null and void” by all the governments comprising the commission). He likewise patiently explained the Czechoslovak position on the issue of the monetary context of the Sudetenland, the issue of the circulation of the Reichsmarks in this region, the issue around the integration of the Protectorate of Bohemia and Moravia into the economy of the Reich, etc. Watson, however, insisted on a written reply with the relevant documents.49 The replies of the Czechoslovak government to the commission’s three questions were prepared by the deputy Czechoslovak delegate to the IARA, Miloš Novák, on 14 July 1948. This was yet again a detailed report, accompanied by copies of documents related to the issue. At the same time, it can be considered as one of the last documents the Czechoslovak side used to finalize the explanatory marathon of questions and requests from the Tripartite Commission. Regarding the first point—the question of the transfer of 14,536.2010 kg of pure gold to Germany, which was transported to the RB in March 1939 as payment for Czechoslovak banknotes withdrawn from circulation by German authorities in Czechoslovak territory occupied by German troops in the autumn of 1938 after Munich—the Czechoslovak side repeated and emphasized the fact that these banking negotiations were a direct consequence of the Munich Agreement concluded by the UK, France, Italy and Germany. At that time no other choice remained for Czechoslovakia but to give in to German pressure (also under the threat of isolation) and to accept the conditions imposed by the Reich. The Czechoslovaks attached this ˇ to the document as evidence. It also attached a letter from the NBCS RB dated 31 October 1938, which states that claims that existed against foreigners as of 1 October 1938 in favour of persons residing in Germanoccupied territories under the Munich Agreement were demanded by the Reichsbank in the same order as the transfer of the gold in question. ˇ financed with its own foreign exchange reserves Even though the NBCS the purchase of raw materials intended for the processing goods that went for export, the foreign exchange profit from these exports belonged to the

49 AMZV CR, ˇ f. MPO, Dokumenty k…, pp. 186–190, record of the discussion of Ing. Jaromír Hollmann with representatives of the Tripartite Commission of 19 May 1948.

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Reichsbank. Thus, the foreign exchange losses suffered by the National Bank amounted to a sum of 1.5 billion crowns. Regarding the issue of monetary conditions and the consequences of reattaching the Sudetenland to the Czechoslovak Republic after the war, the Czechoslovak side here explained patiently that no such “reattaching” took place, and the facts were as follows: after Munich, Germany occupied part of what it called the “Sudetenland”. The Munich Agreement was never recognized, and the Allies, too, labelled it as null and void. On 15 March 1939, the German military occupied the rest of Czech territory (the Protectorate of Bohemia and Moravia) and recognized the independence of Slovak territory. After the liberation, the government in exile returned and resumed power over the entire territory of the pre-Munich Czechoslovakia, without the need for any act of accession. The monetary situation in the restored republic was complicated after the war. The Czechoslovak economy, stable prior to the war, was destroyed, and several forms of money circulated on Czechoslovak territory. In the autumn of 1938, these were occupation marks, or Reichsmarks, in the “Sudetenland”. In the area occupied after 15 March 1939, in the Protectorate of Bohemia and Moravia, the Reichsmark and the Protectorate crown circulated, as did the occupation mark for some time, along with Soviet army vouchers and old pre-war Czechoslovak banknotes. In Slovakia Slovak crowns and Soviet army vouchers were in circulation, and from 1938 to 1939, the Hungarian pengö also circulated in the lands occupied by Hungary. Keeping this situation in mind, it was necessary to unify the currency after the war (after 31 July 1945, the Reichsmark was withdrawn from circulation from the entire territory) and currency unification took place throughout the Czechoslovak Republic in November 1945. The Czechoslovak side responded to the TGC’s third question (on currency conditions and the consequences of the emigration of former Czechoslovak nationals from the Sudetenland to Germany after the end of hostilities) by stating that the Czechoslovak monetary situation, or the legal measures applied to the entire territory of the Czechoslovak Republic, did not take this emigration into account. The Reichsmarks taken out of circulation were used in the emigration of former Czechoslovak nationals to Germany. These emigrants were paid amounts in Reichsmarks that were determined by an agreement concluded by the Allied authorities of the occupation zones to which the concerned persons ˇ records, 1.2 billion Reichsmarks were paid to moved. According to NBCS these people at a set exchange rate of 1:10, which represented 12 billion

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Czechoslovak crowns. In conclusion, they stated that the liberation of the Sudetenland did not mean any benefit in foreign exchange or gold for the ˇ On the contrary, foreign exchange was confiscated by the ReichsNBCS. bank without compensation, 1.2 billion Reichsmarks were made available to emigrants, and Czechoslovakia’s gold was still in Germany.50 After the sending of this Czechoslovak document, the Tripartite Gold Commission fell silent. Additional negotiations and correspondence appeared only sporadically. New factors and determinants undoubtedly entered the gold game. This opinion was confirmed by the meeting of the new Czechoslovak financial expert at the IARA, Oldˇrich Kulhánek, and the Secretary General of the Tripartite Gold Commission, John A. Watson, in Brussels on 14 February 1950. The record of Kulhánek’s meeting first maps the correspondence between the TGC and the Czechoslovak side in December 1949, in which the commission requested additional documents in order to continue its study of the Czechoslovak government’s request for ˇ during the war. The proportional restitution of gold lost by the NBCS National Bank answered the Tripartite Commission’s questions in a letter dated 12 December 1949. In the meantime, the Czechoslovak delegate to the IARA, at the suggestion of a member of the Wingate Commission, asked the National Bank in Prague to send an expert to Brussels who would provide the commission with further necessary explanations. The talks of the Czechoslovak expert, Dr. Ing. H. Hajtl, took place on the grounds of the commission on 14 February 1950 with the participation of O. Kulhánek. The commission identified the issue of the receipt, use and charging of 10 million British pounds in the autumn of 1938, which the British government had made available to the Czechoslovak government, as a fundamental problem. During the discussions with the commission, the Czechoslovak side explained that this issue has no direct or indirect link with the Czechoslovak claims for the restitution of monetary gold in accordance with the provisions of part III of the Paris Reparations Agreement. In the meeting minutes, Kulhánek noted that he got the impression from the debate with Secretary General Watson that the commission is trying “to delay a decision on the Czechoslovak government’s

50 AMZV CR, ˇ f. MPO, Dokumenty k…, p. 191 et seq., 14 July 1948, m. no. 1272/ 48 IARA H/Št.

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request under the pretext of direct examination of the facts”.51 Watson refused to comment on the other issues and requested additional time to evaluate Czechoslovakia’s request for gold. The talks and written dialogue on the level of questions and answers between Czechoslovakia and the Brussels Tripartite Commission for the Restitution of Monetary Gold developed negatively for Prague. Out of the more than 45 tonnes requested, it had just over 6 tonnes in its safes at the beginning of 1950, and what’s more, it didn’t even know what share of the “pool” it would still have.

51 ACNB, ˇ ˇ sign. NB-PXVII-332/5, report on the meeting of O. Kulhánek f. NBCS, with Secretary General of the Tripartite Gold Commission J. A. Watson in Brussels from 14 February 1950.

CHAPTER 3

The Gold (Brussels and Washington)

Understandably, the Secretary General of the Tripartite Gold Commission, John A. Watson, also informed the US State Department about the discussions between Prague and Brussels, and they instructed him on how to proceed. On 7 July 1950, a special team of State Department financial experts, led by Otto Fletcher, drafted a comprehensive memorandum, which was meant to be a kind of manual for Watson in Brussels. This American memorandum divided the Czechoslovak demand for the return of 45,008.2784 kg of gold into the following items: A. 6,375.8588 kg in coins, part of the Czechoslovak monetary reserve, physically transferred by the Germans to the RB in Berlin, the Czechoslovak demand acknowledged and a proportional part already delivered to Czechoslovakia. B. 14,536.2010 kg in gold bars as coverage for banknotes circulating in the Sudetenland, transferred to the RB for this purpose; the request was granted to Prague at the 85th meeting of the TGC on 15 October 1949; Prague has not yet been informed of its allocation and none of this gold has been supplied yet. C. 23,087.3040 kg, gold held by Czechoslovakia on the BIS account in the BOE (the Basel gold); transferred by Prague from the BIS account to the RB account under pressure from Germany. As

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Michálek, Nazi Germany and the Role of the US in the Fate of Czechoslovak Monetary Gold, https://doi.org/10.1007/978-3-031-38758-6_3

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compensation for this gold, however, the Reichsbank deposited the equivalent of gold in the Reichsmarks in favour of the NBBM. American financial experts divided this Czechoslovak request on the basis of documents as follows: 1. 6,920.5597 kg, left in a separate RB account, confiscated by the US military at the end of the war along with other RB gold and transferred to the “pool”. This part of the Czechoslovak request was subsequently approved together with the proportionally supplied gold coins. 2. 12,768.9601 kg was sold back to the RB against free Reichsmarks. Free Reichsmarks could generally be used for obtaining gold and hard currency. However, the experts were unable to assess whether the NBBM could actually use the free Reichsmarks and how many free Reichsmarks were spent, especially whether the goods purchased abroad were used for the benefit of the Czech economy. 3. 3,397.7842 kg represents the gold bars purchased by the Slovak National Bank from the RB, which were deposited with the Swiss National Bank in Bern. After Germany’s defeat, they were made available to the Czechoslovak Republic by Switzerland. This gold, which the SNB acquired with Reichsmarks from mutual Slovak-German trade, or could represent the net proceeds from the many gold transactions of the NBBM and the RB, for which the NBBM used free Reichsmarks. The sum of this part from the weight of the 23 tonnes is not clear. D. 1,008.9146 kg of gold obtained from the Škoda Works for their own business under licences from the Czechoslovak government. American State Department financial experts do not consider this gold as monetary gold and requests for its return will not be accepted.1 From the above-stated opinions of the State Department, it followed that the Czechoslovak Republic would be awarded 43,999.3638 kg of monetary gold from the gold “pool”.

1 NAR, f. TGC, box no. 18, Memorandum on the Czechoslovak Gold Claim, 7 July 1950.

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The delaying tactics of the commission, on the initiative of the State Department, not to inform Prague and to delay the issuing of the gold were confirmed by further negotiations of Czechoslovak representatives in Brussels in the autumn of 1951. The chairman of the commission initiated talks with Czechoslovak experts from the State Bank of Czechoslovakia ˇ 2 Ing. Julius Hájek and Dr. Karl Popel, on 21 November 1951. (ŠBCS), The fact of conscious stalling from the side of the commission was actually confirmed by the commission’s new questions, which the Czechoslovak side had actually answered and documented in 1947–1948. According to the meeting minutes, the chairman of the commission, Ronald Wingate, verified the commission’s opinion regarding the relationship between the ˇ the NBBM and the SNB— three banking entities subjects—the NBCS, or how these banks operated under direct German control. He further confirmed the commission’s opinion that the SNB did not take over any ˇ while the NBBM did so. gold or foreign exchange reserves of the NBCS, Another question the TGC had was related to the transfer of almost 1,009 kg of gold from the Škoda Works and the Armoury to Berlin, by which all the gold of the NBBM, whether kept at home or abroad, was allegedly transferred to Germany, with the exception of a few gold coins. Czechoslovak experts, referring to the documents already submitted, stated that it was not the case, that some of the National Bank’s gold remained at home and abroad. They again repeated to the commission the steps of the Czechoslovak government in Czechoslovak–Swiss negotiations in the spring of 1946, or how seven tonnes of “Slovak” gold ˇ which happened on the basis of national were released for the NBCS, laws regulating the issue of succession to the SNB and the NBBM (the mentioned Act No. 139/45 Coll. and the decree on the transitional ˇ regulation of the legal conditions of the NBCS). Another problem for the commission was the change of depositors on the Czechoslovak side in the issue of gold. This was also an issue that the Czechoslovak side had already explained. The commission noted that

2 Extensive centralization of state banking began after the establishment of the communist regime in Czechoslovakia. By Act No. 31 of 9 March 1950, the State Bank of Czechoslovakia was established, which on 1 July 1950 took over all rights and obligations ˇ the Živnostenská banka, the Poštová sporiteˇlnˇ a and the unified Slovenská Tatra of NBCS, banka (created by the merger of Slovenská banka and Tatra banka). It thus became the only banking office in Czechoslovakia that operated as an issuing bank as well as a bank for the provision of loans and as a clearing house.

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ˇ and the transfer of 14,536.201 kg of gold was a transfer from the NBCS ˇ represented a transfer that was related exclusively to the NBCS, while ˇ the transfer of 23,087,304 kg of gold was a transfer from the NBCS; however, agreements followed from it that were associated with this gold. The RB acted, now in the name of the NBBM, and two later transfers, of 6,375.8588 kg of coins and 1,008.9146 kg of bars of the “autonomous” gold, took place fully in the name of the NBBM. The Tripartite Gold Commission asked for an explanation of how the name of the depositor ˇ experts Hájek had changed in regard to this 23,087 kg of gold. ŠBCS and Popel again explained to the TGC that the transfers of 14,536 kg ˇ because and 23,087 kg of gold were still formally made by the NBCS, at that time the NBBM did not legally exist, and there was no difference between these transfers, as they were the result of a unilateral violent act by Germany.3 After answering all of the commission’s questions, the Czechoslovak experts began to ask questions themselves: whether the circumstances of the Czechoslovak claims were now sufficiently clear and understandable for the commission (allegedly yes); whether the commission considered the Czechoslovak claims as correct and undeniable (the commission refused to answer); whether at the end of the investigation the Czechoslovak side will be informed how the Czechoslovak claims were evaluated (likewise without a specific answer from the commission); when would the Czechoslovak claims be definitively decided on (the commission’s answer anticipated in the middle of 1952); whether the then Czechoslovak side can count on the return of gold in the summer of 1952 (answer that this is not a matter for the commission, but for the three governments); and what percentage will the governments be allocated (answer, that the amount of advances already given to individual countries cannot be taken into account for any calculation).4 From the above-mentioned answers of Mr. Wingate to the Czechoslovak delegation in Brussels, both general and non-binding, it clearly followed that it did not matter when the commission completed its “investigative” work. The political decision of the governments of the three great powers—the US, the UK and France—would be key.

3 AMZV CR, ˇ f. MPO, Dokumenty k…, diel II., 1949–1957, pp. 58–63, Report on the business trip of Ing. Julius Hájek and Dr. Karel Popel from the State Bank of Czechoslovakia to Brussels on 17–26 November 1951. 4 AMZV CR, ˇ f. MPO, ibid.

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To the end of 1952, the Tripartite Gold Commission carried out six official preliminary allocations from the total restitution of monetary gold, the amount of which was not actually announced. For Czechoslovakia, its share from the start of May 1948 represented 15% of the claims. According to the commission’s announcement to the Office of the Delegate of the Czechoslovak Republic to the IARA in Brussels, the commission had allocated in advance gold weighing a total of 208,008.27845 kg. Nine countries received allocations from this weight as follows: the Czechoslovak Republic 6,074.1564 kg, the Republic of Albania 1,121.4517 kg, Belgium 90,649.8374 kg, the Netherlands 66,536.7797 kg, Luxembourg 1,929.4999 kg, Italy 27,862, 2013 kg, Yugoslavia 266.6766 kg, Austria 13,530.2064 kg and Greece 37.8319 kg.5 Overall, this involved nine European countries. Other countries asserted claims under the restitution of monetary gold was officially announced by the commission. Unofficially, however, Poland, for example, was known to have submitted claims, but it did not receive any allocation.6 It was likewise known, again unofficially, that France received an allocation of 92,500 kg in October 1947 and another 25,000 kg of gold in March 1952. France acquired these 117.5 tonnes of gold as partial compensation for 203 tonnes of gold that it had returned to Belgium as its pre-war deposit after the war. This deposit was captured by the Germans during transport to Africa and therefore fell into the category of gold looted by the Germans. The Tripartite Commission, however, did not report these French deposits to the Office of the Delegate of the Czechoslovak Republic to the IARA as additional deposits. This invited the suspicion that the French allocations did not go through the commission or that they were not part of the common “pool” that

5 The officially set allocations determined by the TGC were: 16 October 1947—Belgium 90,649.8374 kg, the Netherlands 35,890.5740 kg and Luxembourg 1,929.4999 kg; 16 February 1948—Albania 1,104.2606 kg, Czechoslovakia 6,074.1564 kg and Austria 7,596.1363 kg; 27 May 1948—Italy 27,862.2013 kg; 30 June 1948—Albania 17.1911 kg, Austria 5,934.0701 kg, the Netherlands 30,646.2057 kg and Greece 37.8319 kg; 17 July 1948—Yugoslavia 215.2303 kg; 18 February 1949— ˇ Yugoslavia 51.4463 kg. National Archives of the Czech Republic (NA CR), Prague, f. Political Secretariat of the Central Committee of the Communist Party 1951–1954 (02/ 5), zv. 49, a. j. 134, point 15, V. Široký’s report of 11 December 1952 on the restitution of monetary gold. 6 Poland acceded to part III of the Paris Reparations Agreement only with the Protocol signed on 6 July 1949 in London.

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was to be distributed as percentages. Keeping in mind the facts, i.e. that the French allotment was not part of the common “pool” and that the Czechoslovak Republic received less than 15% of its recognized claims for gold, although the commission had said that the return of gold would be around 50% for all countries, the Czechoslovak side at the end of 1952 perceived this as a manifestation of unjustified discrimination. It wanted to defend itself against such discrimination with notes of protest addressed to the commission (before the commission decided on the amount of the “Tripartite” gold) and by diplomatic channels towards the US, the UK and French governments (after the commission decided on the amounts of “Tripartite” gold).7 Such steps, however, could only have a political and not a practical effect. And the subsequent steps that Czechoslovakia took must be perceived first and foremost politically—Prague proposed involving the USSR in the problem, namely by calling for its help, or by asking the government of the USSR to consider how it can help Czechoslovakia. This line—via the Soviet Union—turned out to be problematic, because the legitimate question was raised as to how the restitution of monetary gold resolved by the Paris Reparations Agreement fits into the overall complex of international legal reparations and restitution agreements, especially what the relationship of the Tripartite Gold Commission was with the Yalta and Potsdam agreements and the Allied Control Council in Berlin. There was no direct relationship between the Potsdam Agreement and the Tripartite Commission. The commission was a special international body established for the restitution of monetary gold under part

7 The draft of a note addressed to the commission was prepared by the Ministry of Foreign Affairs on 11 December 1952, and Viliam Široký submitted it to the Political Secretariat of the Central Committee of the Communist Party for approval. In it, he referred to the meeting in Brussels of the experts of the State Bank of Czechoslovakia at the office of the commission from November 1951, as well as to the Czechoslovak request of 25 September 1952, calling on the commission to provide additional allocations of gold. At the same time, he asked the chairman of the commission, Ronald Wingate, to interpret for the commission the desire of the Czechoslovak government, “that the total value of monetary gold to be distributed finally be announced to all governments with a claim to restitution, and likewise the amounts of the claims of individual countries sharing in the total amount be announced to these governments, and that this be done before the commission’s decision on the amount of shares which the commission recognizes as justified to be allocated is announced". ˇ NA CR, f. Political Secretariat of the Central Committee of the Communist Party 1951–1954 (02/5), vol. 49, a. j. 134, point 15, annex to no. 5655.

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of the reparations agreement, entrusted by the three Western powers. The reparations agreement itself was specified from the principles of the Potsdam Agreement of 1 August 1945, specifically the part of it dealing with German reparations. These basic principles, laid down by Potsdam Agreement, were outlined in the main features of the Yalta Conference in Art. 3 on reparations. The USSR, which was a signatory to the Potsdam Agreement and a participant at Yalta, was interested in the fulfilment of these international obligations. The fact that in Art. 10 of the Potsdam Agreement, the USSR expressed a lack of interest in the restitution of monetary gold found in Germany did not mean it had completely given up on this topic.8 The fact that the USSR relinquished its own claims to monetary gold did not mean, in the view of Czechoslovak reasoning, that it could not pursue its interest in fulfilment of all the principles of Yalta and Potsdam, and thus in the fair distribution of monetary gold without discrimination. 8 The Potsdam Agreement, Section III, contained inter alia the following provisions related to German reparations:

1. The reparation requirements of the USSR should be met by the removal of goods and equipment from the Soviet occupation zone in Germany and from suitable German foreign assets. 2. The USSR undertakes to satisfy Polish reparation claims from its own reparation share. 3. The reparation claims of the United States, the United Kingdom and other states eligible for reparations will be paid from the Western occupation areas and from appropriate German foreign assets. 8. The Soviet Government waives all reparation claims in respect of the shares of those German businesses located in the western zones of Germany, as well as German assets in all states, with the exception of those specified in item no. 9. 9. The governments of the United Kingdom and United States waive reparations in respect of shares in German companies located in the eastern occupation zone of Germany, equally German foreign assets in Bulgaria, Finland, Hungary, Romania and eastern Austria (originally the Eastern Mark of the Reich, i.e. the Reichoccupied Austria). 10. The Soviet government makes no claim on the gold confiscated by the Allied forces in Germany. From the mentioned text, it follows that the substance of German reparations was divided into two territorial areas and two groups of recipients of German reparations. One territorial area was assigned to each group of beneficiaries—the area of the Soviet occupation zone of Germany for the reparations of the USSR and Polish claims, and the area of the western occupation zones of Germany for the reparations of the US, Great Britain, France and others eligible for reparations. Czechoslovakia thus got into this second group of reparations recipients, while Albania fell from the Soviet bloc.

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There was also no direct relationship between the Tripartite Commission and the Allied Control Council (ACC) in Berlin. The ACC, however, of which the USSR was a member, had in its powers the issuing of guidelines for carrying out the restitution agenda in Germany, as confirmed by its directives of January and March 1946 relating to the exercise and interpretation of restitution. The fact that German restitution was entrusted to three delegated powers in the TGC still did not mean that this question could not be discussed in the ACC forum, if it became clear that the TGC, or the three powers, did not maintain a fair procedure for the distribution of monetary gold, as stated in the preamble to the reparations agreement, because by its nature the ACC had the right to deal with restitution as such. For membership in the ACC, not even the British position at the Paris Reparations Conference, presented by Sir David Walley, that the Potsdam Conference left the gold to the Western powers when the USSR relinquished claims to gold found in Germany and that the ACC thus had nothing to do with the matter, did not change anything. The ACC did not have to consider the matters of the Tripartite Gold Commission so long as the resolution of the gold restitution issues by the three powers and the TGC did not give rise to complaints of discrimination. If, however, such complaints did arise, the Prague considerations continued and the ACC became a higher forum on whose grounds these cases could be discussed. In this matter, however, it depended on how the government of the USSR assessed the situation and how, whether in terms of international law or politically, it would be willing to provide assistance to Czechoslovakia. Whether or not the USSR at this time actively intervened in the question of discrimination against the division of gold and supported the Czechoslovak position is not found in the available archival material. Whether the Czechoslovak side really did ask for such support is debatable. It can rather be assumed that it did not complicate some open bilateral Czechoslovak-American problems even more so. The fact remains that it reached the level of a protest note to the Tripartite Gold Commission and diplomatic steps against the UK and the US. In a note to the Chairman of the commission, R. Wingate, from 15 October 1954, it again asked for the return of the remaining share of the gold. It attached a memorandum to the request, in which it referred to the commission’s announcement that the documentation and verbal clarification provided by the Czechoslovak government were labelled as sufficient for the commission’s needs. The reply of the Secretary General

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of the commission, J. A. Watson, addressed on 20 October 1954 to the Czechoslovak delegate to the IARA, Jan Obhlídal, was edited by State Department officials and was general and evasive: the work of the commission had taken longer than was originally expected, which caused unforeseen circumstances out of the commission’s hands, and a delay was caused in consequence of the complexity of the issues, which were to be assessed by the commission, and it labelled as the most complex those relating to the requests submitted by the Czechoslovak government. The amount of 6,074.1564 kg of gold which the commission had issued to the Czechoslovak government during the preliminary allotment was allegedly, under the existing conditions at the given time, proportional to the amount issued to other applicants. As soon as the commission has the opportunity to make another statement on the matter, the note said, it would do so immediately.9 The commission’s position, expressed in the note, was clear: the Tripartite Gold Commission does not decide about the allocation, the when and how; that is decided by the government in Washington, with the support of Paris and London. In effect, this only repeated what had been known for several years, i.e. that the commission is only a technical body of the three powers, with zero decision-making power. However, there was no harmony or a common view of Czechoslovakia’s share in the restitution in this period even between the great powers. What was the position of France in the early 1950s? At first, the government in Paris did not agree with the allocation of gold to Czechoslovakia. This was confirmed by a note from the Quai d’Orsay (the French Ministry of Foreign Affairs) to the US State Department on 9 October 1951, in which they justified their stance of rejection by stating that the supply of gold would have “serious consequences as an opportunity an increase of Czechoslovakia’s military potential”.10 In 1953, however, Paris agreed with the British position that the work of the TGC needs to be finished and the gold distributed. Paris’s change of course on this issue was influenced by efforts to reach an agreement with Czechoslovakia regarding bilateral open financial and trade issues. 9 NAR, f. TGC, box no. 2, Department’s revised text of Mr. Watson ‘s draft letter to the Czech Delegate. 10 NAR, f. TGC, box no. 6, Department of State, Secret Security Information, 2/1/

52.

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The accommodating stance of London indicated an ending to the commission’s work and allocating the gold to all eligible applicants, including Czechoslovakia, had in the background the resolving of the UK’s own relations and unfinished trade and debt issues with Prague. Whether the common front of London and Paris would be sufficiently persistent and strong enough to change the negative stance of the US was questionable. Apparently, it wasn’t; the US did not change its position. However, the UK and France at least encouraged Washington to communicate more intensively with them. Thus, the impetus for the State Department was a British note from the Foreign Office of 18 April 1954, addressed to both Paris and Washington, in which the British expressed the view that there should be no more delay in ending the work of the TGC and that the UK was ready to acknowledge and sign off on Czechoslovakia’s claim to gold. The note expressed the hope that the US State Department would also be willing to agree and send instructions to its own representative on the commission that the awarding of the gold could be signed off on and published. The US responded to this by calling a meeting at the State Department on 28 April 1954, with the participation of the British and French ambassadors. They agreed that the time had come to sign off and make public a decision, but, as was known to the British and French governments, the US had for years been trying to gain a settlement of its compensation demands and claims and therefore was determined not to sign off on a share for Czechoslovakia. They proposed a postponement. The British representative countered that London also has issues with Czechoslovakia, but Her Majesty’s government is interested in getting the Prague government to accept its share of gold as soon as possible, so that it will then be willing to pay its debts to the UK. He asked when the US government would instruct its TGC representative to consent with the Czechoslovak share of gold. The reply of State Department officials (Otto Fletcher and Harold Vedeler) was that they did not and will not send such a request; let the TGC remain in operation, at least on paper, until everything, including the Czechoslovak request, was resolved.11 London and Paris had been pursuing their own interests for at least two years, attempting to finish their own open questions and problems with Prague. However, they were not an equal partner for Washington

11 NAR, f. TGC, box no. 2, Memorandum of Conversation, 28 April 1954.

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and were looking for various escape routes; at first, they could not and only carefully explore avenues; they then proposed that the Czechoslovak demand for the return of monetary gold be met. Unsuccessfully. What steps had Prague undertaken? On 2 November 1954, the Czechoslovak government informed the British, French and American governments about activities connected with the restitution claims it had made against the Tripartite Commission. In identical notes, Foreign Minister Václav David asked the governments of the three great powers to instruct their representatives on the commission that restitution was no longer being delayed by the commission.12 The Czechoslovak government resolved to take this step after more than seven years of pointless negotiations with the commission. The French government agreed with the issuing of the gold, but the US and the UK presented different opinions. The British government did not react to the Czechoslovak note of 2 November 1954. However, the British Embassy in Prague did respond on 11 January 1955 to another Czechoslovak attempt—an aidemémoire from 29 November 1954—with a stern rejection to the effect that the issue of monetary gold was the subject of “special negotiations”. Therefore, another Czechoslovak aide-mémoire to the British Embassy in Prague followed, on 28 June 1955, which basically repeated the general and evasive opinion of the TGC from December 1954 regarding the unforeseen circumstances or the most complex issues of Czechoslovak claims concerning the commission’s work. The Czechoslovak side admonished the British Embassy that its right to the return of gold is justified and came about as a result of the flagrant and notorious indirect looting of Czechoslovak monetary gold by Germany after the occupation of the Czechoslovak Republic. Furthermore, the commission supposedly designated the information provided as sufficient and did not request any further documents. This Czechoslovak aide-mémoire hardened the diplomatic language in that it directly blamed the UK for the loss of the gold. In it, they stated that, given that a substantial part of Czechoslovakia’s claims related to the indirect looting of Czechoslovak monetary gold which had been deposited in London through the Basel BIS and which the BOE, in an understanding with the then British government, had transferred to the Reichsbank after the occupation by Germany in 1939, it would rightful for the British representative to dispel all doubts 12 AMZV CR, ˇ f. USA Territorial section—secret (TOT) 1945–1954, box no. 11, m. no. 421.374/54 ABO.

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in the Tripartite Commission that possibly exist in relation to this claim. According to the Czechoslovak document, this would controvert not only the provisions of the Paris Reparations Agreement, but also the basic requirements of decency and justice, if the restitution of monetary gold was denied to Czechoslovakia, which had indisputably suffered damage as one of the first victims of Hitler’s aggression and occupation. If the Czechoslovak Republic were to continue to be denied the restitution of its fair share of monetary gold, the Czechoslovak government cannot in discussions with the British government ignore the fact that the British government, along with the BIS, bears responsibility for the unlawful transfer of 23,087 kg of Czechoslovak monetary gold to the German Reichsbank, and Czechoslovakia has not been compensated for this loss, while the British government favours the claim towards the Czechoslovak Republic to repay the 1939 loan related to the Munich Agreement, as well as the claim for repayment of loans granted by the British government to the Czechoslovak government in London during the war and which would not have been necessary, at least not to the same extent, without the loss of the Czechoslovak monetary gold deposited until 1939 at the BOE.13 A document, which had almost the identical wording as that sent to the UK was handed over by the Czechoslovak Ministry of Foreign Affairs to the US Embassy in Prague on 2 November 1954. The US reacted promptly with a new round of internal discussions and consultations with State Department and Treasury officials, the result of which was the final text of instructions for the American delegate at the TGC in Brussels. The first step was Watson’s response to Czechoslovakia’s demand for early delivery of its share of the gold. As a second step, the State Department proposed sending three separate notes from the three ambassadors to the Ministry of Foreign Affairs in Prague on the same matter. The third was to be a separate American note to the Czechoslovak government calling for the start of a new round of discussions on unresolved mutual financial issues, four of which were the most prominent: the claim for compensation for nationalized and otherwise confiscated property of American citizens and companies in Czechoslovakia, the financial requirements of 13 Regarding the issue of British loans and credits to Czechoslovakia during the war, see ˇ Kuklík, Jan. Do poslední pence. Ceskoslovensko-britská jednání o majtkoprávních a finanˇcních otázkách 1938–1982 [To the Last Pence. Czechoslovak-British Negotiations on Property and Financial Issues 1938–1982]. Prague: Karolinum, 2007, pp. 13–133.

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the American government, the handling of revenues from the sale of a steel-rolling mill and the handling of the Czechoslovak share of blocked monetary gold. Part of the State Department instructions was a memorandum that fulfilled the content of the third step, i.e. of the draft of the American note to Czechoslovakia. It said the strong lever the US held in negotiating with Czechoslovakia was the complete control of the 9 million dollars, deposited with the Federal Reserve Bank, that Argentina paid for the steel-rolling mill. As the second lever, the memorandum indicated the possibility that the US, as a member of TGC, could postpone the announcement of the release of the Czechoslovak share of monetary gold worth about 20 million USD or, if necessary, block the supply of this gold when its allocation is officially announced. “We believe that these two weapons – full control over the resources from the steel rolling mill and partial control over the share of Czechoslovak monetary gold – should be used at this time to reach a settlement for the compensation claims of US citizens, an agreement with the Czechoslovak government to repay the credit for the US military surplus and also the unblocking of US crown accounts. Without wishing to reduce the importance of the surplus credit, the priority is to concentrate especially on the compensation debate, with the hope that once this point is resolved it will help to resolve others. The US will not permit the transfer of proceeds from the sale of the steel rolling mill until an agreement on compensation claims is reached”.14 The memorandum continued further, stating that the use of American control over the Czechoslovak share of gold was problematic due to the current British and French positions. Prague, however, needs to declare a position, even without an explicit public statement, that there is an internal and direct link between its failure to obtain a share of the gold and America’s failure in negotiations on meeting American financial claims and demands. If the Czechoslovak response to the US offer to negotiate a possible agreement on open financial issues is positive, then the commitment of Prague to pay an adequate amount of compensation to American companies and citizens should be the pivotal point in it, and this cannot be less than 25 million USD. Washington proposed to “cover” this payment with revenues from the sale of the rolling mill (9 million USD) and about 16 million USD from the Czechoslovak share of the gold. “If the Czechs

14 NAR, f. TGC, box no. 2, US-Czech financial problems, 12/20/54.

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agree to this approach, then the United States will not withhold its consent to the return of Czechoslovak monetary gold”.15 According to the memorandum, the best thing the US can do is to assure the Czechoslovak government that “if and when” it satisfies American claims, it will directly affect the satisfaction of its “gold” demands, and such a solution would leave it with about 4 million USD in gold. In its conclusion, the memorandum stated that it would then be possible to expand mutual trade, but not to the extent that before the Oatis affair and without renewing the most-favoured-nation status.16 Czechoslovakia, of course, did not even consider this “offer” and found the tactical plan of the State Department itself to be unacceptable. It was so unfeasible, even naive, that not even officials in Washington believed in it being even partially successful. The American diplomatic office responded officially to the already mentioned Czechoslovak note regarding the claim for the restitution of monetary gold from 2 November 1954 with note no. 304 from 7 February 1955. It drily stated that the letter of 20 October 1954 from Secretary General Watson of the TGC, addressed to the Czechoslovak delegate to the IARA, fully explained the current situation. The Czechoslovak side indicated this as unsatisfactory and in a note dated 28 June 1955 referred to the comments of the Secretary General of the commission on certain circumstances beyond the commission’s control, which supposedly prevented the restitution of the Czechoslovak share of monetary gold. This, according to the Czechoslovak Ministry of Foreign Affairs, gives the impression of a certain external interference, as if some of the governments, on whose behalf the commission was negotiating, had linked the restitution of the Czechoslovak share of gold with still open bilateral issues. In Prague’s view, this also follows from American note no. 407 of 3 May 1955. Therefore, the Czechoslovak government declared in the said note that “denying Czechoslovakia the restitution of monetary gold on similar grounds would be in gross conflict with the requirements of an objective and impartial discussion of the Czechoslovak request under the provisions of the Paris Reparations Agreement of 1946”.17 The

15 NAR, ibid. 16 The following two chapters of the book deal with the Oatis case and the Most

Favoured Nation (MFN) status and the wide-strip steel-rolling mill. 17 NAR, f. TGC, box no. 2, Delegate of the Czechoslovak Government to the Inter ˇ Allied Reparation Agency, No. 605/IARA-Sk, June 28, 1955 or AMZV CR, f. MPO,

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Czechoslovak note used firmer diplomatic language (extremely dissatisfied, flagrant and generally well-known looting, external interference, etc.) and again called for a resolution of the requested allocation of gold in line with the Paris Reparation Agreement of January 1946. On the other hand, however, the positive position of the US could be favourably reflected in the solution of bilateral open economic issues.18 On the one hand, the Czechoslovak Republic upbraided the US for linking issues related to gold to bilateral relations, but on the other hand, it came up with a similar offer itself, i.e. American approval of gold restitution would be an impetus for Czechoslovakia being helpful in other bilateral matters between it and the US. Washington presented this in the opposite way— Czechoslovakia’s helpfulness in bilateral affairs (particularly compensation for nationalized property) would be the impetus for US approval of the gold restitution. So, did the deaf man meet the blind man or the blind meet the deaf? Thus, the Czechoslovak side had now acknowledged the link between the problem of the gold and open bilateral issues, although it had thus far persistently rejected this idea publicly. The change of course could have been a reaction to earlier American initiatives in this matter. It followed from the positions of both countries that these two utterly unrelated matters, further with a diametrically different historical background, would be mutually connected and the subject of other problems. The initial line of the Czechoslovak communist government in the effort to get their authorized share of the gold, focussed on the Tripartite Gold Commission and the US government, was directed to still a third level, which was a possible attack against the Bank for International Settlements in Basel and against the UK itself. The Czechoslovak Communist Party elite moved forward with this approach. A meeting of the Political Secretariat of the Central Committee of the Communist Party on 10 January 1955 resulted in a resolution ordering the Minister ˇ of Finance Július Duriš to submit a report on the origin and development of the so-called “Basel” gold, as well as a legal opinion on the possibilities of asserting Czechoslovak claims against the BIS in Basel and especially ˇ against the UK. Duriš submitted the required material for approval of Dokumenty k…, part II., 1949–1957, pp. 163–165, note from the Ministry of Foreign Affairs addressed to the US Embassy in Prague on 28 June 1955. 18 AMZV CR, ˇ f. MPO, Dokumenty k…, part II., 1949–1957, pp. 163–165, note from the Ministry of Foreign Affairs addressed to the US Embassy in Prague on 28 June 1955.

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Prime Minister V. Široký on 15 February 1955.19 The brief characteriˇ had a total of zation of the so-called “Basel” gold stated that the NBCS 55,045 kg of its monetary gold stored in the BOE in March 1939 during the German occupation of the rest of the republic, 26,736 kg directly in its own name and 28,309 kg in the name of the BIS (the so-called ˇ issued two transfer indirect deposit). Under German pressure, the NBCS orders on 18 March 1939. One asked the BOE to transfer all of its direct deposit to the BIS. The BOE did not carry out the order because the British government in the meantime had seized Czechoslovak banking assets in the UK. The Czechoslovak government in London later granted the right to handle this item of gold to the British government. After the war, the UK paid Czechoslovakia about 8 million Lstg for this gold, which the Czechoslovak government used for purchases in the UK. This case was legally settled by this step and nothing was to be done about it, since the Czechoslovak Republic after the war decided to accept British pounds instead of gold. ˇ requested the BIS With a second order of 18 March 1939, the NBCS to transfer 23,087 kg of gold (the so-called “Basel” gold) from the indirect deposit to the Reichsbank in Berlin. Despite the fact that the BIS ˇ was acting freely when issuing this order, had doubts that the NBCS it instructed London to comply with the order. In the meantime, the BOE and the British government, on the basis of confidential diplomatic interventions, were asked by Prague not to carry out the compelled order. Nevertheless, the BOE made the 23,087 kg of gold available to Germany. British government officials defended their approach and the BOE’s position, stating that the BOE had to comply with the BIS order, because it was in a legal relationship only with this bank and not with the ˇ in regard to the indirect deposit. Therefore, in its view, the British NBCS government could do nothing for Czechoslovak interests. Further, a brief description of the Ministry of Finance on the state of the Czechoslovak gold mapped out the individual amounts of Czechoslovak gold losses (the Basel gold, the banknote coverage in the border region, the gold coins and autonomous gold of Škoda Works and the Armoury), which it set at 45,483 kg (and not 45,008 kg as originally requested in the spring of 1947). After the war, only 6,074 kg were returned, and the Tripartite

19 NA CR, ˇ f. Office of the Prime Minister—secret (ÚPV-T) 1945–1959, box no. 1686, sign. 13.36.17, item no. 203/350/55 PT.

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Commission had not yet decided about the rest of the gold. The legal opinion of the Ministry of Finance, which was rather information material about a factually and legally complex and fully unclear matter, examined the possibility of civil legal action. It dealt with the issue of whether the ˇ could successfully bring a dispute against the BIS from the point of NBCS view of the deposit agreement or from the point of view of damages. The responsibility of the BIS was indubitable in the report; however, it labelled the hope of success in the dispute as being low. It based its arguments on the following facts: 1. it is likely that the right of action for a dispute over damages had lapsed as early as 1946 and for the right of deposit will expire on 9 May 1955, i.e. ten years after the end of the war, if this right persists at all, 2. it is impossible to rule out the complication of a pending procedure in a Tripartite Commission, 3. it is unlikely that a Swiss court would convict a Swiss bank for breaching a deposit agreement in such a serious matter, because it would shake the domestic banking system, which was based on the storing of valuables from many countries, ˇ is not doubtful (the risk of 4. the actionable legitimacy of the NBCS a so-called succession dispute) in view of the practice of the Swiss ˇ which deposited the gold abroad before the war, courts; the NBCS, took the form of a joint-stock company, which was abolished in 1948 and replaced by a public state institution; the legitimacy of the State Bank of Czechoslovakia was not fully secured before the Swiss court, 5. the dispute would be very expensive and have far-reaching international and political implications. Because of these five arguments, the judgement of the Ministry of Finance recommended an expedited investigation and the addition of factual and legal material. But it was difficult to assuage doubts about the possibility of successful litigation. The opinion recommended minimally, as an immediate action, that the BIS be reminded in writing of its responsibility regarding the question of how it intends to settle the matter. As for filing a lawsuit, the Minister of Finance undertook to submit a proposal to the Political Secretariat of the Central Committee of the Communist

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Party by 10 April 1955, after obtaining additional supplementary material and carrying out further legal consultation. With respect to the option of asserting Czechoslovak claims against the UK, the judgement proposed handing over legal responsibility to the British Government and advocating the Czechoslovak claim for damages in the currently suspended interstate negotiations with the UK. This would facilitate the Czechoslovak position in trade and financial talks and could lead to pressure from the UK on the Tripartite Commission in Czechoslovakia’s favour. If the prerequisites for a civil suit against the BIS were given, then, according to the legal opinion, pressure could be put on the UK in a similar way.20 Although the entire file of the Ministry of Finance showed limited room for manoeuvring for the Czechoslovak Republic, the Political Secretariat of the Central Committee of the Communist Party decided to intensify the Czechoslovak offensive. According to the draft, a resoluˇ tion was to take note of Július Duriš’s report and commit him to sending a representative to the BIS by 1 March 1955 to remind it of its obligation towards Czechoslovakia and to formally declare the Czechoslovak claim to the BIS by a letter from the State Bank of Czechoslovakia. At the same time, by 25 March 1955, he was to supplement the evidence, both domestic and foreign, in cooperation with the Minister of Foreign Affairs Václav David and the Minister of Foreign Trade Richard Dvoˇrák to appoint a Czechoslovak representative for negotiations on the Basel Gold in future discussions with the UK relating to a financial settlement. He was then to submit to the Political Secretariat of the Central Committee of the Communist Party by 30 April 1955 a final proposal on the possibility of filing a petition against the BIS. The draft of the party resolution committed Minister of Foreign Affairs V. David to find out, via the Polish government, by 3 April 1955 the BIS procedure on Polish valuables deposited in the BIS in 1939 and in cooperation with Prime Minister V. Široký to decide on to what measure may be used to inform the public about the whole case of the Czechoslovak gold. Interior Minister Rudolf Barák was given the task of examining the files of Edvard Beneš and the London government in exile by 25 March 1955, to determine if these officials had made any promises and declarations to the British government on the issue of the gold. By 1 June 1955, Barák was to review

20 NA CR, ˇ f. ÚPV-T 1945–1959, ibid.

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what Czechoslovak citizens, and to what extent, bear responsibility for the looting of the gold and for the insufficient and delayed measures for enforcing compensation claims.21 Whether or not the mentioned Czechoslovak document was approved by the Czechoslovak Communist leaders is not stated in the preserved archival material. The fact was that the proposed Czechoslovak offensive to obtain the Basel gold never did take place. The unreality of Czechoslovak legal steps against the BIS, as pointed out in the above legal analysis, laid bare the fact that Czechoslovak Tripartite gold could only be realistically resolved bilaterally with the US and in connection with other open financial and economic issues. The outlined procedure of the Czechoslovak communist elite was only its unrealistic illusion. In 1955 the fundamental question of returning Czechoslovakia’s share of monetary gold was transferred from the TGC in Brussels to Washington. This was confirmed by memoranda and the minutes of discussions with representatives of the British and French embassies and officials from the US State Department. On 22 August 1955, Chancellor of the British Embassy, James Watson, took part in talks at the State Department and reiterated that Her Majesty’s government was ready to sign the final gold distribution document without delay and thus close the Czechoslovak share. He justified this by economic and political factors, stating that the UK was looking for an agreement on intergovernmental Czechoslovak debts in the amount of 20 million British pounds. Prague allegedly informed London that it could not take a positive stance regarding these debts without the British demonstrating a positive attitude towards the distribution of blocked monetary gold. The failure to resolve this matter was also said to have a negative effect on mutual trade and the compensation agreement for nationalized British assets. He described the political factors that could arise in parliament as political. The Czechoslovak opinion, also shared by some in the UK, that British officials refused to take appropriate steps in 1939 to prevent Czechoslovak gold from falling into the hands of Germany was perceived as another political problem. It reportedly argued thus: if this gold had not fallen into the hands of Germany, Czechoslovakia would not have had to take out loans during the war, and intergovernmental debts would now not be a problem. As a result 21 NA CR, ˇ f. ÚPV-T 1945–1959, ibid, Draft resolution of the Political Secretariat of the Communist Party of Czechoslovakia regarding item no. 203/350/55 PT.

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of these factors and the general international situation (the Cold War, bipolar relations) preventing the expansion of international trade, the British government is convinced that the Czechoslovak Republic should get its share. The head of the Central European department at the State Department, Jacob D. Beam, responded that the US had its own series of claims and demands against Czechoslovakia and that it hoped for early resumption of trade and economic negotiations.22 Not quite a month later, on 13 September 1955, French diplomats negotiated in the State Department, asking if the US had changed its view of the matter. The answer was clear—no, they had not changed. The situation in the Czechoslovak case reportedly remained unchanged, and France also allegedly agreed with the joint statement of the TGC that the delay in the allocation of Czechoslovak monetary gold is due to the complexity of the issue. French representatives confirmed that they are adhering to this agreement and, only for their own information, they are interested in knowing when the US will bridge the complexity of the matter and resolve the Czechoslovak situation. They also noted that although they had already reached an agreement with the Czechoslovak Republic on compensation for nationalized French property, its implementation was not progressing very well. Czechoslovak diplomats supposedly never outlined any direct link between compensation and the gold, but in Paris, such a relationship was known to exist, and the French government would welcome a solution to the problem of US consent to the return of gold.23 The Chancellor of the British Embassy in Washington, James Watson, repeated the talks with Jacob D. Beam on 30 September 1955 at the State Department and requested an answer to the repeated British question of whether the US would agree to the prompt signing off on the Czechoslovak share of gold. Beam replied that it is politically unacceptable for the US to agree with this, so long as the unsuccessful negotiations on compensation for American claims continued. Simply put, “it is not possible at present to instruct our commissioner to sign the consent with the Czech share without delay”.24 The talks of Beam and Watson were

22 NAR, f. TGC, box no. 6, Memorandum of Conversation, 22 August 1955. 23 NAR, f. TGC, box no. 6, Memorandum of Conversation, Czech Gold Case, 13

September 1955. 24 NAR, f. TGC, box no. 6, Memorandum of Conversation, 30 September 1955.

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repeated on 6 October 1955, and Beam expressed regret that the British had broken the common front and attacked the US view that blocking gold was the best economic lever to force Prague to negotiate. He reacted to the prepared British note for the Czechoslovak government that “Her Majesty’s government sympathizes with the Czechoslovak government’s desire to receive its share of gold and recommends that other governments in the TGC release the gold”.25 Four months later, on 17 February 1956, London joined forces with Paris and again tried to break Washington’s resistance. In a joint British–French aide-mémoire, they presented the opinion that their governments were ready to sign off on the gold distribution as soon as possible and asked the US to change its opposition. The British ambassador to Washington delivered another aide-mémoire on 13 May 1957, which reiterated Britain’s interest in ending the work of the TGC; three-quarters of the preliminary distribution had taken place by 1952, and the British government has been ready to sign off on the remaining rations of gold since 1953. This was not possible, however, due to the disagreement of the US government with the final distribution to Czechoslovakia, which belongs a share of 18.4 tonnes. London, therefore proposed putting this gold aside and holding it in reserve. The mentioned aide-mémoire went further compared to previous British statements and labelled the “gold” discrimination against the Czechoslovak Republic as an instrument incompatible with the responsibility that was put on the three governments by the articles of the Paris Reparations Agreement. Since the TGC is understood as a whole and lacks consensus on issuing Czechoslovak gold due to Washington’s position of refusal, the accompanying publicity about discrimination discredits the entire commission. What’s more, due to Czechoslovak disagreement, Britain by itself could therefore not resolve even the repayment of the intergovernmental debt of 21 million pounds, and there was a growing fear that Prague was backing away from a hard-won October 1956 nationalization compensation agreement worth around 2.6 million pounds. Thus, if the current policy of the US government does not change, the aidemémoire continued, Washington will cause the British government and British citizens to lose around 23.6 million Lstg.26 Although this British

25 NAR, f. TGC, box no. 6, From London to Secretary of State, 17 October 1955. 26 NAR, f. TGC, box no. 6, British-French Aide-mémoire from 17 February 1956 and

Confidential Aide-mémoire from British Embassy, 13 May 1957.

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document also referred to the Paris Agreement, this was again in contrast to the permanent negative stance of the US regarding the release of the Czechoslovak share of gold from the “pool”; it sounded like a game of cat and mouse. And Albion (and the Gallic rooster) was the mouse. In connection with the above-mentioned memoranda and aidemémoire, it needs to be noted that these were confidential and non-public negotiations and documents between representatives of the three TGC governments. And in fact, another year passed, until early May 1958, before the British government decided to take a stand on the issue of blocked monetary gold vis-à-vis Czechoslovakia. In an aide-mémoire addressed to the Czechoslovak government, it openly declared its consent on the issue of the gold and also made public Washington’s disapproval. Interestingly, the US only learned of this text ex post, on 5 May 1958, during a meeting of NATO countries in Copenhagen, while all previous aide-mémoires of London had first been consulted with Washington. This was a breakthrough in the diplomatic correspondence of the great powers on both sides of the Atlantic, but it does not need to be exaggerated or given any greater importance. The reply of the State Department, addressed to the Foreign Office on the next day, showed that the UK’s stance was not new to it, although it assumed that London and Paris had initially understood the reasons for America’s negative stance on the gold redistribution at the beginning of the year. For 13 years, the Czechoslovak government had refused to fulfil its international obligation to compensate American citizens for nationalizing their property, nor had it fulfilled other financial and economic obligations. In the last three years of continuing negotiations, it had remained uncommonly rigid in its position and shown no effort or only minimal willingness to enter into a compromise agreement with the US. According to this document, the US may also call attention to the growing emphasis of American applicants on congressmen to ensure compensation for lost property. And any action by the US government whose “result would be the release of gold to Czechoslovakia in the face of continuing Czechoslovak reluctance and the rejection of legal obligations towards the United States and its citizens could cause significant damage to public opinion… The Department declares that for the given reasons it will continue its previous position”.27

27 NAR, f. TGC, box no. 6, Confidential Aide-mémoire, Department of State, 6 June 1958.

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The problem of the Czechoslovak monetary gold at that time, however, was not merely a matter of memoranda and aide-mémoire, as it would seem from the available archival documentation of the TGC. In June 1958, the State Department first repeated the results of the TGC’s work for the US Embassy in Prague, confirmed the share it had granted to Czechoslovakia, and added an analysis of a possible “gold” scenario. The total registered claim of the Czechoslovak Republic in 1947 was 45,008,278 kg of gold. The TGC had granted it 43,999.3638 kg, i.e. minus the autonomous gold. Prague originally requested, in 1947 and later, about 50% of the recognized claim, keeping in mind the deliveries already made. In 1958, however, the “pool” share was 64.1318%, which Prague had not known about for almost 10 years. The US assumed that the British or some other country which also claimed gold would divulge this to Czechoslovakia. With such percentage, the Czechoslovak gold looked like this: from the recognized weight, the maximum claim was 28,217.4960 kg. The Czechoslovak Republic directly restored the losses of gold through Switzerland by a weight of 3,710.0148 kg, and the said weight was represented by direct purchases or transfers by the SNB and the NBBM. Thus, with 6,074.0077 kg of gold coins already delivered, the Czechoslovak share of gold already delivered was 9,784.0025 kg. After its deduction, according to confidential instructions for the embassy in Prague, the Czechoslovak share amounted to another 18,433.4735 kg of gold. Since the allotment in 1958 was generally to be rounded to the hundredth for all countries, it was assumed that Prague would receive 18.4 tonnes in this quasi-final allotment. At the same time, the State Department provided the following instructions for its embassy in Prague: it had reviewed the figures of Czechoslovak claims before the TGC, the anticipated Czechoslovak share and previous deliveries, which allegedly will cause certain doubts and will lead to considerable difficulties in future negotiations. It pointed out some possible interpretations that could be misused in the formulation “fifty percent of the recognized claim, taking into account deliveries already made”. The mentioned analysis stated in the introduction: “The Czechs are not stupid; they will undoubtedly find an interpretation that puts us in a box and the fact that they are communists, they will undoubtedly try to do so”.28 What’s more, the analysis continued, the Czechoslovak Republic 28 NAR, f. TGC, box no. 6, Czech Share in Gold Pool, Department of State, 2 June 1958.

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will attempt to accuse the US of not signing off on the Czechoslovak share; therefore, they should insist in the negotiations on the wording “recognized claim” and statistically this analysis showed why. The total registered claim was 45,008.2784 kg, and 43,999.3638 kg of this was seen as the recognized valid share. But the Czechoslovak Republic had originally requested 50% of its registered claim, i.e. 22,504.1392 kg, but 50% of its recognized claim would be 21,999.6819 kg. The presented data demonstrated that Prague would insist in the negotiations that the amount of claimed gold and not the amount of recognized gold, be taken into consideration, which at 50% of the expected share created an allocation of gold larger by half a tonne. Therefore, the analysis warned that an American counterproposal must be made precisely so as not to allow Czechoslovakia to state that they misunderstood, recognized vs. registered gold.29 If we return to the fruitless and never-ending British–American talks in the State Department or the aide-mémoire of one or the other, they are also repeated in 1960 and 1961. London initiated the talks, but it unsuccessfully pressured Washington to change its mind on the issue of the share of Czechoslovak monetary gold from the TGC. Mapping these activities would effectively be a mere repetition of the facts, saying that Washington did not intend to be pushed against the wall. And even a meeting of the foreign ministers of both countries, the British (Selvyn B. Lloyd) and the American (Christian A. Herter), in Washington on 12–14 April 1960 did not change this either. Lloyd announced that in September 1960 Czechoslovakia had refused a commitment to pay 19 million Lstg to the UK unless the gold was released to it. He supposedly understands that the US cannot proceed to release gold. Herter replied that the US will not do so, and this gold represented the only tangible means by which they could obtain payments. Undersecretary of State Douglas C. Dillon labelled this gold as the only “asset” that could be used, and so the UK should use it to achieve closure of its open issues. The US now reportedly found a way to get its demands; it had signed similar agreements with Romanians and Poles, and Czechoslovakia remained the only problem.30

29 NAR, f. TGC, box no. 6, ibid. 30 NAR, f. TGC, box no. 6, Memorandum of Conversation, Foreign Ministers Meeting,

12–14 April 1960.

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This negotiation, too, again showed that Washington was still the strongest player in the game of returning Czechoslovak monetary gold. Although the other two TGC governments supported the Czechoslovak Republic in this time in their effort to get back their gold, their position had no influence on the consistent US rejection. Paris finalized its bilateral negotiations with Czechoslovakia on open financial and trade issues in a Financial Protocol of 11 July 1963, according to which the French government would pay the Czechoslovak government a global amount of 1,576,353 francs (i.e. 2.3 million crowns) to settle Czechoslovak claims under monetary measures of the French franc from 1957 (the so-called Operation Gaillard) and the insurance for uncovered damages associated with the case of the Czechoslovak merchant ship Lidice. At the same time, the Czechoslovak government released to the French government a compensation balance to be distributed to the French claimant who was blocked in connection with the Lidice case.31 This specifically involved the Czechoslovak Government committing to make available to the French Government the balance of account F 344, opened at the Banque de France under the title “Banque d’Etat Tchécoslovaque, Créances Financiéres Francaises, Accord du 2 juin 1950 Avenant du 6. juin 1956”, and it was for the French Government to distribute the sum of 11,935,349 French francs to the claimants.32 What did London think about this? The complex of Czechoslovak– British agreements (a trade and financial agreement, an agreement on

31 NA CR, ˇ f. ÚPV—bežná spisovnˇ a, box no. 178, sign. 433–443, no. 081074/63. 32 This protocol was followed by a second one on 16 January 1964, the so-called

“Protocol on the resolving disputed Franco-Czechoslovak issues”. It contained these principles: the Czechoslovak government undertook to ensure the repurchase of bonds of the French tranche of the Škoda Works loan of 1930 for 61% of the face value at gold parity and without payment of interest, including costs associated with the repurchase and final liquidation of the loan. The Banque de France undertook to provide 3,722,100 francs (i.e. around 5.4 million crowns) as an advance. At the same time, Paris committed to provide compensation for 233 unreturned Czechoslovak railway freight cars from the Saarland, the value of which was set at one million francs. A part of the protocol was a letter in which the French government committed to immediately complete all the necessary formalities in the TGC and to give its representative the necessary instructions for ˇ the purpose of releasing the Czechoslovak monetary gold. NA CR, ibid, no. m. 203/ 0369/64, information for the Prime Minister of the Czechoslovak Socialist Republic Jozef Lenárt from 25 January 1964.

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the settlement of certain interstate debts and a compensation agreement) was signed on 28 September 1949.33 Up to 1954, Czechoslovakia had repaid more than 5 million pounds out of the required 8 million pounds under the compensation agreement and others more than 7 million pounds from the post-war loan from 1945. The repayment of intergovernmental debts was complicated as a consequence of the economic problems of the Czechoslovak Republic and the chronic lack of pounds on the Czechoslovak side. In February 1955, Prague unsuccessfully attempted to transfer legal responsibility to the British government for the issuing of Czechoslovak monetary gold in the BOE to the RB through the BIS, or that the question of the gold be used to settle British claims against Czechoslovakia directly. This literally screamed of an effort to use this gold as a political means of negotiation. In November 1964, although Prague and London agreed that the British government would give the TGC permission to issue the gold, due to Washington’s unchanging stance, this was not practicable and in fact was fully dependent on the results of the Czechoslovak-American negotiations in the subsequent period. Therefore, the return of gold and the related British–Czechoslovak open economic and financial issues did not occur ˇ until the beginning of 1982 as part of the agreement between the CSSR and the US. For the returned gold, the US got 24,266,000 pounds, i.e. about 44 million USD, from Czechoslovakia as part of the concluded agreements.34 The Tripartite Commission for the Restitution of Monetary Gold completed its investigation into the states’ claims for the return of monetary gold in 1958. The fulfilment of its task—the return of Czechoslovak gold—remained, however, unforeseeable, especially due to the US position, which conditioned its resolution on the settling of other open economic–financial bilateral Czechoslovak-American issues. The linking of this issue, i.e. the return of the Tripartite gold, with open bilateral issues was not objective and correct in terms of international law or the Paris Reparations Agreement; the Czechoslovak gold, however, became a lever in the hands of the US and a factor with which they wanted to

33 Kuklík, Jan, p. 286 et seq. 34 Kuklík, Jan, p. 425.

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force a solution mainly regarding compensation for nationalized American property in Czechoslovakia taken away by communist Prague. Although the Czechoslovak side publicly rejected this connection between two fundamental and diametrically different issues, it had no choice but to accept this American position in the future.

PART II

The US–Czechoslovak Differences

CHAPTER 4

Compensation for Nationalized Property, the US Surplus and Rolling Mill

If we want to understand the stance of the US regarding Czechoslovakia in relation with its blocking of Czechoslovakia’s monetary gold with the Tripartite Gold Commission, we must look back, at least in theory, to shed light on some of the contexts of Czechoslovak–American bilateral relations after the Second World War. These were primarily questions about compensation for nationalized and confiscated American assets, a mutual trade agreement, credits and loans, a most-favourednation clause, a wide strip rolling mill, William N. Oatis, IBM assets, and so on. Their non-resolution represented, aside from broader ideological– political bipolar Soviet–American disputes, the cornerstone of the future “gold” problems. Czechoslovak–American trade and economic relations were arranged by a trade agreement signed on 7 March 1938. After Germany occupied the Czechoslovak Republic, the trade agreement was suspended by the US and declared unilaterally abolished in its entirety. According to this American Decree of 23 March 1939, which entered into force 30 days after its publication, i.e. on 24 April 1939, the provisions of the

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Michálek, Nazi Germany and the Role of the US in the Fate of Czechoslovak Monetary Gold, https://doi.org/10.1007/978-3-031-38758-6_4

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mentioned trade agreement and its additional protocol lost validity in the Czechoslovak Republic.1 After the end of the Second World War, when normal trade and economic relations resumed, the absence of an agreement in this area between the two countries was more evident. In May 1945, the US Congress passed the Trade Agreement Act relating to the extension of trade agreements; the act did not permit the renewal of cancelled agreements, and this also applied to the Czechoslovak–American trade agreement from 1938. Therefore, on 16 June 1945, the Czechoslovak Minister of Foreign Affairs, Jan Masaryk, made inquiries with the staff of the US Department of State about whether Washington would recognize the validity of a continuation of this agreement.2 Undersecretary of State William Clayton, however, in his reply, seven days later, made reference to the validity of the said Trade Agreement Act. On the basis of this, the Czechoslovak government declared on 11 December 1945 the provisions of the 1938 agreement as invalid on the Czechoslovak side as well.3 The State Department prepared a proposal for the signing of a new temporary bilateral Czechoslovak–American trade agreement and in a memorandum dated 29 June 1945 sent the text of it to the Czechoslovak Ministry of Foreign Affairs. This proposal essentially contained the same principles as the former 1938 trade agreement. In the counterproposal, the Czechoslovak side insisted that the text on the preparation of exports and imports by a permissions procedure be removed from the American proposal and that the Most Favoured Nation (MFN) principle should be supplemented by exceptions that recognized the monopolies of Czechoslovak enterprises on certain types of products. On the Czechoslovak side, the priority was to protect its own economy, which could not, of course, compete with American companies in Europe due to war damage. Czechoslovakia was also lacking the dollars needed to pay for

1 AMZV CR, ˇ f. USA Teritoriálny odbor – obyˇcajné (TOO) 1945–1951, box no. 32,

m. no. 70783/IV-1/B-45. 2 Michálek, Slavomír. Ceskoslovensko-americké ˇ rokovania o kompenzácii a obchodnej dohode v rokoch 1945–1955 [Czechoslovak-American Discussions on Compensation and a Trade Agreement, 1945–1955]. In Historický obzor, VII-VIII/1999, p. 165. 3 Procházka, Zdenˇek. Hospodárska válka USA proti Ceskoslovensku ˇ [The Economic War of the USA Versus Czechoslovakia]. Prague, 1946, p. 112.

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American supplies of goods and raw materials, and goods that Czechoslovakia could produce on its own were considered to be economically disadvantageous. On the other hand, it had an interest in purchasing modern machinery and equipment.4 The American government rejected the Czechoslovak comments and counterproposals and demanded guarantees that Czechoslovakia would not discriminate against the US commercially and also spoke out against the monopolies of Czechoslovak companies. At the end of February 1946, it demanded American companies the highest benefits and equal conditions as domestic companies in the Czechoslovak market.5 The Ministry of Foreign Affairs assessed these demands on 15 March 1946, and keeping the loan negotiations in mind, it proposed signing an agreement on the provision of MFN status, and on 23 April 1946, it informed the US Embassy in Prague. Three days later, Ambassador Vladimir S. Hurban discussed Czechoslovak–American economic relations in Washington with State Department officials. He justified the impossibility of accepting the other principles on the Czechoslovak side as consequence of the recovery and reorganization of the post-war economy by proposing the closing of a trade agreement containing only the most-favoured-nation clause. Further, Czechoslovakia also had to face economic disruption in the surrounding European countries, as well as transport difficulties. The American side agreed to this proposal and conditioned the signing of the agreement on the start of negotiations on compensation for the assets of American owners for nationalization and confiscation in 1945. After additional multilateral and complex negotiations during the first half of 1946, and after an exchange of dispatches, proposals and supplements between the ambassadors and Ministries of Foreign Affairs, the US Department of State on 8 July 1946 submitted a new wording of the US note relating to the trade agreement between the two countries.6 This proposal contained eight articles, and Article no. 7 spoke about compensation questions for nationalized and confiscated property that originally belonged to US citizens and businesses. The State Department in this case refused to limit itself to nationalized property, with other property otherwise taken over 4 Prokš, Petr. Ekonomicko-politické rokování mezi Ceskoslovenskem ˇ a Spojenými státy v letech 1945–1947 [Economic and Political Discussions between Czechoslovakia and the United States, 1945–1947]. In Slovanský pˇrehled 1992/1, p. 11. 5 AMZV CR, ˇ f. USA TOO 1945–1951, box no. 33, m. no. 7712/IV-3/45. 6 AMZV CR, ˇ f. USA TOO 1945–1951, box no. 16, m. no. 7894/46.

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excluded. The Czechoslovak Embassy in Washington recommended to the government in Prague that after reviewing this note, it expedite its decision to accept it, which could have positively affected negotiations on a loan of 50 million USD earmarked for the refurbishment and purchase of American products and equipment.7 The contentious point of the draft trade agreement was the issue of compensation not only for Americans, but also for Czechoslovak citizens living in and naturalized in the US.8 In a large number of cases negotiated over American assets in Czechoslovakia that Czechoslovak authorities had confiscated or nationalized and for which American owners demanded restitution or compensation, the Office of the Government Plenipotentiary in Prague notified the US Embassy that the Czechoslovak authorities could deal with specific cases. As a condition, however, it insisted on the provision of credible documents by American owners about their nationality and citizenship for the entire period starting on 17 September 19389 and about ownership

7 AMZV CR, ˇ f. USA TOO 1945–1951, ibid. 8 The issue of the relationship between the naturalization of Czechoslovak nationals

in the US and their previous Czechoslovak nationality was arranged by the agreement between the Czechoslovak Republic and the US of 16 July 1928 (No. 169/29 Coll. Of Laws and Regulations). According to Art. 1 of this agreement, citizens of Czechoslovakia who have been or will be naturalized in the US will lose their original affiliation and become citizens of the USA. According to paragraph 3 of the referenced article, this provision did not apply to Czechoslovak citizens who achieved naturalization in the US at the time when their state was waging war. These citizens therefore continued to be considered Czechoslovak citizens, i.e. they were not subject to Czechoslovak regulations for foreigners and were not entitled to compensation for nationalized property. The most prominent case in this context was Petschek’s property. The interests of the Prague financier Viktor Petschek were defended by his lawyer from the law firm Sullivan and Cromwell. The Czechoslovak authorities proposed to wait in the case of Petschek’s property. However, this case was not resolved even in December 1946, or the Czechoslovak party did not change its mind in this case and continued to consider him as a Czechoslovak citizen. Library of Congress, Manuscript Division, Washington DC, f. Steinhardt Papers, box no. 83. 9 The Czechoslovak side explained the nature and reasons for setting the date of 17 September 1938 as decisive in the subject case as follows: on 28 February 1944 the Czechoslovak government in exile in London sent a note to the US stating that in compliance with its declaration of war from 16 December a war-time state occurred between Czechoslovakia and Germany on 17 September 1938. This date was based on the start of aggressive actions of Hitler groups (Sudetendeutsches Freikorps, formed from the Henleins and trained in Germany) and had its legal basis in the Agreement on the

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of the assets in question in the Czechoslovak Republic, such as a statement from the land register, purchase agreement, etc.10 The majority of American owners, however, could not obtain the necessary documents for various reasons. Declarations on oath, so-called affidavits,11 which contained the required data, citizenship, nationality and property interests in the Czechoslovak Republic, were legally unacceptable to the Czechoslovak government as a substitute. The Czechoslovak government responded positively to the American note of 8 July 1946, which was to be the basis of the Czechoslovak– American trade and economic agreement, but with reservations regarding Art. 7 on compensation. What was the approximate value of American property in Czechoslovakia and, conversely, Czechoslovak in the US? According to an official report by the US Treasury Department on the results of the census of US assets abroad, issued in December 1947, US assets in the Czechoslovak Republic represented as of 31 May 1943 a total of 148 million USD. This included, in particular, corporate interests (67.1 million USD), metals, coins and deposits (13.75 million USD), real estate (28.4 USD), securities (11.7 million USD), private assets, environmental assets, insurance, annuities and survivors’ estates.12 The American side had divided assets relating to corporate investments abroad according to whether they were separate companies or branches, or whether they involved direct participation or participation through foreign companies. Of particular interest were the Vacuum Oil Company, International Telephone and Telegraph Corp., Remington Rand, Standard Oil Company, Paramount, International Standard and others. The largest shareholding in the Czechoslovak industry was held by the Vacuum Oil Company. Its owner was the Socony Vacuum Oil Company of New York.13 On the other hand, according to

Definition of Offensive, which was signed on 4 July 1933 in London between Czechosloˇ vakia, the USSR, Romania, Yugoslavia, Turkey and Great Britain. AMZV CR, f. General Secretariat—Cabinet (GS-K) 1945–1954, box no. 207, m. no. 11403/52. 10 AMZV CR, ˇ f. USA TOO 1945–1951, box no. 12, m. no. 48143/VI-3. 11 Affidavit—a sworn, written declaration on oath in foreign law, especially under AngloAmerican law, made and verified by a notary or another official body (consulate), by which, e.g. jurisdiction of the owner of the securities or other assets is certified. 12 AMZV CR, ˇ f. Representative office – Washington (ZÚ-W), box no. 1946–1947, m. no. 11979/47. 13 NACR, ˇ f. 100/1, box no. 82, a. j. 612.

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the publication Census of Foreign Owned Assets of the USA, published by the US Treasury Department in 1945, Czechoslovak property in the US represented 9.4 million USD.14 These included deposits, securities, lands and houses, estates and minor participation in enterprises. As already indicated in the text of the work, the issue of compensation for nationalized and confiscated American assets in Czechoslovakia was the alpha and omega in the development of mutual bilateral relations between the US and the Czechoslovak Republic after the Second World War. This was confirmed by negotiations and the results achieved in them. Already at the time of preparing the nationalization of key industries, the US was attempting to disincline the Czechoslovak side from the nationalization of American companies. On 23 July 1945, thus three months before the nationalization decrees, Ambassador Lawrence A. Steinhardt requested the following promise from the Czechoslovak government: if nationalization were to take place, he tried to obtain the promise of adequate and effective compensation. In a discussion with the State Secretary of the Ministry of Foreign Affairs, Vladimír Clementis, on 29 August 1945, he warned the Prague government not to nationalize the Cologne refinery, which belonged to the Vacuum Oil Company. In the opposite case, he threatened to stop the supply of machinery needed for the extraction of oil, which could have caused Czechoslovakia significant problems with gasoline and diesel. If the Czechoslovak government were to postpone the nationalization of the refinery in question, he promised to supply oil imported from Venezuela and transported from French Cherbourg to Germany.15 In the event that the company was nationalized, the embassy proposed compensation in dollars or the return of the company and its assets to American owners.16 The Czechoslovak government responded with a general note on 21 January 1946, in which it explained the principles of the nationalization decrees: the overall economic situation in the state supposedly required nationalization as a consequence of enemy occupation. As soon as the total amount of compensation is determined,

14 AMZV CR, ˇ f. ZÚ-W, box no. 1946–1947, m. no. 11979/47. 15 AMZV CR, ˇ f. USA TOO 1945–1951, box no. 18, m. no. 24121/A/45. 16 NAR, f. Rg 59, Records of the US Department of State relating to the Internal

Affairs of Czechoslovakia (shortened to State Department and Czechoslovakia) 1945– 1949, No. 860F.5034/1-2946.

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the Czechoslovak government will enter into negotiations with the American side and pay for the damage caused by nationalization.17 Prague did not fulfil the obligation expressed in the note, however; in fact, they forgot about it. No compensation was paid. The exchange of diplomatic notes between the US and the Czechoslovak Republic regarding compensation continued until the summer of 1946. First, the US State Department emphasized in note no. 820 its readiness to negotiate and expressed the conviction that the Czechoslovak side also recognizes the importance of adequate and effective compensation for the development of mutually beneficial economic relations between the two nations. However, Prague’s reply significantly slowed down America’s efforts to negotiate rapidly and resolve the issue.18 It explained that the Ministry of Foreign Affairs must first determine the total amount of compensation for all the countries involved. Evidently, it was in no hurry to do this. On the American side, Ambassador Steinhardt also personally interposed in resolving one contentious open issue. This was confirmed in his letter to the CEO of the Socony Vacuum Oil Company, Harold F. Sheets, which pointed to the close connection between the economic and political aspects of the issue. In it, he announced his prediction about how the pending Czechoslovak elections would turn out. He predicted the victory of the non-communist parties, which in his view would have a positive effect on the commencement of compensation negotiations. Further, Sheets should not worry when he hears about the loan from Export Import Bank, because its provision was to be conditional on compensation for nationalization.19 As it turned out, Steinhardt did not correctly guess the outcome of the Czechoslovak parliamentary elections and evidently underestimated the Czechoslovak political scene (the Communists in particular). Aside from the above-mentioned Vacuum Oil Company (VOC), other companies, such as Standard Oil Company, International General Electric Company (claimed its patent rights) and Universal Oil Product Company (which had a stake in Apollo Bratislava), also registered for the settlement of compensation for nationalization. But the well-known and globally

17 NAR, ibid. 18 NAR, ibid, No. 860F.5034/3–1846 CS/LF and No. 860F.5034/4-346. 19 Library of Congress, f. Steinardt Papers, box no. 58.

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active International Telephone and Telegraph Corporation (ITT Corp.) deserved special attention from American followers of Czechoslovak compensation for nationalization, not so much for the range of the compensation required, but for other specific reasons. Its two enterprises in Czechoslovakia, Lorenz in Vrchlabí and Schuchard in Bruntál, fell into the Soviet war booty, and their facilities were gradually dismantled and taken to the USSR. In response to a sharp protest from the US Embassy in Prague on 11 August 1945, the Czechoslovak Ministry of Foreign Affairs replied with a note on 17 September 1945 that it was attempting to persuade the Soviet government to stop dismantling the American facility.20 In early December, the Ministry informed the US Embassy that the Soviets had dropped the entire Schuchard company from its list of loot and was expecting to remove 50% of the plant from Lorenz. Steinhardt protested that this was a violation of the Potsdam Agreement.21 He rejected the USSR’s view that the facility was a spoil of war, because it was evident that it still had the capacity to serve peacetime production without interruption (radio tubes and field telephones); he also rejected the Soviet argument that it cannot be proven that the disputed company was truly the original property of American citizens. The text of his note further indicates that the US government also accused the Soviet Union of shared co-responsibility and assigned so-called “secondary responsibility” to the Czechoslovak side because it, in fact, suffered wrongdoing on its territory to the detriment of American interests that it could and should have prevented.22 The facts of the problem, however, did not change, and the Soviet government did not return the removed equipment. In the scope of compensation for nationalized American property, the question of the total amount of compensation for Americans, which was the subject of Steinhardt’s talks with Zdenˇek Augenthaler, head of the National Economic Department of Prague’s Ministry of Foreign Affairs, on 29 October 1946, was among the debatable topics. Augenthaler responded to the ambassador’s direct question by saying that Czechoslovak experts had set the amount of eligible US demands at 20 AMZV CR, ˇ f. GS-K 1945–1954, box no. 90, m. no. 33932/R/45. 21 Under the Potsdam Agreement, the Soviet Union could satisfy its reparations against

Germany only on German property located in Finland, Hungary, Romania, Bulgaria, the Soviet zone of Germany and, under certain conditions, material from the western zones of Germany. 22 AMZV CR, ˇ f. GS-K 1945–1954, box no. 90, m. no. 33932/R/45.

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2,340,000 USD. Steinhardt then countered that the VOC alone was seeking compensation for 14 million USD, and that in addition there were a number of other smaller claims. If Prague was working on the assumption that American demands for nationalization compensation could be in the range of 2–3 million USD, Steinhardt further stated, then it will be very difficult to resolve the matter.23 In a report to the State Department from this meeting, he announced that the Czechoslovak side envisages starting discussions on compensation for nationalized American property as soon as possible in the hope that it would then be easier to obtain a loan of 50 million USD (negotiations on which had stalled in September 1946 due to applause by the Czechoslovak delegate at a conference in Paris after a speech by a Soviet representative on US dollar alms). In the conclusion of the report, he emphasized: “Therefore, I am against the resumption of loan negotiations until the issue of US assets, or compensation is resolved to our satisfaction”.24 This was the hard and uncompromising stance of the American ambassador, which in terms of defending American property interests was absolutely understandable and correct. The Czechoslovak government set the criteria for nationalization compensation at its meeting in early November 1946. It permitted compensation for nationalized property in cases where it was proven that the invested capital had come from abroad. Citizens of the Allies and some neutral states (Switzerland and Sweden), as well as citizens of Bulgaria, Italy, Finland and Romania were considered to be foreign nationals. They were to be provided compensation, if the provisions of Presidential Decree no. 100/1945 Coll. nationalization laws did not prevent it.25

23 NAR, f. State Department and Czechoslovakia 1945–1949, No. 860F.5034/102946. 24 NAR, ibid. 25 The mentioned citizens had the right to compensation, even if they were persons

of German or Hungarian nationality, with the exception of those who acquired foreign citizenship after 17 September 1938 and thus ceased to be Czechoslovak citizens or citizens of an enemy state. Austrian citizens were only to be provided compensated if they had Austrian nationality before 12 March 1939 and did not identify with Nazism. At the same time, the criteria stated that Czechoslovakia would not provide compensation in cases where the property was acquired by transfer in violation of Czechoslovak law. NA ˇ CR, f. 100/24, box no. 102, a. j. 1157/1.

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At the end of October 1946, the entrusted representatives of the governments of the US and Czechoslovakia arrived at the official form of the text of their declaration on the trade policy between the two states. On 8 November 1946, Deputy Prime Minister Zdenˇek Fierlinger delivered the Czechoslovak text of the trade and political declaration and memorandum to Ambassador Steinhardt. In a personal discussion, he explained the Czechoslovak position, whereby Steinhardt disagreed with some passages of the memorandum and pointed out in this context the case of Viktor Petschek.26 He urged the State Department not to accept the said memorandum on the Czechoslovak procedure for compensation.27 But despite this negative attitude of the American ambassador, a qualitative shift in the issue of Czechoslovak–American trade negotiations occurred. Thanks to the accommodating step of Washington in particular, diplomatic notes were exchanged between the Czechoslovak Embassy in the US and the State Department, signed by US Secretary of State Dean Acheson and Czechoslovak Ambassador Juraj Slávik on 14 November 1946.28 These notes meant a practical foundation for a new economic and trade agreement between the US and Czechoslovakia, thus ending the existing non-agreement situation. The notes (American and Czechoslovak) were identical, both labelled as the “Declaration on Trade Policy and Nationalization Compensation” and addressing the issues of economic cooperation. In them, both governments maintained the opinion that carrying out international trade through bilateral trade, clearing and similar agreements was incompatible with the desire to achieve maximum benefit. The Czechoslovak government stated that it 26 Viktor Petschek (1914, Prague–2005, New York) was one of the descendants of an important Czech Jewish family. In the interwar period, the Petschek family divided into two branches: North Bohemia was known as coal barons and established itself in the Czech and German coal industries. The second branch—the so-called Prague (which also included Viktor, son of Otto and Marta Petschek), comprised successful financial magnates who made money from stock exchange operations and penetrated the glass, chemical and paper industries. Their bank, with a network of companies, formed a syndicate whose worth was estimated at about 200 million Reichsmarks before the Second World War. In 1939, the Petscheks fled to the United States and the Germans confiscated their assets. In October 1945, the Czechoslovak government then confiscated it from the Germans and nationalized it. In addition to a network of companies and banks, they also lost 13 large buildings and villas in Czechoslovakia. One of them was the residence of US Ambassador Lawrence Steinhardt. 27 NA CR, ˇ f. 100/24, box no. 102, a. j. 1157/1. 28 AMZV CR, ˇ f. USA TOO 1945–1951, box no. 33, m no. 11949/46.

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would maintain a system of import controls during the transitional postwar period in order to maintain its balance of payments, so that it could fulfil the post-war economic reconstruction plan. Prague was to issue import permits from abroad without discrimination after obtaining a sufficient amount of freely convertible currency. Article no. 5 of the declaration defined the relationship of a monopoly enterprise to its partners. According to this, a monopoly should admit fair and equal treatment to the trade of the other state, whereby the crucial business criteria were price, quality, marketability, transport and conditions of the purchase or sale. Further, in the declaration, both governments expressed their intention to begin talks on concluding a proper treaty of friendship and a trade agreement as soon as possible. They also acknowledged the clause on MFN status to one another’s products, and Czechoslovakia undertook to provide Washington with information about its trade relations with the other states. It is difficult to analyse why the Czechoslovak government agreed to such asymmetry in the declaration because, a similar commitment was absent from the American side. The issue of compensation for nationalized and confiscated property was addressed in the declaration by Article no. 7, which stated that “the Government of the United States and the Government of the Czechoslovak Republic will provide adequate and effective compensation to the other country with respect to their rights or interests in property which has been or will be nationalized or confiscated by the government of the other state”.29 Interesting in this part of the text is the fact the US no longer persisted in its original position, which precluded the formulation of a common understanding on the issue of “reciprocity” of nationalization (past or future) of the property of the other state. The Czechoslovak side elaborated the main principles of its approach in the already mentioned memorandum, which was the subject of the above-mentioned talks between Fierlinger and Steinhardt and which the Czechoslovak government adopted at the meeting on 8 November 1946. Effective compensation was understood to mean compensation in dollars or other freely convertible currency. The US government never approved the content of this Czechoslovak memorandum, particularly because it

29 AMZV CR, ˇ f. USA TOT 1945–1954, box no. 11, m. no. 412411/54-ABO/1 or ˇ NA CR, f. 100/24, box no. 102, a. j. 1157/1.

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did not agree with the point concerning Czechoslovak citizens naturalized in the US after 17 September 1938. On the other hand, the signing of the declaration on trade policy and compensation for nationalized and confiscated property itself declared the fact that tensions between the two countries had been overcome for a certain time and put away. For Washington, the declaration meant a signal that states in the Soviet sphere of interest could accede to American principles of multilateralism while respecting trade standards, as dictated by private enterprise. Today, this assumption by the US seems naive and unrealistic. In the end, this was confirmed in the near future. A substantial portion of the declaration consisted of the Czechoslovak commitment that American nationals whose property was nationalized or confiscated by the Czechoslovak government would receive compensation. It was signed, among other reasons, because Czechoslovakia had entered into final negotiations in the second half of 1946 in a new spirit. The suspension of credit for the purchase of the US military surplus in Europe (the so-called US surplus) and the interruption of talks over the 50 million USD loan of 13 September 1946, which caused a certain amount of dismay in Czechoslovak business circles, acted as a factor stimulating a certain helpfulness during the negotiations on the Czechoslovak side. If the government wanted American loans, it had to alter its approach and accept American conditions. For Czechoslovakia, the declaration meant, aside from the possibility of resuming negotiations on the loan of 50 million USD, the possibility of getting a loan from the International Bank and also raised hopes for the cancelling of high US tariffs, which prevented the expansion of trade between the two countries. But the declaration did not fully resolve the issue of compensation for nationalized and confiscated property of American citizens and companies. This remained the subject of further negotiations in 1947, continuing (after February 1948) in 1948–1949 and later, whereby there were two ways of dealing with it: an individual way and a global way. The American side initially preferred the individual way, but it later advocated the global way. In 1947, Washington’s interest was focussed mainly on resolving certain specific cases, notably the Vacuum Oil Company and Viktor Petschek, although together with other companies, such as Remington Rand, Corn Product Refining and ITT Corp., the Czechoslovak Ministry of Foreign Affairs as of 1 September 1947, registered a total of 225 American requests and complaints. These were properties with a very wide scale

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of sizes, from large farms and agricultural property to various companies for rubber, silk goods, Odol mouthwash or weaving mills and even paintings and similar assets. These included, for example, Aries Gloves Inc., A. Stern National Cash Refining Company, H. A. Evans, Manon Manion, Maort Company, J. G. Ziegler, Otto Maria Mandl, G. Lambert and others.30 Ambassador Steinhardt was exceptionally strict in promoting American interests in the case of Corn Product Refining, which was confirmed by his personal message to the Czechoslovak Government Plenipotentiary as well as a note to the US Embassy of 2 September 1947, which bluntly stated that: “…if the property is not returned, the company intends to take such measures as it deems necessary and which will relate to reparations for Czechoslovakia from Germany”.31 The US showed the greatest interest, however, in resolving property or compensation issues around the mentioned company VOC and Viktor Petschek. And what solutions did they propose? They proposed settling Petschek’s case such that the injured party would abandon his claim to some American company, which would then be paid the compensation.32 At the beginning of November 1946, the Czechoslovak Minister of Foreign Trade, Hubert Ripka, also expressed his view of Viktor Petschek’s case. He was willing to accept the American proposal and compensate for Viktor Petschek’s nationalized property, if the American side were to provide a loan to Prague. However, Steinhardt was of the opinion that the Petschek issue must be resolved first, then the Czechoslovak Republic would receive the loan. But Ripka defended the principle that the two cases, Petschek and the loan, should be settled in tandem.33 What’s more, on the Czechoslovak side, the justness of Petschek’s request for compensation, which was monitored by the Ministry of the Interior, was considered debatable. On 13 September 1947, he sent a communication to the Ministry of Foreign Affairs in which he dealt with all the members of the Petschek family. In this note, he stated that, according to an investigation, all members of the Petschek family had declared 30 NA CR, ˇ f. 100/24, box no. 102, a. j. 1157/1. 31 AMZV CR, ˇ f. USA TOT 1945–1954, box no. 11, m. no. 412411/54-ABO/1. 32 According to Steinhardt, the settlement of other cases went smoothly and compen-

sation could be paid in Czechoslovak crowns. He at the same time declared that Czechoslovakia could get a loan of 80 million USD from the US. Archive of the Office of the President of the Republic (AKPR), Prague, sign. T-3030/47. 33 AKPR, ibid.

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their German nationality in the 1930 census and all had acquired foreign citizenship, mainly American. The Interior Ministry further stated that, pursuant to section 240 et seq. on Czechoslovak Armed Forces Regulations (Government Decree No. 141/27), the men had not been released from compulsory military service, and that application for foreign citizenship at a time of increased threat to the republic qualified as a violation of loyalty to the state. In the conclusion of the memorandum, he stated that with such persons one of the preconditions for exemption from confiscation under Decree no. 108/45, par. 1, sec. 1, point 2 had not been satisfied.34 The arguments of the Czechoslovak side, which were based on the preconditions for the exemption from the confiscation of property, were based on valid legal rules and regulations. What was the property actually worth? Petschek left behind a great deal of property in Czechoslovakia. The American side demanded compensation in the amount of 600 million crowns, which was reduced to 400 million crowns by deducting 30% of the state benefit from the property. From this, it requested the return of 50% in US dollars (i.e. 4 million USD), 20% in British pounds and 30% in Czechoslovak crowns (i.e. 80 and 120 million crowns). It was also willing to buy luxury glassware in Czechoslovakia for the latter amount in crowns. The sum of 4 million USD was to be used to purchase Petschek’s villa, where Ambassador Steinhardt lived, or another house for 2.5 million USD. The remaining 1.5 million USD was to be repaid from the potential loan of 80 million USD.35 Steinhardt divided the potential loan for Czechoslovakia into three parts: 20 million USD for the purchase of cotton, 20 million USD for the purchase of goods for the domestic Czechoslovak market, 40 million USD for the purchase of surplus military equipment in Europe (US surplus), mainly tools and machinery for the repair of roads and trucks. In regard to the Vacuum Oil Company, the director of its headquarters in New York, Harold F. Sheets, was willing to waive the requested compensation if his company gained a privileged position in Czechoslovakia, specifically a request to participate in oil production in South Moravia. It would further contribute technical and material assistance to this and a willingness to provide technical cooperation in the production

34 AMZV CR, ˇ f. GS-K 1945–1954, box no. 39, m. no. 3316. 35 AKPR, sign. T-3030/47.

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of synthetic fuel and limiting losses in the production of light gasoline. They further requested participation in petrol stations and in Czechoslovakia’s trade in petroleum products.36 The above-mentioned calculation of the American side, with the possibility of not asking for compensation but having a strong position in the Czechoslovak petrol market, was a well-considered step. For the VOC, it could have been the basis for future expansion in the European market. Around what values were VOC’s assets in Czechoslovakia, or how much compensation did both the American and Czechoslovak parties agree on? The US originally claimed compensation of 14,683,000 USD, i.e. more than 700 million crowns. However, during the negotiations, the VOC insisted on compensation, which ranged from 200 to 300 million crowns, even after deducting the state asset tax, and demanded half of the demanded amount be paid in dollars. By contrast, the estimate of Czechoslovak experts was around 80 million crowns, based on the value of the company at the time of the liberation, when the Cologne VOC refinery was still in ruins after the Allied bombing.37 Since the Czechoslovak side did not consent to VOC having privileges in the Czechoslovak market, the price, too, or the amount of compensation, did not approach the amount proposed by the Americans. The Americans initiated new negotiations on compensation in the summer of 1948. Czechoslovakia, through the Office of the Government Plenipotentiary at the Ministry of Finance, responded positively, but with the warning that the compensation would not include claims from the Czechoslovak land reform. Further, Czechoslovakia was no longer willing to pay in cash and made the expansion of frozen trade relations a condition. The Commission for Compensation, headed by State Secretary of the Ministry of Foreign Trade Eugen Löbl, in the end decided that the Czechoslovak Republic would pay compensation only if it received a loan from the US in the amount of two- to three times the compensation. Löbl even offered the opinion that the higher the compensation, the higher the American loan to be demanded by Czechoslovakia.38 These Czechoslovak initiatives confirmed the fact that Prague attempted to link the issue of compensation with the effort to obtain an American loan,

36 NA CR, ˇ f. 100/1, box no. 82, a. j. 612. 37 AKPR, sign. T-3030/47, or NA CR, ˇ f. 100/1, box no. 82, a. j. 612. 38 AMZV CR, ˇ f. USA TOT 1945–1954, box no. 11, m. no. 412411/54-ABO/1.

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moreover several times higher. The American side did not share such notions, however. New negotiations on compensation continued in September 1948 in Washington. The American delegation expressed a willingness to discuss compensation for nationalized American property based on the preliminarily issues discussed in Prague on the principle of global compensation. This was to be determined as a percentage of the total exports from the Czechoslovak Republic to the US, with the condition that one cash payment be first deposited into the compensation account. The US proposed compensation in the amount of 45 million USD, while admitting that it could be 35 million USD or less. One member of the American delegation, Ernest Kekich, explained the reasons for the American initiative, saying that “Americans affected by nationalization are constantly urging the central authorities in Washington, also pointing out that Czechoslovakia has already agreed with other states in this regard and that the Washington authorities are interested in resolving this issue as a matter of urgency”.39 Kekich also presented his personal stance, when he considered it necessary to resume trade between East and West. With the existence of political–ideological and military boundaries of the bipolar world (Cold War), accompanied by trade barriers (the ban on trade in strategic goods with the enemy, high import duties, etc.), this idea was unrealistic in practice and can only be considered a polite diplomatic joke. Talks were supposed to continue in Prague on the principle of global compensation. However, the understanding of the principle of global compensation on the Czechoslovak side was diametrically different than that of the Americans. Prague started from the directive of 9 November 1948, according to which the main principle circumstance was that foreign participants assert their claims against the authorities of their state, i.e. not against Czechoslovakia. But the understanding of the range of compensation, i.e. who and which assets should be covered by the global compensation, was different from the American one. In terms of the mentioned Czechoslovak Directive, this did not concern agricultural assets which had been seized under Czechoslovak land reform laws. At the same time, Prague advocated the position that the future agreement should contain a provision that all claims defined in the agreement between the Government of the Czechoslovak Republic and

39 NA CR, ˇ f. 100/24, box no. 102, a. j. 1157/2.

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the government concerned and the entities specified in the agreement will be arranged by this global settlement. The directive designated as the Czechoslovak counterclaim “the release of all Czechoslovak property, including property owned by Czechoslovak nationals of German nationality on 17 September 1938, and all legal entities established under Czechoslovak law, regardless of the nationality of the nationals, namely on behalf of the persons to whom this property now belongs according to the Czechoslovak legal order”.40 This quotation spoke clearly—Czechoslovak citizens who acquired citizenship or naturalization in the US during the war do not have a claim to property or even compensation for it, whether individual or global. It is questionable whether the Czechoslovak side, if it accepted global compensation (i.e. its partner in the negotiations should have been the US government, and not the individual applicants), could have decided or influenced the decision on the American side about who should or should not be included in the compensation. It probably could not have; otherwise, it would be an infringement on the internal affairs of another state. Informative “compensation” meetings in September 1948 in Prague and Washington continued again in Prague from 24 January to 7 February 1949. The American side came to the talks armed with an official memorandum of the US government, the so-called “Instructions for American negotiations with the Czechs on compensation requirements”, prepared by the economic department of the State Department. Although the memorandum stated that American financial assistance to Soviet satellites is in conflict with US policy, the State Department nevertheless admitted the possibility of loans, depending, however, on the Prague government’s position on compensation for nationalized property.41 It was clear in Washington that if compensation for American citizens and businesses was a priority, an accommodating gesture in the form of a possible credit would be a necessity. Ambassador Joseph E. Jacobs reported to the State Department on developments in these negotiations. The Czechoslovak side explored the possibility of getting loans from the Export–Import Bank and the International Bank and proposed an increase in mutual trade. Both delegations accepted the principle of global compensation, and the Czechoslovak

40 NA CR, ˇ ibid, annex no. 2. 41 NAR, f. State Department and Czechoslovakia 1945–1949, No. 860F.5034/1-1449.

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side further rejected compensation to Czechoslovak citizens naturalized abroad. Delegations also presented differing opinions regarding the amount of compensation, when Czechoslovakia did not want to exceed 18–20 million USD and the Americans refused to accept compensation of less than 40 million USD. The Czechoslovak side insisted on payment in crowns, and the Americans in dollars.42 New negotiations were scheduled for April 1949 in Washington to find a way out of this closed circle. However, the expert talks in Washington in April were preceded by a “domestic” Czechoslovak meeting on 6 April 1949. Its importance lay in the fact that it “armed” the delegation with instructions, which took into account the overall difficulty of the situation as well as the resulting adverse outcomes and risks. The importance and sensitivity of Czechoslovak interests towards the US dictated the stance that the negotiations were interesting for Prague only if a substantial loan was obtained. The delegation’s directives were laid out in the meeting in five main points, which included both political and economic aspects: 1. Czechoslovakia has no interest in breaking up the negotiations; therefore, the delegation must proceed in such a way that they can continue, even if concrete results cannot be achieved. 2. The delegation must be on the lookout, so as not to be manoeuvred into a politically intolerable situation, and the possible outcomes should not be more favourable to the other side. 3. With global compensation, the delegation will insist on a dollar loan of two to three times the compensation paid. 4. If the global concept fails due to American resistance, the Czechoslovak delegation will adhere to the principle of individual compensation. 5. However the negotiations do develop, the delegation must strongly raise the issue of discrimination against Czechoslovak orders, i.e. on the issue of US export licences.

42 Members of the US delegation to the talks in Prague were Ambassador Joseph E. Jacobs, Embassy Commercial Attaché Ernest Kekich and State Department Representative Frank D. Taylor. The Czechoslovak delegation was led by State Secretary of the Ministry of Foreign Trade Eugen Löbl, Director General of the Czechoslovak National Bank Leopold Chmela, and for the Ministry of Foreign Affairs Rudolf Bystrický and for the Ministry of Finance Hugo Skála. NAR, f. State Department and Czechoslovakia 1945–1949, No. 860F.5034/2-1449.

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The meeting at the Ministry of Foreign Affairs also expressed itself on the question of the loan, the repayment of which was to be made by Czechoslovakia within 15 years. Regarding the amount of compensation and its proportion to the loan amount, the meeting took into consideration the following data: if global compensation of USD 25 million was agreed, Czechoslovakia would apply for a loan of USD 50 million. If, however, the US demanded higher global compensation, the Czechoslovak delegation had permission to go up to 35 million USD, meaning Czechoslovakia would then demand a higher credit line (three-fold), i.e. about 105 million USD. The Czechoslovak side assumed US interest rates would be reasonable and common for the US credit market.43 What did these Czechoslovak compensation credit scenarios indicate? In effect, the unreality of Prague’s ideas. Namely, in keeping the 15-year loan obligation, this meant repaying around 75 million USD, i.e. 5 million USD per year, in the first case, and 140 million USD, i.e. around 9.3 million USD per year, in the latter case. At that time and in the context of an acute shortage of foreign exchange for the Czechoslovak Republic, this was not really possible. Ambassador Jacobs notified the State Department of the Czechoslovak side’s consent to talks in Washington on 24 March 1949, based on an interview with Löbl ten days earlier. He informed headquarters in Washington that the Czechoslovak side was planning to declare that it wants to use its gold reserves (monetary gold held by the Tripartite Gold Commission on an account at the Federal Reserve Bank) as a guarantee for obtaining private loans, if the loan negotiations fail. However, such a possible approach by the Czechoslovaks did not worry the US government, particularly with the knowledge that it saw itself as the decisive element that would determine the future of the Czechoslovak Tripartite Gold. The Czechoslovak delegation left for the talks in Washington under the leadership of Eugen Löbl. From the get-go, the discussions were affected when the financial expert on global compensation, Hugo Skála, left the delegation before the meeting with documentation and declared himself a political emigrant. The US delegation was led 43 The meeting at the Ministry of Foreign Affairs on 6 April 1949 in Prague was chaired by the Minister of Foreign Affairs Vladimír Clementis. The Minister of Foreign Trade Antonín Gregor, as well as Eugen Löbl and Rudolf Bystrický, also took part in it. ˇ NA CR, f. 100/1, box no. 64, a. j. 523.

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by Paul H. Nitze, who welcomed the imminent dialogue and submitted a plan for the talks which was to resolve compensation issues. He supported the idea of global compensation and in 9 points summarized the meeting agenda: the issue of dual citizenship, claims involving investments in Czechoslovak crowns, real ownership under US law, land reform claims, the range of the agreement, public and private claims, the method of distributing compensation, compensation amount, payment terms, and other economic topics.44 Since Löbl came to the US with the instruction that the main task of his mission was to achieve credit and expand trade relations in the compensation negotiations, he could not deal with the loss of the global compensation expert and the delegation’s documentation. After requesting and receiving instructions from Czechoslovakia, he interrupted the negotiations on global compensation for technical reasons and returned to Prague. The situation was a failure primarily of the Czechoslovak side. In July 1949, Ambassador Jacobs again informed the State Department that, based on sources close to the embassy, Czechoslovakia wanted to resume negotiations on nationalization compensation in September 1949, mainly due to the need to obtain credit and the abolishing of US controls on strategic goods exports. The Czechoslovak side was to propose compensation in the amount of 32 million USD, and its expert delegation was to negotiate specific technical requirements; however, it was not authorized to conclude an agreement. Therefore, Prague cancelled the planned trip to the US.45 Thus, the question of resolving compensation, be it global or individual, was again nowhere in sight. The unpreparedness of the delegation on the Czechoslovak side, or its zero authority, leads to the opinion that the Czechoslovak Republic in this period had no intention of resolving the compensation due to political aspects, although the need for a dollar loan was for them highly current and acute. From 1950 onward, initiatives for bilateral negotiations ceased. American interventions in matters of the property of American citizens also ceased, and information was again acquired through the embassy in Prague. In August 1951, the Office of the Treasury at the Treasury Department reported that it had registered about 800 US applications

44 AMZV CR, ˇ f. USA TOT 1945–1954, box no. 11, m. no. 412411/54-ABO/1. 45 NAR, f. State Department and Czechoslovakia 1945–1949, No. 860F.5034/6-149.

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for compensation or restitution.46 Additional negotiations on compensation were not proposed by the American side until 1956, in the amount of 18 million USD. The talks essentially failed due to the reluctance of both parties to compromise on setting the payment terms. The issue of compensation for nationalized and confiscated American assets in Czechoslovakia thus remained unresolved for decades. And for Washington, the fact was confirmed that if it wants to achieve compensation, it has a strong trump card in its hands: not to release Czechoslovakia’s share of monetary gold in the TGC. When looking at the issue of Czechoslovak–American relations in connection with Czechoslovak monetary gold after the Second World War, it is impossible to avoid American loans and credits, which had an important place in US foreign policy. On the one hand, they documented the economic and political power and position the US had in the world, on the other hand, the position and standing of states dependent on credit and loans. For Czechoslovakia, they were an extremely important element that could have had a positive effect on its further economic development. The US developed its lending policy after the Second World War in two fundamental dimensions. The first was short-term and low-volume loans, the second long-term and large-scale loans. Both dimensions were affected by the political background or orientation of the nations involved. This can clearly be documented in the case of the Czechoslovak Republic. The short-term US loans to Czechoslovakia included a loan of 2 million USD for the purchase of tobacco, approved in the summer of 1946 and released for 26 months.47 An additional dollar loan (20 million USD) was used for the purchase of American cotton, although originally initiated by the Czechoslovak side to meet the needs of its post-war textile production. It was ultimately approved by the American side, however, in the summer of 1946, as the US had excessive war stocks of this article. The US State Department expressed its agreement with the immediate provision of a small loan from the Export–Import Bank (Exim Bank) in a note dated 11 December 1945.48 Czechoslovakia was to draw on the loan with a 2.5% interest rate within 15 months.

46 AMZV CR, ˇ f. USA TOT 1945–1954, box no. 11, m. no. 412411/54-ABO/1. 47 NA CR, ˇ f. MZV-VA, box no. 500, m. no. 1–97 z 14. 48 NAR, f. State Department and Czechoslovakia 1945–1949, No. 860F.51/12-1145.

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Short-term and low-volume loans were supplemented by a 50 million USD loan provided by Exim Bank for the purchase of US military surpluses in Europe, which represented significant unproductive capital for the US.49 Deliberations on this loan began with an offer by the American side for a purchase worth 10 million USD,50 but the Czechoslovak government asked the US to increase the loan to 50 million USD. The basic terms of the loan were as follows: a total of 50 million USD was to be repaid within 30 years at an interest rate of 2.375%, and the first instalment was to be made five years after the signing of the loan agreement. Czechoslovakia began drawing on the loan as early as January 1946, although the loan agreement was not signed until 28 May 1946 (the US preliminarily released 10 million USD for the loan drawdown in January 1946). Entrusted representatives of both states were in charge of the practical implementation of the purchases of American war surpluses. For the US, this was the Office of the Foreign Liquidation Commissioner (OFLC), the central Parisian body commissioned to broker the purchase of military surpluses by European states and to conclude contracts. For the Czechoslovak side, the permanent delegation from the Ministry of Foreign Trade, also based in Paris, was entrusted with the purchases. Even during the talks on the provision of surplus credit in February 1946 in Washington with representatives of Exim Bank, separate internal negotiations were already taking place on the Czechoslovak side, the socalled inter-ministerial meetings of the Ministries of Foreign Trade and Foreign Affairs, with questions on how to proceed with the purchase of military surpluses addressed in them. The question of whether the entire act on the Czechoslovak side should be entrusted to a private company or whether it should be led by one of the ministries required a special solution. The company Omnipol showed interest, and it began to negotiate with the OFLC. Eventually, the Supreme Accounting and Audit Office decided that purchases could only be made by a ministry or government delegation, without domestic or foreign brokers and without commissions or fees from the purchases.51 Therefore, on the basis of a

49 AMZV CR, ˇ f. ZÚ-Washington, box no. 4, m no.. 3486. 50 NAR, f. State Department and Czechoslovakia 1945–1949, No. 860F.24/8-1446. 51 NA CR, ˇ f. Ministry of Industry (MP) 1945–1950, box no. 1110, m. no. 101.913/

47-III/9.

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government resolution of 15 February 1946, a special department was established at the Ministry of Foreign Trade to record all acts associated with the purchase, distribution and settlement of US military surpluses. On the basis of reports coming from Paris, this department (III/9) from the beginning monitored the development of the organization and technology of surplus goods sales and coordinated the entire agenda.52 According to the guidelines, purchases were always to be made by a coordination commission comprised of representatives of the Ministry of Foreign Trade and the Ministry of Finance. With the selection of materials and goods, only the necessary items were to be taken into account, particularly machines for renewing industry, and the purchase of railway wagons and locomotives was to be agreed in order to have a fleet of rolling stock available for transport. The Czechoslovak ministries submitted the complete purchasing programme on 7 February 1946. It was learned from them that the total requirements were about 40 million USD, so some 10 million USD was a reserve for later or unforeseen requirements. The purchases themselves were made on the basis of the so-called offerings, i.e. lists of bids issued by OFLC containing a description of the item offered, the place of storage, the number of units and the price. The offerings were available to the representatives of the purchasing authorities in Paris and, in addition to this, department III/9 at the Ministry of Foreign Trade sent them to all the offices which, based on the type of goods offered, were eligible for the necessary purchase. The loan agreement itself for the purchase of the US military surplus was signed in Washington on 28 May 1946. It was signed on behalf of the US by Special Representative of the State Department Thomas B. Cabe, and on behalf of Czechoslovakia by Ambassador Vladimir Hurban.53 According to the agreement, the US provided the Czechoslovak government with a loan of 50 million USD on the condition that it would be repayable in dollars and in 25 equal instalments, starting on 1 July 1952 at 2.375% interest. On the day the agreement was signed, however, the American side published the text of the US–French agreement, according to which all US military surpluses located in France were handed over to France with

52 NA CR, ˇ f. Hubert Ripka, box no. 221, m. no. 1-139/1-34/28-34/94. 53 NAR, f. State Department and Czechoslovakia 1945–1949, No. 860F.51/5-2846.

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immediate effect. Further, the French acquired a pre-emptive right to purchase surpluses in all other countries in continental Europe. Therefore, the purchases of the Czechoslovak delegation had to be limited to items located in Belgium, Italy and Germany. In Italy, most of the valuable goods were handed over to the Italian government or purchased by the UNRRA. Furthermore, the issue of transporting purchased goods from this area at this time was an almost insurmountable obstacle. In the American zone of Germany, the activities of the Czechoslovak purchasing delegation were hindered by the fact that it was very difficult to get permission to enter the warehouses from the American occupation authorities, so purchases were to be made without the necessary inspection of the goods. The Czechoslovak delegation was thus forced to limit making its purchases to Belgium. However, sales of US surpluses from warehouses in Belgium did not start on a larger scale until early September 1946. The Czechoslovak government took a negative stance regarding the French–American agreement on the preferential right to purchase military surpluses. At the request of the Ministry of Finance, the Ministry of Foreign Affairs, in note no. 1512 from 27 July 1946, accused the US of discrimination in relation to the surpluses. On the one hand, the US concluded an agreement with the Czechoslovak Republic on 28 May 1946 for a loan of 50 million USD for the purchase of American surplus military equipment, while on the other hand, by signing an agreement with France on that same day, they minimized Czechoslovakia’s purchasing opportunities. In the note, the Ministry of Foreign Affairs expressed the fear that by reducing purchasing opportunities, the 50million loan USD would not be fully used and would thus not serve its originally intended purpose. It called on the US government to remove the discriminatory barriers and permit the purchase of surpluses for the entire amount of the loan.54 American Ambassador Steinhardt claimed the critical objections in the Czechoslovak stance were a consequence of the concentrated rise of the communists in the Czechoslovak government and the effort of the Ministry of Foreign Affairs to dictate to the US the extent to which the Czechoslovak Republic should provide assistance.55 54 AKPR, cˇ . j. 0249/45, m. no. 135.530/IV-3/46. 55 Michálek, Slavomír. Nádeje a vytriezvenia, cˇeskoslovensko-americké hospodárske vztˇahy

v rokoch 1945–1951 [Hopes and Disillusionments, Czechoslovak-American Economic Relations in the Years 1945–1951]. Bratislava: Veda, 1995, p. 65.

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Acting Secretary of State Dean Acheson also rejected the allegations of discrimination in the sale of US military surpluses on the 50 million USD loan. He cited as the reason for the lack of success of Czechoslovakia’s purchases compared with other countries was its own delay in making them. According to Acheson, the Czechoslovak government delayed negotiations on the loan and did not accept it until May 1946. Despite the absence of a loan agreement for the period of February–May 1946, the American side sold excess material (goods) worth 1,137,567 USD to Prague and goods worth 412,000 USD were ready for sale. By the end of August 1946, Czechoslovakia had purchased goods worth 6,815,000 USD, submitted new orders for another 7 million USD and imported 5.2 million USD worth of goods to the Czechoslovak Republic.56 The drawing of the Czechoslovak surplus loan stopped and the purchase of American surplus military materials was suspended on 13 September 1946, although deliveries of purchased goods continued until May 1947. The official US State Department instructions stated that for the US “there is no desire to support the current (Czechoslovak) government or to contribute in any form to the official propaganda presenting American financial aid as an imperialist effort to enslave Eastern European states”.57 In reality, the US government justified the political motives for this unexpected step with a Czechoslovak campaign criticizing American efforts and policies and the misinterpretation of American economic aid. It can be assumed that it had in mind the mentioned stance of the Czechoslovak delegation at the peace conference in Paris, when it rewarded with applause the speech of Andrej Vyšinský about US efforts to achieve European economic slavery through the policy of beggar dollar alms. Another motive was the accusation of discrimination in the sale of military surpluses in Europe and the improvement of the economic situation of the Czechoslovak Republic, which put the republic in a better economic position than other states. The last officially announced reason for the American step was the Czechoslovak–Romanian protocol relating to the re-export of surplus military material originally purchased by the

56 NA CR, ˇ f. MP 1945–1950, box no. 1109, m. no. ¼-531/46. 57 Michálek, Slavomír. Nádeje a vytriezvenia…, p. 66.

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Czechoslovak government for its own needs in the amount of 10 million USD to Romania.58 US State Department officials openly presented the uncompromising American position on the issue of stopping surplus credit to Ambassador Juraj Slávik on 27 September 1946: the US will only sell goods to those in which it has political confidence.59 The US stated the official reason for the negative stance on drawing a surplus loan of 50 million USD from the Exim Bank for the purchase of military surpluses in Europe in a State Department memorandum on 28 September 1946. The author of the memorandum, John Hickerson, stated in it that the Czechoslovak side did not understand the intentions of America’s loan policy; therefore, alongside the suspension of this loan, negotiations on further loans were also blocked by the US.60 This step by the US also highlighted the Czechoslovak government’s unwillingness to sign an agreement between the two countries on compensation for nationalized American property. The Czechoslovak position on the American step was presented by State Secretary of the Ministry of Foreign Affairs Vladimír Clementis on 24 October 1946 at the Foreign Affairs Committee of the Constituent National Assembly and on 31 October 1946 at the Constituent National 58 The Czechoslovak–Romanian agreement on the re-export of goods contained four articles and a protocol. It laid out the conditions under which the Czechoslovak government extended a 10 million USD loan to Romania to obtain US military surplus materials, which the Czechoslovak Republic secured through the 50 million USD loan from Exim Bank. The goods so obtained were intended only for internal Romanian use, without the guarantee of Czechoslovakia, as far as the quality and quantity of the delivered goods were concerned. Alongside the price of the goods, Romania had to pay administrative costs to Czechoslovakia (7%), and the regular annual instalments were charged 6% interest for five years. The agreement and the protocol were both signed on 14 September 1946, and were subject to US consent. On 16 September 1946, the Ministry of Foreign Affairs delivered this protocol to the American ambassador in Prague. Ambassador Steinhardt commented on the situation, saying that the US government is competent to sell its surplus military material to the Romanian government, if it decides to do so, without the mediation of the Czechoslovak government. He further stressed that the surplus loan had been increased to 50 million USD for Czechoslovakia for its own use, and not with the intention that part of it would be transferred to another state. Such an argument is necessary to accept, although, on the other hand, Czechoslovakia cannot be blamed either, as there was a clause in the agreement with Romania that made its validity conditional on Washington’s consent. 59 AMZV CR, ˇ f. USA TOO 1945–1959, box no. 38, m. no. 289/A/46. 60 Byrnes, James F. Speaking Frankly. New York, 1947, pp. 143–144.

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Assembly itself. For the most part, he repeated the official American reasons: this was allegedly a trade and political conflict, when some Czechoslovak mistakes were only a pretext for American action. According to Clementis, the applause of a small state cannot be sufficient cause for a sharp intervention for a great power. He admitted, however, that the content of the agreement with Romania could give the US the impression that they could sell the goods to Romania themselves if they so wished, and do so without the burden of 7% of the administrative costs.61 Furthermore, a week later, he stated that the suspension of the 50 million USD loan, together with the suspension of talks on the 50 million USD loan, was an unusual step in the history of the friendly states, and he found no principle differences between the two countries on the issues of international trade or compensation for nationalized US assets. He described this step as a small unpleasant episode and a transient phenomenon in the political and economic relations with the US.62 These views of Clementis on the matter at hand were a deliberate alleviation of the situation. What is questionable is why he reacted in this way. The press also presented different and varying views on both sides. In an editorial on America’s lending policy, the New York Times on 18 October 1946 wrote that a well-known feature of both communist and pan-Slavic propaganda was the accusation that the US had enriched itself through the war and was now using its economic and financial aid to gain imperialist status. When bringing out this accusation, however, the New York Times further wrote, it is forgotten that almost 52 billion USD was expended on deliveries within various assistance actions to the war Allies, much of which was intended for the Slavic nations. Similar commentaries, supplemented by a lack of understanding of the motives and purpose of American aid to post-war Europe, were also made by other dailies and periodicals—e.g. the Washington Post, World Report, etc. The bimonthly World Dispatch offered another interesting opinion, mentioning on the topic of Czechoslovak–American relations that the lack of dollars limited Czechoslovakia’s trade with the West. The dollars the Czechoslovak Republic could have used to expand its trade to the West were being withheld in Washington. The article criticized the US government for its 61 Former Archive of the Federal Assembly (AFZ) of the Czechoslovak Federative ˇ Record from the 6th meeting Republic, Prague, f. Reports on meetings of the NZ RCS, ZV ÚNZ, pp. 3–4. 62 AMZV CR, ˇ f. GS—K 1945–1954, box no. 65, m. no. 206.760/A/46.

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view that the Czechoslovak Republic would have to change its policies in order to receive a dollar loan and stated that from the banker’s point of view, Prague in its current situation is a much more reliable borrower than other candidates for US loans candidates, such as Greece, Italy, China, for example.63 The mentioned source pointed to a strong connection, or interdependent relationship between politics and the economy in the US in this period as well. The Christian Science Monitor also commented on the standing of Czechoslovakia, stating that on the one hand, Czechoslovakia enjoyed the infinite trust of the Soviet Union on foreign policy issues, but on the other hand, it depended directly on Western economic aid for its existence. It described the previously mentioned applause of communist members of the Czechoslovak delegation in Paris during Vyšinský’s speech on the US dollar as an offensive and politically naive lapse. According to the Christian Science Monitor, this applause “deprived Czechoslovakia of a loan of 90 mil. dollars 64 and it can be said that it was the most expensive applause in history”.65 Even though Czechoslovak purchases of US surplus goods officially ceased on 13 September 1946, deliveries of these goods continued until May 1947. Among the first goods delivered were 20 locomotives, followed by aircraft and binding material, earthwork machinery, bulldozers, railroad wagons and aircraft. Imports of clothing, hospital equipment, trucks and cars, tires, spare parts, petrol and oils continued. Sometimes, however, these were goods that would be difficult to identify as essential or necessary. These included, e.g. mosquito nets, barbed wire or tents.66 The purchase also included raw materials for the chemical, metallurgical and pharmaceutical industries. Agricultural items included corn, flax, soybeans, ploughs, grain dryers, refrigerators and freezers, and for the construction industry cranes, excavators, crushers, etc. In total, the Czechoslovak government delegation concluded 84 purchasing agreements for goods worth a total of 9,465,252.01 USD, but only a portion of the contracted goods came to Czechoslovakia. According to OFLC

63 Michálek, Slavomír. Nádeje a vytriezvenia…, p. 71. 64 The 40 million USD for a surplus loan and 50 million USD for stopping negotiations

on a reconstruction loan to buy US equipment and machinery. 65 NA CR, ˇ f. MZV-VA, box no. 489, m. no. 1–97, f. 5. 66 AMZV CR, ˇ f. USA TOO 1945–1959, box no. 37, m no. 233.918/IV-3/47.

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accounts, Czechoslovakia took over the material with a total purchase value of 7,599,084.97 USD.67 It is an undeniable fact that the benefits of the entire “surplus” purchase could have been significantly higher, if not for the contradictory, politically motivated steps on both the Czechoslovak and American sides. The Czechoslovak government stopped meeting its obligations under this loan on 2 August 1952. These obligations consisted of three parts: debt capital, interest due and interest on the unpaid interest. Czechoslovakia had to accept the fulfilment of these obligations. They then became part of the American agenda of blocked monetary gold and resolving the open economic and financial issues between Czechoslovakia and the US. If we map Czechoslovak–American relations after the Second World War in terms of credits and loans, we have to mention the Marshall Plan (the European Recovery Programme, ERP), which Czechoslovakia first accepted, but then on 9 July 1947, after pressure from Stalin, cancelled its participation in68 and the United Nations Relief and Rehabilitation Administration (UNRRA) project. The UNRRA meant significant material assistance to many of the war-torn economies of Europe (and outside of Europe). From the total package of 3.766 billion USD between 1943 and 1946, Czechoslovakia obtained various goods (food, medical supplies, raw materials, rolling stock, agricultural machinery, machinery for industry and transportation, etc.) totalling 253 million USD, and the purchased goods came to the Czechoslovak Republic in 1948. The US covered two-thirds of the funds in the entire UNRRA project, and in the case of Czechoslovakia exactly 73%. On the whole, the UNRRA project must be viewed as a work of broad international cooperation, solidarity and human understanding that was unprecedented in modern history. Czechoslovak–American relations generally developed positively up until the Prague communist coup in February 1948. Czechoslovakia took advantage of America’s credit policy, and both countries recognized each other’s most-favoured-nation clause on the basis of the previously mentioned “Trade Policy Declaration” of 1946 (replacing the interstate trade agreement), and, from 1947, also as members of the General Agreement on Tariffs and Trade (GATT). The fundamental debatable issue

67 NA CR, ˇ f. MP, box no. 1110, m no. 101.913/47-III/9. 68 Regarding the Marshall Plan and Czechoslovakia, see: Michálek, Slavomír. Nádeje

a vytriezvenia, pp. 83–113.

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between the two states was the mentioned matter of compensation for American property nationalized and confiscated in Czechoslovakia, which became a major political issue after February 1948. And the issue of returning Czechoslovakia’s share of the “Tripartite” gold was linked to it. Of course, broader, bipolar Soviet–American relations were also reflected in Czechoslovak–American bilateral relations in the late 1940s and early 1950s, and these, as we know, they were very tense during the period under review. On 1 March 1948, both houses of the US Congress passed an embargo on trade with the states of the Soviet bloc in an effort to limit the export of US strategic goods behind the Iron Curtain. This expanded US control of foreign trade took on an openly political dimension on 26 March 1948, when President Harry S. Truman signed a declaration that contained a list of products classified as military materials. Their export to the USSR and its satellite countries was banned for reasons of US national security and foreign policy. Specifically for Czechoslovakia this meant, for example, that it could not import from the US items such as equipment for drying milk, aluminium foil, X-ray lamps, etc.69 Another tough move by the American administration against Czechoslovakia and other Moscow satellites was the ratification of the Export Control Act in February 1949. Based on its wording, a so-called Advisory Committee for Export Policy was formed, which, in cooperation with the US Department of Commerce, prepared quarterly lists of controlled goods.70 New complications in the relationship between the two states occurred in the spring of 1951, when Associated Press correspondent William N. Oatis was arrested by the Czechoslovak security forces. He was accused of espionage in proceeding on 2–4 July 1951 and was sentenced to 10 years in prison. In response, the US revoked the validity of US passports to Czechoslovakia, banned Czechoslovak planes from flying over the western occupation zone of Germany, required fingerprinting of Czechoslovak 69 AMZV CR, ˇ f. GS-K, box no. 207, m no. 2737/48/Hˇc. 70 This involved goods in two categories—those in short supply and those subject to a

security inspection—in both cases prohibited for export to the Czechoslovak Republic and other “people’s democratic” countries. This covered 90% of the types of goods in world trade. The practice of the Ministry of Commerce was such that the American maker or exporter did not get a so-called export licence for the designated goods. In contrast, US tariffs for imports were set centrally at such high rates that such goods were absolutely incapable of competing on the US market due to pricing.

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citizens when issuing visas to the US at the US consulate in Prague, and did not verify consular commercial invoices. The approach of the American central authorities in issuing export permits (licences) in relation to Czechoslovakia led first to the withholding of deliveries from the US to Czechoslovakia and later to the cancellation of already issued licenses for prepaid goods. This fact was best documented by the case of a wide strip rolling mill, which the Czechoslovak joint-stock company Banská a Hutní, Tˇrinec, ordered in 1947 through a trading company with steel and metallurgical goods, a.s. Investa, and for which it gradually paid over 16 million USD. The rolling mill was completed in the US in 1950, but the US Department of Commerce refused to issue an export permit for communist Czechoslovakia, citing the Trading with the Enemy Act of 1917. What was the genesis of these problems between Czechoslovakia and the US in relation to the mentioned wide strip rolling mill? After the mentioned embargo by the US Congress on trade with the USSR and its satellites in 1948, as well as after additional steps by the American administration, it was clear that it would be very difficult for Czechoslovakia to obtain the ordered and already paid-for rolling mill. This was indicated by the lists of strategic goods, the non-issuance of export licences, the non-verification of consular invoices and so on. Prague, therefore, began looking for ways to resolve the situation. Czechoslovakia’s problem regarding the wide strip rolling mill acquired a new, much more serious dimension after the arrest and sentencing of William N. Oatis in the spring and summer of 1951. The only real possible solution for the Czechoslovak side was to agree with a third party which would then accept the rolling mill for the set price, with revenues from the sale going to Czechoslovakia. There were several such “third party” candidates. First, a financial group from Panama, the East–West Syndicat Civitas, introduced itself as a potential buyer, and at the end of 1950 had already signed a preliminary purchase agreement with Czechoslovakia. These negotiations failed, however, in July 1951. Next in line was the German group Vereinigte Stahlwerke, which signed a preliminary purchase agreement with the Czechoslovak side in May 1951. However, this agreement was not valid even at the end of 1951, because Germany had not received permission to build a steelrolling mill. What’s more, American approval, or the promise of an export licence, was missing. It was assumed that Germany had a long-term

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interest in the rolling mill and that it would bid for it through the American trading company World Commerce Corporation (WCC). Another bidder with whom the Czechoslovak side negotiated over the rolling mill was the Koons trading company, through which Czechoslovakia had also sold other “frozen” American machinery and equipment. However, in September 1951, Czechoslovakia discontinued negotiations on the rolling mill with it.71 Its purchase price, which at that time Czechoslovakia had already paid, was 16,140,431.33 USD.72 The “fate” of the rolling mill in the US was influenced by two main factors. The first was the State Department, for which this status—that the Czechoslovak side had neither the rolling mill nor the money—was suitable and which wanted to use this situation for political extortion, particularly on the issue of compensation for nationalized and confiscated American property in Czechoslovakia. The State Department did not seize the rolling mill officially or directly, but it blocked its availability to the Czechoslovak side by secondary means. The second main factor is the Office of Defence Mobilization and its agencies, especially the socalled Defence Production Administration and the National Production Authority. These authorities were in charge of increasing arms production or weapons programmes in the US. In addition, they were in charge of covering the needs of civilian production that could be easily reoriented to arms production with simple modifications. These political-armaments circles had a primary interest in having the rolling mill put into operation in the US, especially because sheet-metal production was not covered in the US for year 1952.73 And Czechoslovak side well knew that although the rolling mill was designed and manufactured for civilian production, with a simple modification it could roll sheets for the production of tanks. By introducing the rolling mill into production, the American side would save time, material and the labour force, which was assessed as being advantageous. This interest of the American armaments lobby was supplemented by the interest of steel monopolies, which could receive state loans for buying the rolling mill.

71 NA CR, ˇ f. Antonín Zápotocký, zv. 63, a. j. 1252. 72 NA CR, ˇ ibid. 73 NA CR, ˇ ibid, letter of Karl Švec to Minister Antonín Gregor from 13 December

1951, m. no. 23637/51.

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The legal issues of the equipment in question represented another angle of view around the rolling mill. In the first place, this involved the possibility of legal interference by the US government against the Czechoslovak rolling mill. The legal basis for US confiscating the rolling mill due to American defence was provided by the Defence Production Act of 15 September 1950 (Act No. 774.64 Stat 798). This law, under the title of Art. II. Section 201 (the Authority to Requisition), provided that “the President of the United States is authorized to seize against the payment of equitable compensation any property or its use for defense purposes if he decides that: such property is necessary for national defense, that such a need is immediate, imminent and such that does not permit delay, or the use of any other means, that all other means have been exhausted to obtain use of the property for the purposes of US defence under decent and reasonable conditions”.74 Regarding fair compensation itself, the President should determine the sum or its amount. If the person entitled to compensation is not willing to accept the amount determined by the President as full compensation, then 75% of this amount should be paid to him immediately and he or she can claim additional payment by means of a legal action. The President was also authorized to decide whether such confiscated property is no longer needed for defence and to return it to the original owners, if they wanted it and if they paid the corresponding price for it. Via facti the President, by government decree no. 10200 of 4 January 1951, delegated his authority to seize the Czechoslovak wide strip rolling mill to the Weapons Administration. This procedure related to property on US soil regardless of who it belonged to. At this time, the rolling mill in question was not yet in real Czechoslovak ownership, because the last instalment of the market price of the goods was still lacking, which meant that the Czechoslovak side had no ownership right to the rolling mill, but only an obligatory claim. In mid-January 1952, the manufacturer and supplier of the rolling mill—the United Engineering and Foundry Corporation of Pittsburgh— notified the Czechoslovak delegation that they had just received an order from the US Treasury Secretary appointing the US company as the administrator of the equipment. With this regulation, the Czechoslovak side lost the right of access, or the US government prohibited any access 74 NA CR, ˇ ibid, letter of Karl Švec to Minister Antonín Gregor from 4 January 1952, m. no. 3026/51.

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without its consent. On 17 January 1952, an order of US Treasury Secretary John Snyder was issued under the Military Powers Act of 1941 and the Enemy Trade Act of 1917. Under that law, any transfer of the rolling mill was invalid without the consent of the Secretary of the Treasury.75 The Americans presented the order of Secretary Snyder not as pressure from the State Department for the release of imprisoned journalist William N. Oatis or on the issue of compensation, but as a procedure in line with US security and defence interests. This approach rested on sections 1B and 5B of the mentioned US Enemy Trading Act, according to which the President of the US may prohibit transactions with any US property in a period of “national danger”. At the beginning of summer 1953, Argentina entered into the game on the sale, or the purchase, of the rolling mill. However, the US government again stepped into the promising Czechoslovak–Argentine dialogue around the rolling mill. On 14 August 1953, Ambassador George Wadsworth visited Viliam Široký in Prague. He delivered to him an aide-mémoire, informing him by order of his government that the release of William N. Oatis in mid-May had resolved one of the most important issues between the two governments. The US government announced the forced public auction of the Czechoslovak wide strip rolling mill on 24 March 1954 in the form of an order from the new US Treasury Secretary, George M. Humphrey. The introduction to the order stated that the interests of the US government, which protects the outstanding claims of US citizens against Czechoslovakia, require that this property—the rolling mill or the proceeds of its sale—remain available for use in connection with the settlement of these claims. The net proceeds will be deposited into a special account at the Federal Reserve Bank in the state where the assets were stored. The sealed bids will be opened on 28 April 1954, and the Treasury Department will select the one that is most advantageous in terms of price, assuming the American conditions are met. The winner of the tender will pay the amount for the rolling mill within 10 days. After receiving this amount, the administrator will draw up a sales note, by which the property will be transferred to the buyer without violating the existing confiscation rights.76 On 14 April 1954, the Czechoslovak government responded 75 AMZV CR, ˇ f. USA TOT 1945–1954, box no. 7, m. no. 150.624/53-ABO, or Federal Records doc. 57–847. 76 Point no. 5 of section “a” of the Order of the Secretary of the Treasury, G. Humphrey, from 24 March 1954 on the forced auctioning of the rolling mill, reads: “The

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with a note to the steps announced by the US government by stating that it reserved the right to retaliate against the US government’s discriminatory action.77 This reaction of Prague was understandable and was to be expected. On 17 May 1954, the US Treasury Department announced that it had accepted an Argentine company’s bid of 9 million USD for the rolling mill and its accessories in a forced auction that day. The sealed written bids were scheduled to be opened on 28 April 1954, and the 9 million USD bid sent by Buenos Aires-based Sociedad Mixta Siderurgia Argentina was the highest. The second-place bid for 1.5 million USD came from the Harvey Machine Company of California. The US Treasury Department further announced that the winning Argentine company is a joint venture between the Argentine government and private steel companies in Argentina. Sociedad Mixta Siderurgia Argentina also confirmed that it will use the rolling mill equipment for a new plant near Buenos Aires as part of the development of the steel industry in Argentina. The US Treasury Department’s report also announced that given the fact that the Czechoslovak side refused to compensate US citizens, the US government decided to sell the rolling mill at the best price and the money would be blocked in a special account in the US until Czechoslovakia has settled US nationalization claims.78 To get a general idea of the parameters or production focus and capacity of the wide strip rolling mill in question, a few more important facts need to be stated. It had a wide range of uses. It could produce material that was used in the manufacture of car bodies, steel furniture, pipes, the so-called “white plate” used in the food industry, but with a simple modification, it could roll steel sheets for the production of tanks and armoured personnel carriers, and its potential use in the armaments industry was therefore undoubted. The equipment did not produce socalled crude steel, but processed steel, both hot (rolling steel reduces the metal diameter) and cold (further rolling and thinning of the material). interests of the United States require that the property be sold and that the proceeds of that sale remain available for use in connection with the settlement of US claims against Czechosloˇ vakia”. NA CR, f. 100/3, m. no. 421.672/54, Diplomatic correspondence between Czechoslovakia and the USA for the first half of 1954. 77 NA CR, ˇ f. MF-T, cˇ . kart. 1955–56, m. no. 141.852/5-5ABO/1. Information for the Minister for negotiations in PB, guidelines for negotiations with the USA, p. 16. 78 AMZV CR, ˇ f. USA TOT 1945–1954, box no. 6, m. no. H-485.

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The rolling mill in question was manufactured in such a way that 75% of its products were to be cold-rolled and 25% hot-rolled, and the planned capacity was 400,000 tonnes of strip steel annually. After delivering a certificate that the rolling mill would not be reexported and will be used in Argentina, it was loaded in the US in July 1954 and shipped to Argentina. The commissioning of the entire complex took nearly two and a half years. We can look at the issue of the Czechoslovak wide strip rolling mill from several angles and on several levels, and the Czechoslovak–American economic and trade relations must be seen as the dominant one. The rolling mill, or the blocking of it, which represented severe discriminatory pressure in terms of international trade relations between countries maintaining diplomatic relations, was also one of the few tangible effective levers the US could use to deal with compensation, in addition to the blocked Czechoslovak monetary gold.

CHAPTER 5

The Oatis Case, IBM in Czechoslovakia and the Augsteins’ Case

What was the real background of Oatis’s “prison” story in Czechoslovakia? William N. Oatis came to Czechoslovakia in June 1950 with the assignment to take over management of the Prague branch of the Associated Press. Shortly after arriving in Prague, he was contacted by the State Security (StB) with an offer to work as an agent for Gottwald’s communist regime. Oatis refused to do so. The subsequent development of the situation around him—what is generally referred to as the “Oatis case” in the documents of the Ministry of Interior or State Security—played out according to a proven scenario. State security first monitored, then seized Oatis; they devised his anti-state activities and accused him of espionage. On 4 July 1951 (the day of the largest American holiday, Independence Day), he was sentenced to 10 years in prison in a trial by the State Court in Prague. This process had two important political dimensions for the Czechoslovak communist regime—an internal one and an external one. From the internal point of view, the Czechoslovak State Security Service was to show with it the connection of selected domestic political representatives with the imperialist West, and from the external one to demonstrate to the world that little Czechoslovakia is not afraid of the US and that it will not give in to it.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Michálek, Nazi Germany and the Role of the US in the Fate of Czechoslovak Monetary Gold, https://doi.org/10.1007/978-3-031-38758-6_5

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The accusation of espionage and the arrest, investigation, trial and imprisonment of William Nathan Oatis in the summer of 1951 also had an international impact. It led to the already cold, tense and complex bipolar Soviet-American as well as bilateral Czechoslovak-American relations (the rolling mill, the blocked monetary gold, IBM, the compensation for nationalized American property) acquiring a new serious rift. At the beginning of the 1950s, Czechoslovak–American bilateral relations had almost slipped to the freezing point. The diplomatic “game” around William Nathan Oatis officially began on 25 April 1951, two days after his arrest. The Czechoslovak Ministry of Foreign Affairs announced in a note to the US Embassy in Prague that the head of the Associated Press in Prague had been “detained by the Czechoslovak security authorities for anti-state activities. According to witnesses, William Nathan Oatis entrusted former employees of the Prague office of the Associated Press with obtaining and verifying secret reports. Further, he acquired and disseminated illegal publications defaming the Czechoslovak Republic and its establishment, and used Czechoslovak members employed in the Prague office of the Associated Press for similar purposes”.1 The Czechoslovak Ministry of Foreign Affairs then rejected an official request of the American side to visit Oatis. It also refused to allow Oatis an American lawyer. Even this initial diplomatic correspondence showed that the Czechoslovak side was unwilling to give up anything, even unimportant things, regarding Oatis. Therefore, it could not have been a surprise that the American side followed with a vigorous, first political step—on 2 June 1951, the State Department issued a decision in which it revoked the validity of American passports for trips to Czechoslovakia. The US used political arguments in particular to justify this approach. To find a way out of this vicious circle that was acceptable to both sides, each of which was using a different interpretation of facts and principles, was impossible, even though it is impossible to deny the efforts of the American diplomatic circle in particular to resolve the incident. The meeting at the Czechoslovak Ministry of Foreign Affairs with Minister Viliam Široký, initiated by Ambassador Ellis O. Briggs on 15 June 1951, confirms this. According to the minutes of the meeting, Briggs explained to Široký that the American side had an eminent interest in the release of

1 AMZV, f. USA TOT, 1945–1954, box no. 19, m. no. 117.943/A-V-1.

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Oatis and asked why he had been arrested. Široký’s reply was flawless— this was a case against the Czechoslovak state; he had studied the file himself and Oatis had signed a detailed confession. At Briggs’s insistence that he clarify the details of the nature of the offence, Široký stated that these were issues of national security, the military and its organization. Briggs labelled this classification of the outrage as greatly embarrassing. He continued the talks in the sense that if Oatis had actually committed an offence against the republic, his government would consider it a sensible solution if they were to withdraw Oatis’s accreditation and expel him from Czechoslovakia. He also objected that Oatis had been in contact with foreign countries only through public means of communication, so that all his activities were legal and known to the Government of the Czechoslovak Republic. Široký’s answer was again very general: in the case of Oatis, this was espionage activity.2 Široký ended the conversation by saying that it was his obligation to take care of the state, and therefore Oatis’s release was out of the question. The State Department reacted immediately to the sentencing of William N. Oatis to 10 years in prison on 4 July 1951. In a note to the Ministry of Foreign Affairs in Prague, it sharply condemned the whole trial of Oatis as an absurd parody of the truth, prepared and staged in advance by Czechoslovak State Security. He labelled the verdict itself as an attempt at misleading world opinion with fabricated evidence.3 The release of Oatis was also supported by American trade union organizations, and the American political elite also began to take up the Oatis case. Many senators and congressmen condemned the Czechoslovak communist regime in the press. Senator William E. Jenner even presented a fiery statement that if Oatis is not released, the US Air Force should be sent to Czechoslovakia to liberate him by force. This, of course, was nonsense, and Jenner himself did not know how to carry out such an air “operation”. Should American planes take off from military bases in West Germany, attack Prague in an air raid or send a special airborne commando to abduct Oatis from the closely guarded prison? Jenner didn’t have an answer. A much more sensible and practical proposal was the one submitted by Senators Herbert O’Connor and Mike Mourney

2 AMZV CR, ˇ f. USA TOT 1945–1954, box no. 19, no sign. 3 Schmidt, Dana A. Anatomy of a Satellite. Boston, 1952, p. 46.

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and Congressmen John V. Beamer and O. K. Armstrong, who proposed economic sanctions against Czechoslovakia. Ultimately, Congress itself took up the Oatis case. First, on 14 August 1951, its lower house (the House of Representatives) proposed an immediate suspension of all trade relations with Czechoslovakia until Oatis was released. This resolution was not binding for the administration, i.e. the President and his cabinet, it was only a recommendation and expressed the views of the American public and part of the Congress. On 23 August 1951, the Senate (the upper house of Congress) took up this resolution and adopted it unanimously.4 A suitable moment to present the position to the highest American circle came a few days later, on 28 and 29 August 1951, when the official delivery of a letter from the new Czechoslovak ambassador to Washington, Vladimir Procházka, was to be put into the hands of the President of the US. Procházka was first received by Secretary of State Dean Acheson, and the following day by President Harry Truman. Minister Acheson’s conversation with Ambassador Procházka began with Acheson’s interpretation of Czechoslovak–American relations, which he labelled as bad and getting worse, with the Oatis case as the primary obstacle. He pointed to a recent resolution of Congress, as well as the case of another American, Ján (John) Hvasta, who had been convicted of espionage in Czechoslovakia.5 In Acheson’s view, Oatis was convicted of 4 The text of the approved resolution of Congress read: “Because the arrest and conviction of William N. Oatis, an Associated Press correspondent in Czechoslovakia, is an unprecedented violation of the original fundamental human freedoms guaranteed by the United Nations Charter, and because the treatment of William N. Oatis shows that the Czechoslovak government has voluntarily rejected the principle of free information, which is so essential for peaceful cooperation and friendly relations between the nations of the world, and because the American people and the people of the free world condemn the persecution of other American citizens by the Czechoslovak government, let the House of Representatives (with the cooperation of the Senate) decide that the Congress of the United States expresses its deepest outrage over the arrest, fraudulent trial and unjust conviction of William N. Oatis and bestows on the executive authority of the government to take all possible steps to secure his release, let the meaning of this resolution be sent to the relevant representatives of our government by the United Nations and the Czech government. Let it be further decided that the intention of the Congress is to terminate all trade relations with Czechoslovakia immediately and to resume them only when the Czechoslovak government restores freedom to ˇ ˇ William N. Oatis”. NA CR, f. MZV-VA, box no. 489, cˇ . j. 1–97c(19), or AMZV CR, f. USA TOO 1945–1959, box no. 30., without sign. 5 John Hvasta, a native of Slovakia and a naturalized American, came to Czechoslovakia in January 1948. He worked at the visa section of the Consulate General in Bratislava.

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espionage, but nothing had been done to demonstrate his guilt. Acheson urged that a way be found to settle the case. Ambassador Procházka disputed by saying that William (Bill) Oatis had confessed, had been convicted of espionage, and the case was closed. He also rejected the American stance that Oatis be released or that the whole process was a comedy and an unjust decision. He saw this as undue criticism of the Czechoslovak judiciary and the Czechoslovak legal order and interference in internal affairs. Acheson proposed that Oatis be expelled from the country and whether or not he had been convicted fairly would not be an issue. In his view, this would mean that the Czechoslovak position would not be prejudiced and the validity of the Czechoslovak court’s judgement would not be questioned. Procházka agreed that he would interpret this opinion for his government. Overall, he perceived the American position as political discrimination—the US had decided to punish Czechoslovakia for its political regime.6 That, however, was a matter for Czechoslovakia, and no one else. Dean Acheson ended the conversation by delivering the above-mentioned Congressional resolution to Procházka. The receiving of the new Czechoslovak ambassador with credentials on 29 August 1951 by President Truman was short and cold. Truman stated that Oatis’s case would not end until Oatis was released. According to Procházka, the case was closed and Czechoslovakia would not succumb to any pressure.7 The secret diplomatic efforts of the American side to secure the release of Oatis took place at the turn of 1951 and 1952 in the form of an exchange, but without success. These consisted in the fact that on 7 December 1951, the US Embassy in Prague submitted a proposal to exchange persons of US citizenship under Czechoslovak authority for the same number of Czechoslovak citizens who are under US jurisdiction. In a political trial before the State Court in Bratislava, he was sentenced to 3 years in prison for espionage. He appealed, and the Supreme Court of the Czechoslovak Republic increased his sentence to 10 years. He was jailed in Leopoldov, from where he escaped in early 1952. He hid in the Slovak countryside until October 1953, when he appeared at the American Embassy in Prague. Thanks to American diplomacy, with American economic pressure in the background, he was expelled from Czechoslovakia in February 1954. 6 AMZV CR, ˇ f. USA TOT, 1945–1954, box no. 18, cˇ . j. 8041/51. Telegram of Ambassador Vladimír Procházka summarizing the interview with Dean Acheson from 28 August 1951. 7 AMZV CR, ˇ f. USA TOT 1945–1954, ibid, Special press overview, no. 2 from 30 August 1951.

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The reply of the Czechoslovak Minister of Foreign Affairs, V. Široký, from 12 January 1952 in the form of aide-mémoire was that the Czechoslovak side would agree to the exchange only if the US government revoked its discriminatory measures. The directive tone of the Czechoslovak response represented, in terms of content, the immediate return of deposits for equipment ordered in the US, for which the Czechoslovak side undertakes to pay a certain percentage of Czechoslovak profits from exports to the US as part of compensation for nationalized American property. The US will immediately, or on the day of the exchange, verify consular invoices for Czechoslovak goods to the US, and the US authorities will issue export licences for US goods to Czechoslovakia in the scope and structure of the years 1950–1951. Likewise, on the day of the exchange, the American side will lift the ban on flights over the American zone of Germany to Western Europe and will also seek the consent of the governments of the UK and France to lift this same ban.8 The response of Ambassador Briggs from 14 February 1952 was almost identical to Czechoslovak requirements, particularly with regard to licences, invoices and overflights, but it did not mention the returning of down payments for equipment ordered in the US, specifically the previously mentioned rolling mill. This was namely blocked by an order of the US Treasury Secretary on 17 January 1952, five days after the Czechoslovak proposal for the exchange of persons. But the Czechoslovak side conditioned the release of William Oatis on the rolling mill and did not want to back down from this request.9 At the beginning of March 1952, however, the State Department described this possibility as “pure speculation”; the rolling mill was not, is not and will not be subject to exchange for Oatis. The release of William N. Oatis did not become a reality until March– April 1953. It was preceded by a request for a pardon from Oatis’s wife, Laurabella, addressed to President Gottwald on 15 November 1952,10 and forwarded from the President’s Office to the Ministry of Justice. On 26 January 1953, Minister Štefan Rais asked the Minister of Foreign Affairs Viliam Široký by letter for a ministerial opinion. In this letter, Rais pointed out that he had suspended further processing of the matter and proposed three solutions: 8 AMZV 9 AMZV

ˇ CR, f. USA TOO 1945–1959, box no. 30, cˇ . j. 108.300/52. ˇ CR, f. USA TOO 1945–1959, ibid. 10 AMZV CR, ˇ f. USA TOO 1945–1959, box no. 30.

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1. Rejecting the request for pardon by the Ministry of Justice and notifying Mr. Oatis’s wife of this position, 2. Notifying Mr. Oatis’s wife that the Minister of Justice had given the instruction for further examination of her request and to inform her of the outcome; and 3. The establishing of an application for pardon ad acta without notifying Mr. Oatis’s wife of the fate of her application. Minister Rais was inclined towards the third option. Široký’s reply to Rais of 9 February 1953 was that he should inform Oatis’s wife that her request for a pardon is being investigated, that the Ministry of Foreign Affairs is studying this in terms of the overall development of Czechoslovak–American relations taking into account other Czechoslovak–American open economic and financial issues.11 This was supposed to be the official answer, but internally Široký informed Rais that the Ministry of Foreign Affairs would return to this issue if Czechoslovak political interests required it to do so. On 27 March 1953, the head of the American–British Department of the Ministry of Foreign Affairs, Ján Pudlák, was visited by US Embassy Councillor Nathan B. King and was asked what stage the release of W. Oatis was currently at. Pudlák’s response was vague but also promising: the request for pardon from Mrs. Oatis is the basis for a proceeding which is under discussion. Two days later, the US diplomatic offensive continued with a letter from the new US ambassador in Prague, George Wadsworth, to the head of protocol at the Ministry of Foreign Affairs, Josef Šedivý, informing him that he would like to visit Antonín Zápotocký to personally deliver a message from US President Dwight D. Eisenhower on the occasion of Zápotocký’s election as Czechoslovak President. The reported audience of the American ambassador with the new Czechoslovak President took place on 30 March 1953. In the delivered personal message, President Eisenhower congratulated Zápotocký on his election and expressed hope that he would consider releasing William N. Oatis, thus eliminating one of the causes of friction. “If your government releases Mr. Oatis,” President Eisenhower’s message continued, “and thus removes the obstacle which as a result of his continued imprisonment stands on the path of their resolution, the US government is willing to 11 AMZV CR, ˇ f. USA TOT 1945–1954, box no. 19, cˇ . j. 104.518/53-ABO.

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negotiate, on the basis of full mutual understanding, the issues that have emerged from the arrest of Mr Oatis and are still open between us”.12 This personal message from Eisenhower offered an elegant solution. The Czechoslovak side could use the presidential amnesty, a traditional ritual of the new head of state, without its move seeming to succumb to American pressure. This would be beneficial for the American side, too, as it would appear that the liberation of Oatis had been achieved without a “ransom”, and the removal of some discriminatory measures would sound like a gesture of welcome. This was an opportunity for both sides to close the Oatis case in a way that was mutually satisfactory. Eisenhower’s message was supplemented on 13 April 1953 by a memorandum from the US Embassy in Prague, which confirmed America’s assurance that Washington will again start to verify consular invoices starting in July 1951, that other restrictions on US exports to Czechoslovakia would be lifted (with the exception of those generally applicable), that the Czechoslovak trade with the US will be without restrictions or barriers imposed by the US authorities, that entry visas will be issued to Czechoslovak citizens on the basis of valid documents, that US passports to the Czechoslovak Republic will be renewed and the ban on Czechoslovak flights over West Germany will be lifted.13 It is therefore an undeniable fact that this helpful step was taken by the US government (and Prague reacted positively, and the recent deaths of Stalin and Gottwald should be mentioned as a not insignificant factor). The response of the Czechoslovak government was positive, and on 15 May 1953 Viliam Široký delivered to George Wadsworth a note or message from Antonín Zápotocký from that same day in which it was stated that President Zápotocký is grateful for the congratulations on his election as President of the Czechoslovak Republic and announced that “on the proposal of the government from 15 May 1953 on the basis of § 74, par. 1, no. 11 of the Constitution, he pardoned William Oatis the unfulfilled portion of his prison sentence…”.14 From the diplomatic point of view of the US, the Oatis case thus ended successfully. William Nathan Oatis returned home to the US, and the US

12 NA CR, ˇ ˇ zv. 179, a. j. 605. f. 100/3 (International Department of the ÚV KSC), 13 NA CR, ˇ f. Ministry of Finance – secret (MF-T), box no. 1955–1956, m no.

141.852/5-5ABO/1. Information for the minister for negotiations in PB, guideline for negotiating with the US. 14 NA CR, ˇ f. 100/3, zv. 179, a. j. 605.

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withdrew some discriminatory measures, though the primary one, related to the most-favoured-nation clause, remained in force. Among the thus far unexplored problems of Czechoslovak–American relations after the Prague communist coup was the imposing of national administration on IBM’s property in Czechoslovakia in September 1952. This was a retaliatory step against the blocking of the Czechoslovak steel-rolling mill in the US and against the American suspension of the most-favoured-nation clause for the Czechoslovak Republic within the GATT in the early 1950s. This retortion measure thus became part of the issue of the return of Czechoslovak monetary gold and the solution to the “package” of open economic and financial issues of bilateral Czechoslovak–American relations for four decades. The Czechoslovak “story” of the New York company International Business Machines Corporation, which was part of the Morgan Group, began in 1927, when it founded a company in Prague, registered on 13 January 1928 in the Czechoslovak Commercial Register under the name International Business Machines, trade in commercial machines, Ltd. During the occupation, this company was managed as enemy property by a sequestrator and on 12 August 1941 it was renamed Elektrické úˇctovacie a štatistické stroje, spoloˇcnosˇt s r. o. (Electric Accounting and Statistical Machines, Ltd). After the liberation in 1945, by decision No. 1809/45 Pres. of the mayor of Prague of 28 June 1945, national administration was established in the company. The legal status of the “Czechoslovak” IBM, however, changed shortly afterwards. Pursuant to a new act of the Prague mayor on 9 November 1946 (ref. No. 39881NS-46), this national administration was cancelled and the company was returned to the original American owner. In December 1946, it was renamed International Business Machines for Czechoslovakia, a limited liability company. The equity capital of this company amounted to 500,000 crowns and it was owned by the parent IBM in New York, which split into two parts at the beginning of 1948. The first was IBM for manufacturing and trade, the second for machine rental abroad under the name IBM World Trade Corporation (IBM WTC). IBM WTC thus became the parent company of IBM in Czechoslovakia. After the communist coup, IBM was threatened with nationalization in Czechoslovakia in accordance with Act No. 114/48, as it had around 150 employees. Therefore, IBM WTC entered into negotiations with the Czechoslovak Ministry of Industry, resulting in an agreement concluded

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on 29 October 1948 and valid until 31 December 1952.15 Based on this agreement, four new companies were founded in Czechoslovakia instead of the original one: IBM for Czechoslovakia Ltd, Manufacturing company IBM Ltd., IBM Technical Service Ltd., and IBM for Office Services Ltd. The four companies obtained authorization to trade from the Minister of the Interior on 27 October 1949. Their entry in the Commercial Register was made on 18 May 1950 by the Civil District Court, and they began their business activities on 20 May 1950. The equity of each of the four companies was 400,000 crowns, plus a reserve fund of 40,000 crowns. The issue of nationalization was also resolved by the agreement of October 1948. According to this, the property of the New York company and its Czechoslovak entities were excluded from nationalization. The Czechoslovak Republic undertook an explicit commitment that the Minister would remove the property of the New York company from nationalization, if this did not happen according to the size. As for IBM for Czechoslovakia assets, they were also excluded from nationalization; at the same time they were transferred by the New York company which owned them into the newly established companies in Prague as equity, and it was agreed that only then would IBM for Czechoslovakia be nationalized. It was clear from the Commercial Register that only then was the original IBM for Czechoslovakia to be liquidated. The four new IBM companies in Prague continued to do business as before, when the original IBM for Czechoslovakia operated. According to the agreement, 49% of the assets of these companies remained in the possession of US citizens designated by New York IBM, and the remaining 51% of each company’s shares were held by Czechoslovak citizens who acted as “trustees” for IBM New York, and they were also named the same.16 To exclude the assets from nationalization, IBM undertook that before 31 December 1952 it would not terminate any IBM machine lease agreements installed in the Czechoslovak Republic as of 1 January 1948, on the condition, however, that Czechoslovak customers would perform the contracts and rents transferred to the US. In the protocol from the agreement, the Czechoslovak side explicitly acknowledged the exclusive ownership of the machines, components and

15 AMZV CR, ˇ f. TOT, USA, 1945–1954, box no. 10, Record on the status of the file on International Business Machines as of 20 August 1953. 16 AMZV CR, ˇ f. TOT, USA, 1945–1954, box no. 10, ibid.

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other property values of the four Czechoslovak companies by the New York company.17 The agreement further acknowledged the validity of the subleases, stating that after 31 December 1952 both parties, the New York Company and the Czechoslovak government, were free, and that on 1 January 1953, the original terms of the leases of IBM New York would enter into force, according to which it has the right to terminate contracts within three months and, as explicitly stated, to export the machines from the country. The agreement also addressed the use of rent for the Dehomag machines for domestic purposes, the purchase of cardboard for cards in the US, the control rights of the domestic Czechoslovak companies by the Ministry, the facilitation of inspections, etc. The agreement further showed that the exemption of IBM’s assets from nationalization, the recognition of its ownership right and the right to terminate and export machines, as well as the granting of the right of transfer to the US, could have far-reaching importance in the event of a dispute between Czechoslovak users of the machinery and the American company. What were IBM’s operating and financial relations in Czechoslovakia? It made electrical accounting and statistical machines based on a punched card system as well as other office equipment. IBM did not sell its machines outside the US, but leased them exclusively through IBM WTC, which did not even set up branches in individual countries. Instead, it set up formally separate companies under local law and regulations, but with capital owned by IBM WTC. Such was the original IBM for Czechoslovakia in the Czechoslovak Republic and subsequently its four successor companies. These developed extensive business activities as a whole: they procured the import of machines and their parts from abroad; they led the agenda related to the rental of machines, i.e. they concluded lease agreements, and they were in charge of their renewal and the billing of rent. At the same time, they were responsible for the maintenance of all leased machines and ensuring their smooth operation. They performed general repairs of the machines, made the most necessary spare parts in 17 AMZV CR, ˇ f. TOT, USA, 1945–1954, box no. 10, Protocol written on the agreement, concluded on 29 October 1948 between the Ministry of Industry of the Czechoslovak Republic, represented by JUDr. František Jeˇrábek on one side, and International Business Machines Corporation, 590 Madison Avenue, New York, NY, United States of America, represented by Albert L. Williams, Treasurer of the International Business Machines Corporation of New York, and George A. Daubek, Special Representative of the International Business Machines Corporation of New York, on the other side.

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their own workshop, printed the punched cards for Hollerith machines in their own print shop, proposed modifications to punched cards, made technical documents for working on machines in their own reproduction department, and systematically trained their own and foreign employees. For these activities, the domestic Czechoslovak companies received a 20% commission from IBM WTC to cover costs, which was calculated from the proceeds from the machines leased in Czechoslovakia. This commisˇ sion, with the consent of the State Bank of Czechoslovakia (ŠBCS), was paid by offsetting liabilities and receivables, vouchers from IBM’s foreign ˇ as well as direct US dollar bills. accounts in the ŠBCS, The Czechoslovak enterprises paid exactly set monthly fees for the use of IBM machines on the basis of subcontracts concluded by the New York IBM WTC through the four Czechoslovak IBM companies, usually for a period of one year. The rental rates were based on the machine type and in USD; they ranged from 7.50 USD for the simplest machine to 36.50 USD for a complex tabulator per month. For the use of machines during the second or third shifts a 50% surcharge of the standard leasing price was added. Overall, the Czechoslovak Republic leased 1255 machines of all types, which were located in the largest Czechoslovak companies, ˇ and elsewhere. The rents were paid into insurance companies, the ŠBCS several separate accounts, and a large portion of them was transferred to the US prior to May 1952. According to the report of the Ministry of Finance of 22 December 1951 on the legal and financial terms in IBM for Czechoslovakia, nearly two million USD—exactly 1,952,210.93 USD (i.e. 97,610,546.50 crowns at a rate of 1:50)—were paid from 1945 to the end of September 1951 in dollars for the so-called “old machines” and two-thirds of the transferable rents of 443,132.85 USD (i.e. 22,156,642.50 crowns) for the so-called “new machines”.18 The cited record from the audit report of the Ministry of Finance contained two other interesting facts that could have played in favour of the Czechoslovak state in the event of national administration or nationalization of IBM’s assets in Czechoslovakia. In September 1951, when the review was carried out at IBM, Prague was already seriously considering how to prevent the company from leaving the Czechoslovak Republic.

18 AMZV CR, ˇ f. TOT, USA, 1945–1954, box no. 10, Record of financial and legal relations in IBM for Czechoslovakia from 24 April 1952, file no. 113.817/52 – ABO Pudlák.

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The first fact in the report was a reference to Act No. 243/49 Coll. on Joint-stock Companies, when limited liability companies were either to be liquidated or to apply for conversion into joint-stock companies. Although the Czechoslovak companies of IBM also received permission from the Ministry of Industry to convert into joint-stock companies, they did not do so until December 1951 and requested an additional sixmonth period. The second fact was that according to the original contract from 1927, the flat-rate commission of the Czechoslovak IBM was 20% of the rental proceeds for the machines, which was to be provided by the parent company IBM WTC. It stopped paying this commission, and according to the review, an amount of 3,396,464.70 crowns remained to be paid to the four companies in the Czechoslovak Republic. However, they did not insist on this commission. The matter was that, on the ˇ basis of the general permission of the ŠBCS, IBM in Czechoslovakia also took over the collection of rents for the machines of the former Dehomag company. It was obliged to deposit these amounts into the “IBM NY – Dehomag” account, which it did not do in 1949. This represented 11,926,753.30 crowns, which it kept to cover the overheads of its companies in Czechoslovakia.19 The issue of Hollerith machines of the Dehomag company (Deutsche Hollerith Maschinen Gesellschaft m. B. H.) was handled at an interministerial meeting in Prague on 22 May 1951. The facts were this: the company was originally German, with its headquarters in Germany, and IBM in Czechoslovakia was in charge of its service. Furthermore, 84% of the Berlin company’s assets were in the ownership of the American IBM Corporation and the remaining 16% was that confiscated by Czechoslovakia. On 20 June 1950, the National Property Fund signed an agreement with IBM, by which it gave up this 16% stake for a price of ˇ refused to confirm this, however; therefore, 6 million crowns. The ŠBCS the question of what to do with the Dehomag machines remained open, i.e. whether it would be possible to confiscate them or not. Although this open state was more suitable for the Czechoslovak side, it turned out that without IBM’s services, the German machines would not be able to function smoothly and spare parts for them were manufactured only by IBM. To move to another accounting system was costly and time-consuming, and it was clear that if Dehomag machines were confiscated, the IBM

19 AMZV CR, ˇ ibid.

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service would cease working immediately. But this fact pointed to a much broader internal Czechoslovak problem, i.e. that the organization of basic statistical records was effectively dependent on IBM. The political decision to establish a national administration or to nationalize IBM’s property in the Czechoslovak Republic had been developing in Czechoslovak political circles since the spring of 1952. This is evidenced by a document of the Ministry of Foreign Affairs called the “Retortion measure to affect the assets of IMB WTC in Czechoslovakia” from 28 April 1952 (this involved property of the parent company from New York, American assets legally organized through the four companies in Czechoslovakia, and German property with recognized US ownership, i.e. the Dehomag machines), which offered 10 possible regulations and arguments to justify the proposed step.20 The definitive political decision on establishing national administration over American IBM in the 20

1. Nationalization—By Order of the Minister of Engineering, it would be possible to nationalize the stated property pursuant to Act No. 114/1948 Coll. Nationalization would then affect all assets, i.e. property of New York IBM, its four Czechoslovak companies, as well as property of American IBM in Germany (Dehomag). 2. Measure according to the Foreign Exchange Act No. 92/1946 Coll. —According to paragraph 24 of this Act, it was possible to bind by a Government regulation the validity of legal acts of one of the bodies of the Czechoslovak companies ˇ IBM with permission of the ŠBCS. These bound acts could only relate to the relationship of IBM’s domestic companies regarding foreign exchange, to their property and rights, or to their property or legal claims. 3. Liquidation of the domestic IBM companies and their transformation into jointstock companies —According to paragraph 18 of the Act on Joint Stock Companies No. 243/1949 Coll., all limited liability companies had to be either converted into joint-stock companies or liquidated by 6 June 1950. However, for the third time, the domestic IBM limited liability companies requested a 6-month period for this conversion, which was approved by the Ministry of Industry. 4. Measure under criminal provision—Only the forfeiture of property would be considered as an ancillary punishment here. This would in practice mean starting a political process against the American owners of domestic limited liability companies and also against the owners of IBM WTC in New York. According to paragraph 238 of the Criminal Procedure Code, all property would then be seized, which amounted to confiscation. 5. Measures pursuant to the State Defence Act No. 131/1938 Coll.—In this case, it would be necessary to label the Czechoslovak IBM companies as important for the defence of the state. According to paragraph 19 of this Act, it would then be possible to direct and control the activities of these companies by directives and, in the case of non-compliance, to impose compulsory administration on them.

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Czechoslovakia was made on 27 August 1952. It was issued by the Political Bureau of the Central Committee of the Communist Party and cited the blockade of the Czechoslovak wide strip rolling mill in the US in January 1952, worth 16 million USD, as justification for this step (retortion measure). Subsequently, the Ministry of Heavy Engineering Industry entered the “action”. As early as 5 September 1952, it issued an order, with effect on the following day, that the declaration on the introduction of the national administration of IBM property in the Czechoslovak Republic referred to in paragraph 3 of Decree no. 5/1945, according to which “national administration was introduced where the smooth running of production and economic life was required – that is, the public interest – or where domestic enterprises were abandoned or held, administered, or leased by persons unreliable for the state, especially Nazi collaborators”.21 The first reactions of the American owners of IBM to the introduction of the national administration were moderate, as they considered this measure as a means of state pressure for negotiating new contracts. Even the note from the US Embassy in Prague on 9 December 1952, addressed

6. Not permitting the transfer of rent and other payments for the American IBM ˇ as an administrative WTC—Such a measure would be taken directly by the ŠBCS coup, which, however, cannot directly affect the property as such. 7. Banning the export of machinery to the US—This was likewise an administrative measure that could only be carried out in early 1953 and was therefore not suitable as an immediate and effective retortion measure. 8. Introduction of national administration for all property and facilities according to Act No. 5/1945 Coll.—This solution was not an interference with the right of ownership, but with all the accessibility of the owner and its agents in the Czechoslovak Republic. 9. Regulation under paragraph 41 of the Act on Five-Year Plan No. 241/1948 Coll—The Czechoslovak Government could achieve in the form of a Government regulation the manner and effects of detention, which would take place similarly as the regime of national administration. 10. Measure according to Government Regulation No. 107/1949 Coll.—This regulation related to the seizure of unused material and machinery. According to paragraph 1 clause 2 letter b, the Minister of Heavy Engineering could take “appropriate measures and for its use, at least restrict the possibility of handling it and order that the owner leave it within a specified period and for a reasonable fee to the company working to fulfil the tasks of the five-year plan”. ˇ f. TOT, USA, 1945–1954, box no. 10, Retortion measures to affect IBM AMZV CR, WTC assets in Czechoslovakia, 28 April 1952. 21 AMZV CR, ˇ f. TOT, USA, 1945–1954, box no. 10, Record of the status of the International Business Machines file as of 20 August 1953, p. 6.

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to the State Department, was only to support IBM’s request from New York for an explanation. The American side received this in a letter from the Minister of Heavy Engineering Industry on 18 December 1952, in which it stated the introduction of the national administration in accordance with Czechoslovak legal provisions. The Czechoslovak offensive against IBM associated with the national administration of its assets took on a new dimension at the beginning of February 1953—it was a clear propaganda scenario that the Prime Minister and Minister of Foreign Affairs Viliam Široký addressed to the Minister of National Security Karol Bacílek. According to the draft of Široký’s letter, the Americans were sorry not only for the property damage they suffered as a result of this retortion measure but also for the loss of intelligence opportunities provided to them by their branches in Czechoslovakia. He asked Bacílek to thoroughly investigate whether some officials and employees had not been misused by the company for espionage and other hostile activities against the republic prior to the introduction of the national administration. He was to instruct the competent authorities of the Department of National Security to investigate promptly so that they could receive further instructions to prepare for the public process that would take place as early as March 1953. In the process, alongside the conviction of the offending employees, the confiscation of all IBM assets in favour of the Czechoslovak state could be declared. This process, in Široký’s view, should have “far-reaching political significance, given IBM’s close connection with the current US Republican government, mainly because it would expose the criminal machinations of American monopolists, the abuse of trade concessions to rob the Czechoslovak people, but also to carry out espionage and subversive activities”.22 The propaganda game with public opinion in regard to criminality, espionage and the looting of Czechoslovak workers appeared for the first time at IBM in this draft. Surprisingly, it did not have a continuation in Czechoslovak activities. The American partner, as the acknowledged owner of the machines, stuck to the agreement of October 1948 between IBM and the Czechoslovak state, which ended on 31 December 1952. Furthermore, the Czechoslovak side clearly also recognized IBM’s right to terminate

22 AMZV CR, ˇ f. TOT, USA, 1945–1954, box no. 10, draft of the letter of V. Široký to K. Bacílek from 4 February 1953, cˇ . j. 102.359/53-ABO.

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the original three-month contracts and remove the machines from the country after the agreement expired. There was no doubt that if IBM in ˇ 23 New York were to start a dispute against the Czechoslovak state (ŠBCS and other users of the machines, if they were not returned), Czechoslovak entities would face legal proceedings before the Arbitration Court of the International Chamber of Commerce in Paris, in which IBM could claim large sums as compensation for the value of the machines which were unlawfully detained in the Czechoslovak Republic. It could also claim compensation for damages and lost profits for the period after 31 March 1953, as well as the transfer of amounts which should and should not have been transferred, i.e. 541,188.78 USD.24 ˇ turned out to be in the worst position—in the event of The ŠBCS non-return of the machines. It was a state institution and a possible lawsuit filed by IBM New York before a US court could mean that IBM may satisfy its claims from the property of the said bank and for other Czechoslovak companies on the grounds that they are Czechoslovak state enterprises, i.e. businesses belonging to a single owner. The retortion measure of the Czechoslovak state against the US, i.e. national administration of IBM’s property in the Czechoslovak Republic, was undoubtedly a reaction to the aforementioned discriminatory measures of the US in the late 1940s and early 1950s. Although Prague from the start rejected its association with wider international aspects and justified these steps by the “fulfilling” of domestic legal norms and provisions, it had to assume and did assume that this issue would be resolved within the complex of open economic and financial Czechoslovak–American problems. In terms of domestic Czechoslovak needs, the fact was that without the IBM machine sets, it was not possible to perform statistical needs and tasks; that is, without the IBM machines there was a threat of state collapse in this segment. The situation, perceived in this way, raised the question not in regard to the liquidation of IBM companies in the Czechoslovak Republic,

23 The ŠBCS, ˇ as the successor to NBCS, ˇ acknowledged the contracts with IBM, stating that it paid the obligations arising from the contractual relationship and used American company machines: 1 multiplier, 1 rapid summary punch, 1 summary speaker, 2 sorters, 1 writing alphabetic punch, 1 motorized punch, 4 repeater punches, 3 alphabetic repeater punches, 2 alphabetic testers, 1 summary alphabetic repeater. 24 AMZV CR, ˇ f. TOT, USA, 1945–1954, box no. 10, Record: statement concerning IBM machines belonging to IBM New York of 19 February 1953.

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but in regard to their full operation, but in what form—whether under national administration or by nationalization. National administration posed financial difficulties for IBM, mainly due to the high level of taxation. According to the Ministry of Heavy Engineering Industry, the validity of the agreement with IBM expired at the end of 1952, and it was not extended, so there were no legal obstacles to nationalization, which it reported by a letter on 28 August 1953 to the Ministry of Foreign Affairs. The Ministry of Foreign Affairs rejected this proposal, pointing out that “national administration was appointed to IBM for special reasons which still exist”, and recommended that the Ministry of Heavy Engineering Industry “carry out a thorough review at IBM and find out the real cause of problems in the enterprise and, along with national administration, take steps to eliminate them”.25 What enduring special reasons did the Ministry of Foreign Affairs have in mind? Several things can be included here—the Czechoslovak side had in mind to resolve its problematic issues with the US; it was interested in the proceeds from the blocked steel-rolling mill; it still had the monetary gold blocked; it needed loans; it had a suspended GATT clause and stopped export licences, etc. The “open” state around IBM basically suited it as one of the few factors it had in its own hands in the negotiations on resolving the above-mentioned Czechoslovak– American disputes, especially the rolling mill and the blocked monetary gold. On 9 November 1953, the US government officially entered into the dispute over IBM’s property in the Czechoslovak Republic. In embassy note no. 170 it requested that the Ministry of Foreign Affairs resolve the situation by referring to the contract from October 1948, to its termination on 10 December 1952 by IBM after the imposing of the national administration in September 1952, as well as unpaid monthly fees for rental and use of machines and their non-return. The note from US Ambassador Ural Alexis Johnson fully supported the American IBM companies in Czechoslovakia and demanded that the Ministry of Foreign Affairs arrange for the immediate return of the relevant machines and immediate payment of fees for the period in which they were used.26 25 AMZV CR, ˇ f. TOT, USA, 1945–1954, box no. 10, Record of the state of the International Business Machines file as of 20 August 1953. 26 AMZV CR, ˇ f. TOT, USA, 1945–1954, box no. 10, note no. 170 of the American ambassador to Prague on 9 November 1953, addressed to the Czechoslovak Ministry of Foreign Affairs.

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The Czechoslovak reply to the American note followed quickly, on 14 November 1953. It referred to the order of the Minister of Heavy Engineering Industry of 5 September 1952 on the ordering of the national administration of IBM’s property located in the Czechoslovak Republic, with reference to Act No. 5/1945 Coll.27 Since the US Embassy now, on the basis of instructions of its government—the note of the Ministry of Foreign Affairs continued—is asking the Ministry of Foreign Affairs to take action in this matter, taking into account the American interests involved, “the Ministry of Foreign Affairs cannot assess this request without linking it to the fact that considerable property belonging to Czechoslovakia, or Czechoslovak entities, are completely blocked and being held in the USA. Therefore, the Ministry of Foreign Affairs expects assurances from the US Embassy that the US government will release Czechoslovak assets blocked in the US before recommending to the relevant Czechoslovak authorities the release of the assets of the American company IBM”.28 What was this Czechoslovak note actually saying? It confirmed that Prague had, in fact, used a similar discriminatory position as Washington in the case of the rolling mill. It also confirmed that, due to the lack of interest of one side or the other, the conflicts in the relations between the two states, the USSR satellite and the Atlantic Super Power, will be subject to long-standing open economic issues. Washington initiated a new round of negotiations on the open economic and financial issues between Czechoslovakia and the US with notes on 4 February and 5 May 1955. The previous round in the spring of 1949 had ended in failure; afterwards these issues, mainly compensation for nationalized American assets in the Czechoslovak Republic and the Czechoslovak monetary gold, were effectively unresolved, although

27 At the same time, the note stated that despite the sharp discriminatory action of the US government against the Czechoslovak Republic and despite numerous actions by US authorities against Czechoslovak property, American IBM was allowed to work in Czechoslovakia until 1952; IBM property was excluded from nationalization, and the ˇ regularly transferred these earnings in dollars to the US. The note further stated ŠBCS that the order of the Minister of Heavy Engineering Industry of September 1952 did not revoke IBM’s property rights or even its right to the secured rents, even though all its assets in the Czechoslovak Republic were temporarily excluded from its free availability. This property is being administered by the national administrator under the control of the Czechoslovak authorities within the framework of Czechoslovak legal provisions. 28 AMZV CR, ˇ f. TOT, USA, 1945–1954, box no. 10, note of the Czechoslovak Ministry of Foreign Affairs for the US Embassy in Prague on 14 November 1953.

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they appeared sporadically in diplomatic correspondence as part of other issues, for example, in the case of William N. Oatis, in the hijackings of Czechoslovak civil aircraft to West Germany, etc. The mentioned instruction of the Political Bureau of the Central Committee of the Communist Party from February 1955 was, in fact, a reaction to an American note calling for a new round of negotiations. In an extensive report on all the disputed issues, the so-called “Information report on the draft guidelines for negotiations on open economic issues between the Czechoslovak Republic and the USA”, elaborated by the legal department of the Ministry of Foreign Affairs, facts old and known were repeated in connection with IBM but some new facts also appeared. According to this report, the exact value of the IBM machines in Czechoslovakia could not be determined, as they were not for sale, only for rent. Their value for clearing customs was about 900,000 USD, and the Czechoslovak authorities estimated their value at about 6.5 million crowns. From the viewpoint of the future, the Ministry of Foreign Affairs mentioned two options: either nationalize them and offer compensation or conclude another lease agreement. Nationalizing them would apply if the Czechoslovak state could not do without machines; leasing them for the period that Czechoslovakia needed to replace them with its own machines. All of these were known and old facts. In early 1959 Prague responded to the US’ 1958 initiatives on the settlement of IBM’s assets. A draft notice by Deputy Minister of Foreign Affairs Jiˇrí Hájek to Ambassador John M. Allison from 27 January 1959 stated that the American representative initially agreed with the Czechoslovak proposal that an agreement on the principles for resolving the whole complex of open economic and financial questions should contain a provision that issues related to IBM in the Czechoslovak Republic would be resolved by direct negotiations between the American company and the relevant Czechoslovak authorities. If within 6 months no agreement was reached in these negotiations, which would start only after the adoption of a comprehensive agreement, these issues would then be resolved through diplomatic channels. In the summer of 1958, however, the American side changed its stance. It proposed negotiating with IBM immediately or that the Czechoslovak side provide one million dollars as a deposit on behalf of Czechoslovak–American trade in exchange for agreeing with the creation of a Czechoslovak trade department at the Czechoslovak Embassy in the US. It thus demonstrated that it wanted the issue of IBM’s position in Czechoslovakia to be resolved

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on merits and in direct relation to the other issues currently being negotiated. In the interest of reaching an agreement on the whole complex of open economic issues, Prague was reportedly willing to consider these American proposals.29 The Czechoslovak side not only assessed these proposals; they accepted them, too. IBM would be a part of the global compensation, which was immediately reflected in the proposed Czechoslovak text of 6 April 1960. This was the introductory passage of Article no. 2, which stated that all of IBM’s claims are included in the global agreement. Washington welcomed this with the condition, set by the American side during informal negotiations on open economic issues at the State Department in Washington, that Deputy Foreign Minister Jiˇrí Hájek would take part. The State Department agreed that IBM would be part of the global compensation agreement; however, it labelled as unacceptable that IBM should be specifically named in the agreement. This reportedly could have evoked views in the US that IBM takes precedence over other companies that had lost assets in Czechoslovakia much earlier and which had also claimed compensation but were not specifically named in the agreement. In the view of the State Department, the mention of IBM would prevent the US from accepting this clause. But at the same time, it assured Hájek that it understood, as did IBM, that stating its claim would be included in the global compensation.30 The State Department proposed not naming IBM in Article no. 2 of the draft of the global agreement, which the Czechoslovak side basically expected. The analysed Czechoslovak–American disputes over the steel mill and IBM property, however, had, in addition to an interstate dimension, a judicial and civil dimension in the early 1950s, which developed in the New York Supreme Court in the form of the lawsuit of Otto and Hanuš Augstein (the father, as a Canadian citizen, and the son as an American citizen) against the property of the State Bank of Czechoslovakia and the Živnostenská banka of New York state.31 Once in the US, Hanuš Augstein changed his name to John A. Stephen. 29 AMZV CR, ˇ f. TOO, US, 1945–1959, box no. 17, IBM – draft notification of

Deputy Foreign Minister Jiˇrí Hájek to Ambassador John Allison of 27 January 1959. 30 AMZV CR, ˇ f. TOT, US, 1960–1964, box no. 6, Minutes of the informal meeting in the negotiations on open economic issues between the Czechoslovak Republic and the US, held on 8 July 1960 at the State Department in Washington, cˇ . j. 027.661/60-6. 31 Along with the Augsteins vs Živnostenská banka lawsuit, the Vogels vs Živnostenská banka case was also topical in New York in the early 1950s. Brothers Richard and Zdenˇek

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Who in fact were the Augsteins? They were members of a wealthy Jewish Czech-German family, the owners of mines and coal wholesalers, as well as substantial domestic assets, who in March 1939 emigrated from Czechoslovakia to Canada and the US. They had previously sold their assets and deposited the proceeds of the sale with Prague banks in the form of cash deposits and securities, and these valuables were confiscated by the Gestapo as Jewish property. After the war, the Augsteins unsuccessfully applied for restitution. Their property was subsequently confiscated based on Presidential Decree No. 108/1945 Coll. on the grounds that they could not be considered Czechs, because they were closely related to and in the interwar period had cooperated with the German families of the coal barons Sachs and Weinmanns.32 The available archival material enables the court dispute in question, taking place on two levels, to be traced only until 1962. The first level was represented by the New York property of Živnostenská banka and the property of its legal successor, the State Bank of Czechoslovakia. The second was the blocked rolling mill with the original owner, Banská a hutní, a. s., of which Otto Augstein was also a shareholder. On 2 May 1952, Otto Augstein filed a lawsuit with the Supreme Court of the State of New York against Živnostenská banka for damages for deposits and securities in Czechoslovak banks that had been taken over after the war by Živnostenská banka or the Czechoslovak National Bank. He estimated his total claims at approximately 1.1 million USD. Augstein stated that Banská a Hutní, a. s., from whose resources the mentioned wide strip steel-rolling mill in the US had been purchased, was liquidated Vogel, like the Augsteins, emigrated from Czechoslovakia before the war. They were partners of the Prague fur wholesaler Arnstein and Pick. They founded several new companies in the US and developed into leaders in the fur business and the feather business. After the war, they claimed restitution of their Jewish property in Prague, but it was then nationalized after February 1948. In consequence of their 7 lawsuits in the US, they asserted claims against the Czechoslovak state as compensation for damages from nonexecuted transactions. In 1952, they valued their overall assets and lost profits at 176,000 USD and in another 5 lawsuits at 358,000 USD. On the other hand, the Czechoslovak Republic intended to collect tax arrears from them of 71.8 million crowns and wanted to lower the value of compensation for the nationalization of Arnstein and Pick by this amount. The Vogels proposed a settlement, and in June 1954 they were willing to accept 200,000 USD as a settlement from Prague. The Czechoslovak side rejected this and the legal disputes between them eventually remained in effect inactive, or dead. 32 AMZV CR, ˇ f. US, TOT 1945–1954, box no. 13, information report on the Augstein dispute against Investa of August 1954, no sign.

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by nationalization, and he declared its transfer to Investa as invalid. The rolling mill, therefore remained without an owner; thus, in his view, it was necessary to satisfy the creditors and shareholders of the nationalized Banská a Hutní, a.s., among whom he also belonged, because he held 500 shares, which he valued at 55,000 USD. The Czechoslovak defence in the lawsuit consisted the fact that Augstein is not a shareholder, does not have shares in Banská a Hutní, a.s., and therefore cannot submit them. According to Prague, the rolling mill was definitively purchased with the money of a national enterprise; the transfer to Investa was properly carried out in line with the applicable Czechoslovak laws, and Investa had paid for it.33 In fact, by a decision of the New York Court of First Instance on 12 May 1952, the current and deposit accounts of Živnostenská banka in various New York banks were seized and a temporary sequestrator (receiver) was appointed for the assets of Živnostenská banka located in the state of New York. At the same time, the deposits in current accounts and securities in the deposit accounts of the State Bank of Czechoslovakia, also kept in various New York banks, were sequestered. The seizure of these assets was justified by the claim that the State Bank of Czechoslovakia had been the legal successor of Živnostenská banka since 1950 and was limited to the financial values that were in the accounts of both banks on the date the court issued the order for seizure. The first information about the lawsuit arrived in Prague from the Washington embassy on 8 March 1953. Ambassador Karel Petrželka announced in a telegram that Otto Augstein had asked the court to appoint a receiver and that, according to the Ministry of Finance, no one could deal with the rolling mill; namely, they did not know who the owner was, whether Banská a Hutní, or Investa, or they asked for instructions on how to proceed.34 The reaction of the Czechoslovak Ministry of Foreign Affairs, which took the form of an aide-mémoire to the US Embassy in Prague on 27 March 1953, followed: “The Czechoslovak government has received information that a certain Otto Augstein, who hasn’t the slightest reason do to so, referring to non-existing claims, is seeking legal action against the property of the Czechoslovak company a.s. Investa against a rolling mill located in

33 AMZV CR, ˇ f. US, TOT 1945–1954, box no. 13, information report on the Augstein dispute against Investa from August 1954, without sign., p. 3. 34 AMZV CR, ˇ f. USA, TOT 1945–1954, box no. 13, Petrželka 527/D, 8 March 1953.

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the territory of the United States of America. Given that this is property of considerable value and was blocked by an order of the US Treasury of 17 January 1952 and that despite numerous protests by the Czechoslovak government against this measure, the United States government has not revoked the blocking order, the Czechoslovak government considers it necessary to emphasize that this makes the US government fully responsible for all damages to the Czechoslovak owner – the joint-stock company Investa – caused or that will be caused by the said property being blocked by the US government and the Czechoslovak owner being deprived of free access to this property”.35 Subsequently, after several expert negotiations, they reacted to the decision of the New York court in Prague by proposing not to pursue the dispute, specifically in regard to the 16 million USD rolling mill, which had been impounded in the US, at least not until its fate is decided and so that the broader Czechoslovak business interests are not endangered; thus, the Political Bureau of the Central Committee of the Communist Party decided in mid-April 1954. This delaying tactic, however, brought about only partial success. The temporary sequestrator first issued the opinion stating that the lawsuit was excluded under the foreign exchange regulations of Czechoslovakia, which is a member of the International Monetary Fund (IMF), and that the nationalization of Živnostenská banka did not fall under the provisions of paragraph 977-b of the CPA (Civic Practice Act), according to which the New York court of first instance ruled. The Political Bureau of the Central Committee of the Communist Party took a different position on 4 August 1954, when it instructed a Czechoslovak lawyer in the US (Lemuel Skidmore) that it was necessary to appeal to a higher court and delay the dispute with the Augsteins for formal reasons.36 Another unfavourable situation for Prague arose at the end of 1954. Overall, it can be stated that the new negotiating position of the Czechoslovak state in the dispute with Otto Augstein was absolutely catastrophic. On 31 December 1954, the Czechoslovak Republic ceased to be a member of the IMF, and the judge issued a new opinion that the Augstein lawsuit was no longer excluded and ordered Živnostenská 35 AMZV CR, ˇ f. USA, TOT 1945–1954, box no. 13, aide-mémoire, Sekaninová 111.434. 36 AMZV CR, ˇ f. USA, TOT 1945–1954, box no. 13, information report on the Augstein dispute against Investa from August 1954, without sign., p. 4.

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banka to demonstrate that it was willing and able to meet its obligations to shareholders and creditors. The bank appealed against this resolution, arguing that the American court is obliged to respect Czechoslovak foreign exchange regulations, particularly because at the time the lawsuit was filed the Czechoslovak Republic was a member of the IMF and the claims underlying the Augstein lawsuit are subject to Czechoslovak law, a part of which is foreign exchange law.37 Prague filed the appeal in an effort to continue the dispute until the situation was clarified with regard to the expected property negotiations with the US. Another not insignificant reason for this stance of the Czechoslovak Republic was the fact that if the dispute with Živnostenská banka were to end, the Investa dispute, which was at “peace” and in which the amount of 9 million USD from the sale of the rolling mill was seized, would revive. Here was the threat that an unfavourable outcome of the dispute with Investa would significantly worsen Czechoslovakia’s negotiating position on the compensation negotiations with the US, in which the Czechoslovak side intended to use this amount as a Czechoslovak asset. In truth, it was highly unlikely that an American court would let itself be influenced in any way by a domestic executive, and it was also unlikely that it would rule in favour of a communist country’s property rights. What’s more, as the analysis of the Foreign Department of the Ministry of Finance of the Czechoslovak Republic pointed out, the negotiating “position” of the State Bank of Czechoslovakia was on shaky foundations. Here it was shown how appropriate it would be if an independent bank for conducting foreign trade with capitalist foreign countries was also established from the mentioned state bank. It would then be possible to separate business activity from issuing activity, and state foreign exchange reserves would be less endangered. As an issuing state bank, it would have extraterritorial absolute immunity.38 The real status of the bank’s activities (commercial–operational and issuance) eased the position of those who demanded their original (nationalized) property in the Czechoslovak Republic and definitively hindered the position where sovereign immunity could be applied.

37 NA CR, ˇ f. MF—T, USA, box no. 56, Augstein dispute against the Živnostenská banka and the State Bank in New York, 12 September 1955. 38 ACNB, ˇ ˇ sign. S VII./A-1., Sept. 1952, disputes with the USA, p. 3. f. ŠBCS,

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Thanks to the Czechoslovak side’s appeal, the court proceedings continued with a Court of Second Instance with the same result and, moreover, without a reason for the decision. After another appeal, on 8 July 1957, a Court of Third Instance in the state of New York followed, in which Živnostenská banka exercised all possible means of defence. The court decided that Živnostenská banka was nationalized in Czechoslovakia under the Civil Practices Act under Section 977-b of the CPA, had ceased trading, does not exist and has no ability or willingness to satisfy its obligations to its creditors and shareholders and the established permanent trustees of all Živnostenská banka assets in the state of New York are obligated to liquidate these assets and distribute them among the eligible creditors or shareholders (including the Augsteins). The Civil Practice Act (CPA) was originally approved by the US Congress as early as 1936. It spoke of establishing governing authorities for the assets of expired, liquidated or nationalized foreign companies for the purpose of paying the claims of creditors and other shareholders of these companies. The provision of Section 977-b, the constitutionality of which was generally recognized in the US, was based on the authority of the State to claim property located on its territory to satisfy claims against the property owner.39 And the constitutionality of this law and the application of its Section 977-b in the dispute of Augstein vs Živnostenská banka and the State Bank of Czechoslovakia were confirmed by the decisions all three courts of instances of the Supreme Court of the State of New York. After the issuing of the third level court, the bank no longer had the possibility to appeal, because the dispute was validly decided by the New York courts in favour of the Augsteins. However, if these courts had also lawfully deliberated on a particular issue relating to constitutional or federal policy, it was possible to suggest that such a decision be reviewed by the US Federal Supreme Court. In the given case, the courts of the State of New York had ruled negatively on the validity and applicability of the Czechoslovak foreign exchange regulations, which, in

39 Czechoslovak Claims Fund. Hearing before the Subcommittee on Foreign Economic Policy and Committee on Foreign Affairs, House of representatives, Washington DC, July 9, 1958. Extracts from Hearings before the Committee on Foreign Relations US Senate, 84th Congress, 1st session on H.R. 6382, p. 50.

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the view of the American lawyer of Živnostenská banka, Lemuel Skidmore, could be considered a matter of federal policy.40 Prague, however, had to make a decision on how to respond. It could still propose a settlement in both Augstein disputes, which, however, was out of the question, because this would cause a dangerous prejudication. And in such cases, new lawsuits similar to those of the Augsteins could be expected. The only solution was to file an appeal at the federal level. Therefore, Živnostenská banka also filed an extraordinary appeal with the Supreme (Federal) Court of the United States of America. The court, however, rejected it on 10 March 1958, stating that the decision of the court of the third seat was not related to any significant federal issue. How much did the assets confiscated in the above-mentioned court proceedings the following year amount to in the view of the State Bank of Czechoslovakia? The accounts of Živnostenská banka held 239,497 USD in cash (own property 22,523 USD and income from securities 216,974 USD) and 441,331 USD in securities (own property of the bank 6,848 USD, property of the Czechoslovak state 234,585 USD, property of domestic clients 132,197 USD and the property of foreigners 67,701 USD). Thus, the total cash and securities totalled 680,828 USD. On the accounts of the State Bank of Czechoslovakia were 93,696 USD in cash (93,680 USD in its own assets and 16 USD in securities) and 129,261 USD in securities (no bank assets, 125,189 USD in Czechoslovak state assets, 2,958 USD in domestic clients’ assets and 1,114 USD in foreign clients’ assets). Thus, the total in cash and securities amounted to 222,957 USD. Therefore, as of 30 April 1959, the cash and securities of both banks in New York state were worth 903,785 USD.41 Živnostenská banka’s own assets (cash and securities) were seized by sequestrators. Based on the summoning of all its creditors by the sequestrators on 10 October 1957, claims totalling 2,224,325 USD were filed.42 In regard to foreign currency of foreign clients, Živnostenská banka advised them to assert their claims independently. The rights of domestic foreign currency clients were to be defended by a court guardian (a referee), according to which the owners should receive 71.5% and sequestrators 28.5%. 40 NA CR, ˇ f. MF-T, USA, box no. 56, Guidelines for the next approach in the succession of disputes in the USA, 27. 8. 1957, m. no. 203/3.712/57-taj. 41 NA CR, ˇ f. MF-T, USA, box no. 56, ibid, p. 3. 42 NA CR, ˇ f. MF-T, USA, ibid.

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As for the property of the Czechoslovak state, acquired on the basis of various Czechoslovak legal regulations (nationalization), Živnostenská banka objected that Czechoslovakia had immunity, and therefore its property should be excluded from the seizure. At the same time, by a note from the Ministry of Foreign Affairs on 22 January 1959, it applied the so-called sovereign immunity. The US State Department recommended acknowledging the Czechoslovak state’s immunity with respect to the seized assets, stating that “the US government accepted the Czechoslovak government’s factual assertion that the cash and listed securities were Czechoslovakia’s assets”.43 The court did not grant immunity, however, namely on the grounds that other persons had also exercised their rights to these assets and the Czechoslovak state gained the right on the basis of Czechoslovak measures that are contrary to public order, or to New York State Civil Ordinance (977-b CPA) and thus have no effect on property located in New York State. This decision was confirmed by the Courts of the Second and Third Instance such that it entered into force on 1 November 1962. Prague’s defence to the intervention in state property, or in both banks, was led not only in court proceedings but also through diplomatic channels. Since 1958, this court dispute over property had become a part of a set of Czechoslovak–American negotiations to resolve open economic and financial issues and Czechoslovak monetary gold.44 The heads of both delegations signed the principles of their solution on 8 December 1961 and laid the foundation for reaching an agreement on resolving the economic and financial issues between the Czechoslovak ˇ Socialist Republic (CSSR) and the US. Regarding the property assets of the Czechoslovak state deposited in the accounts of Živnostenská banka and all assets held in the accounts of the State Bank of Czechoslovakia that were sequestered in the said court proceedings, the following were agreed on in principle:

43 NA CR, ˇ f. MF-T, USA, 56, ibid, p. 4. 44 Czechoslovak-American negotiations on compensation for the nationalization of

American property in the Czechoslovak Republic began shortly after the war, continued unsuccessfully in 1949, and then there was a period of “negotiation silence”. The new round started in 1955 on the initiative of Washington.

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1. The Czechoslovak Government will be obligated to pay a sum of 1 million USD out of the agreed global amount, only if all the stated seized assets of the banks are freed, 2. If only part of the assets is released, the amount of 1 million USD will be reduced by the part of the assets that have not been released, 3. If no assets are released, the Czechoslovak government will not be obligated to pay 1 million USD, 4. Prague will pay the amount of 1 million USD or the amount mentioned in the second point only when the released assets are delivered to the Czechoslovak government or the State Bank of Czechoslovakia, 5. Until the transfer referred to in point 4 has taken place, the assets released by the court will stay in the administration of the New York court.45 The presented approach and the draft principles were approved by a resolution of the Political Bureau of the Central Committee of the Communist Party on 28 November 1961. ˇ In this situation, the American legal representative of the CSSR, L. Skidmore, informed about the possibility of filing a request with the US Supreme Court for review proceedings in both cases and, if permitted, to seek the annulment of the court decisions. Experts discussed how to further proceed in this matter at a meeting of the Ministry of Foreign Affairs and the Ministry of Finance on 30 November 1961. They did not recommend submitting a request for review for the following reasons: – in the case of Živnostenská banka, there is no hope of a final favourable decision, i.e. the exclusion of the assets belonging to the Czechoslovak state, because the Court of First Instance no longer refused to grant immunity to the Czechoslovak state absolutely but only with regard to the assets whose ownership it considers questionable in relation to the currently applied claims of some emigrants, and at the same time indicates that Czechoslovak measures on whose basis Czechoslovakia acquired these assets cannot have extraterritorial effects. Therefore, it would be necessary to demonstrate state ownership before the court, which would not be successful with regard to the above-mentioned court opinion. It is impossible in principle, however, for the Czechoslovak

45 NA CR, ˇ f. MF-T, USA, ibid.

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state to submit to the jurisdiction of American courts. The State Department recommended immunity, with the acceptance of the Czechoslovak government’s de facto claim that this was state ownership. In a subsequently issued amendment, when one of the emigrants turned to it, the State Department stated that it did not mean in any way to prevent or circumvent the court ‘s decision on who the real owner is. And thus, the recommendation of immunity in the given case became problematic, and the court would not even have a basis for the opposite decision: • In the case that the mentioned agreement is concluded, the unreleased assets of both banks, or of the Czechoslovak state, formed a deductible item from the agreed global amount of compensation, • In the case of the State Bank of Czechoslovakia, immunity was granted. Even though the current non-releasing of the seized assets in itself seemed illogical, it must be noted that the court followed the instructions and left the assets in seizure until the possible Czechoslovak-American property law agreement entered into force, • The values on the accounts of the State Bank of Czechoslovakia also formed a deductible item within the global compensation.46 In these circumstances and state, experts at the State Department and Treasury Department advised both banks not to apply to the US Supreme Court for review. The dispute between Otto Augstein and Živnostenská banka continued in the following years, without regard to bilateral negotiations on compensation, gold and other open issues. Prague’s attorney, Lemuel Skidmore, informed that the sequestrator of the bank’s assets in the US has the possibility to obtain all its assets in the US, which was originally transferred as its property to the State Bank of Czechoslovakia. The actual amount of the seized property of Živnostenská banka in its hands was set at 761,000 USD as of 31 March 1964. Skidmore’s law office, on the other hand, again argued that the Czechoslovak State Bank’s assets are subject to immunity, which it again filed with the US State Department 46 NA CR, ˇ f. MF-T, USA, box no. 56, Disputes of the State Bank of Czechoslovakia and Živnostenská banka in the USA, cˇ . j. 203/06779/62, p. 5.

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in June 1963. This, however, the New York court again refused to accept on the grounds that in its view no US government agency can order a US court on how it should decide or should have decided on the ownership or non-ownership. Skidmore labelled as questionable whether Prague may in the future claim the lost property dispute as a loss from the US government. In his view, this was also a matter of seeking an understanding on the American side between its components (court–government), which could enable the annulment of the court order on the property of Živnosˇ from 1959.47 The mentioned “understanding tenská banka and the ŠBCS on the American side”, however, at the given time and on the given issues was not realistic. Negotiations between the US and Czechoslovakia on a global agreement on compensation and gold reached the final stage in the early 1960s. The Czechoslovak approach in this phase of the final negotiations was approved on 23 August 1960 by the Political Bureau of the Central Committee of the Communist Party. The Czechoslovak global compensation was increased by one million dollars to cover all of IBM’s claims. The final agreement, signed in Prague by Ambassadors Edward T. Wailes and J. Hájek on 8 December 1961 in the form of a “Declaration on the Principles of Resolving Open Economic and Financial Issues between the Czechoslovak Socialist Republic and the United States”, contained bilateral commitments. Some of them were load-bearing, and they were on both sides. The US would return 18.4 tonnes of blocked ˇ Czechoslovak monetary gold, and the CSSR would compensate for the losses of American property nationalized and confiscated. On the initiative of the US, IBM did not appear by name in article no. 2 of this declaration.48 Likewise the name Otto Augstein did not appear in the declaration of “principles”.

47 AMZV CR, ˇ f. Právny odbor (PO) 1955–1964, box no. 16, m. no. 216184/64. 48 The introductory part of Article no. 2 of the statement read: “All claims of nationals

of the United States of America whose property was nationalized in Czechoslovakia or affected by other Czechoslovak measures which deprive or restrict ownership and which occurred from 9 May 1945 until the Agreement on the Settlement of Open Economic and Financial issues between the Czechoslovak Socialist Republic and the USA (hereinafter referred to as the ˇ Agreement) enters into force will be resolved by global compensation". AMZV CR, f. TOT, USA 1960–1964, box no. 6, Vyhlásenie o zásadách…., cˇ . j. 031.751/61–6/1.

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However, the signing of the declaration of “principles” did not close the chapter on blocked Czechoslovak monetary gold and open economic and financial issues, including the assets of IBM or Otto Augstein. This was mainly due to the disapproval of the US Congress, which considered the conditions negotiated for the US to be insufficient and unfavourable.

PART III

The US Congress as a Hammer

CHAPTER 6

Prague Gold vs the State Department Until 1968

The first public document indicating that the issue of the return of Czechoslovak monetary gold will not remain an isolated problem between Czechoslovakia and the Tripartite Commission for the Restitution of Monetary Gold, or that it will be linked to a broader political context, appeared only shortly after the communist coup in 1948 and its author was the American ambassador to Prague, Lawrence A. Steinhardt. This was his report to the State Department of 28 May 1948, that is, at a time when the TGC was still actively processing requests from several countries for the return of gold and declared full compliance with the spirit of the Paris Reparations Agreement. In his report, Steinhardt first presented his personal experience of negotiating with the Czechoslovak government since the communist coup: only its own gains will prompt Prague to settle American demands for nationalized property. Therefore, the State Department should proceed such that it will develop constant pressure and use economic and trade sanctions, and he described the Czechoslovak share in the golden “pool” as the only effective tool to do so. In his view, the use of gold as an effective lever will not increase the already strong antagonism of the communist Czechoslovak government, and disapproval of the supply of gold from the gold “pool” will compel it to an agreement on compensation for nationalized American property. He said that negotiating with communist Prague on the basis

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Michálek, Nazi Germany and the Role of the US in the Fate of Czechoslovak Monetary Gold, https://doi.org/10.1007/978-3-031-38758-6_6

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of well-established business practices and in line with recognized ethics or standards of the Western world was pointless, and the inability to present an effective counterweight is and will be perceived by communists as a weakness and not as proof of honesty or strength. Therefore, he suggested the US not seek legal justifications for refusing to approve the return of the gold but simply use this means and instead of supplying the gold, take a firm stand in favour of its indefinite delay. He ended the document by saying that any agreement on open economic and financial issues would be highly unlikely if the US supplied the gold before its own demands were met.1 The second piece of evidence was the proposal, again from Steinhardt, on 9 July 1948, presented again on 11 September 1948, and addressed to the Czechoslovak Government Commissioner for Nationalization Compensation at the Ministry of Finance. In negotiations on settling American claims for nationalization Steinhardt took the view that 10% of the total US demand for compensation of 45 million USD was to be paid in a lump sum of cash and the rest would be repaid as part of the proceeds of Czechoslovak exports to the US. He thought that this one-off payment should be obtained either from money deposited by Czechoslovakia in the US for the purchase of equipment for the mentioned wide strip rolling mill or by a loan in New York secured by Czechoslovakia’s share of the international gold “pool” deposited with the Federal Reserve Bank in the US and administered by the Member States of the TGC.2 Obviously, the Czechoslovak side rejected such a scenario, arguing that monetary gold is a separate problem that should not be associated with other bilateral interstate issues. The third item of American evidence from the summer of 1948 related to the link between compensation for nationalized property and gold from Washington’s point of view was a memorandum of 13 July 1948 of the charge d’affaires of the American Embassy in Prague, John H. Bruins, addressed to Nebraska Congressman Karl Stefan. In it, Bruins did not question the right of the Czechoslovak government to nationalize the country’s property, but American demands for compensation should be heard. He referred to the “Declaration on Trade Policy” of 1946, in

1 NAR, f. TGC, box no. 17, No. 834, May 28, 1948, Steinhardt. 2 NA CR, ˇ ˇ 1951–1954 (02/5), zv. 49, a. j. 134, point f. Politický sekretariát ÚV KSC

15, Restitution of the Monetary Gold.

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which Prague undertook to provide adequate and effective compensation. The negotiations did not lead to the fulfilment of the commitment, however. He reiterated the US position on global compensation. At the end of the memorandum, he confirmed that the American side really did insist on overpaying American demands and called Czechoslovak monetary gold, which Prague would like to see returned, as the right card in the hands of the US. This is why Washington is taking the position that now is not the time to return the Czechoslovak gold treasure, and conversely, it is a “hidden trump card” or an “ace in the hole” that can be used to force the Czechoslovak government to provide compensation.3 Another document came from the American TGC commissioner in Brussels, Russell Dorr, on 14 September 1948, and was addressed to Joseph Todd, head of the finance department at the State Department. Dorr noted that more than half of the requests of European countries for the return of their seized gold had already been processed by the commission, but he labelled some as problematic for reasons beyond the commission’s work, particularly those concerning Poland and Czechoslovakia. He also expressed the belief that the State Department would soon decide to accept or reject the share of the Czechoslovak claim,4 which the TGC had set at 24.5 tonnes. The fact that the return of monetary gold to Czechoslovakia would not be early or quick was also confirmed in other ways, aside from in the mentioned American documents, in the following years. These also confirmed that gold had become a major political factor. In June 1950, a group of financial experts negotiated at the State Department over the Czechoslovak (and Polish) gold with workers from the Central European Department of the State Department. Although they confirmed that they acknowledged Czechoslovakia’s claims (aside from the “autonomous” gold), they refused to return it. They justified their opinion as follows: 3 Library of Congress (LC), Washington DC, Manuscript Division, f. Steinhardt Papers, box no. 58, General correspondence 1948. 4 In essence, Commissioner Dorr indirectly called on the State Department to decide, in the case of Czechoslovak gold, whether to give consent or refuse to exercise the Czechoslovak claim. The marathon of providing proofs in the form of correspondence between Prague and the TGC was basically over. The TGC recognized the Czechoslovak claim, aside from the “autonomous” gold of the Škoda Works and the Armoury. NAR, f. TGC, box no. 1, Confidential letter to Joseph Todd from Russell H. Dorr, dated 14 September 1948.

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1. If the US government now agreed to supply any substantial amount of gold to a satellite of Moscow, it would be the target of criticism from the American public and Congress for its unrealistic “business as usual” position. The government should not do anything that would be perceived as assistance to a satellite, especially in the case of Czechoslovakia, which, among other things, has just ordered the departure (expulsion) of the majority of diplomats from the US Embassy in the country. 2. The refusal to supply gold to Czechoslovakia can be used as an American weapon to satisfy its own demands for compensation for nationalized American property in the Czechoslovak Republic. This position was supplemented by the remark that the US had unblocked Czechoslovak property in the US as early as 1945 on the basis of the Prague government’s guarantee that it would satisfy American claims for nationalized property. If the US were now to agree to supply the gold, it would have the following effect: the US Government is the active custodian of the number of claimants for compensation and would be the subject of serious criticism for not using its position to satisfy the claims of its own citizens, refusing to supply the gold will undoubtedly provoke propaganda attacks from the Soviet bloc, the recoverable amount of US claims (around 17 million USD) for compensation is very small compared to the amount of the claims themselves (American assets in Czechoslovakia before their nationalization were estimated at around 148 million USD) and the proposal for an adequate compensation settlement is significantly lower (30–40 million USD, and the US had proposed 45 million and 25 million was seen as the minimum recommended amount), so the ineffectiveness of the refusal to issue gold is almost zero, although Prague may counteract and refuse to repay 5.7 million USD for the surplus loan and one million USD for a US military account, the use of Czechoslovak gold as a bargaining weapon may cause problems with the UK and France.5

5 NAR, f. TGC, box no. 18, No. 116, 25 July 1950.

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The weak element of Washington’s negotiating position in the use of the Czechoslovak gold was that they did not have full control over it, since most of it was physically deposited with the Bank of England in London, and this was likely one of the reasons why there was disagreement within the State Department on the matter. Officials of the Central European Department stated that the US would lose more than it would gain if it did not consent to issuing the gold to Czechoslovakia, or if the US is not prepared to adopt a policy of blocking Soviet satellite assets, then it is difficult to justify its refusal to return gold. They described the return of the gold as “normal business” which is in line with valid trade principles; therefore, the US cannot withhold its consent to its delivery. Officials at the European Department of the State Department took another view: the US cannot give its consent to the supply of gold and they can justify this formally by the need to resolve the unclear legal issues, which in the end the State Department accepted—all of its decisions are only non-binding, provisional and tentative and will published only after the completion of the overall work of the TGC. The State Department described the rules and principles of the TGC as independent in that it freely and responsibly assessed the requirements and then allocated the eligible share of gold. Its delivery, however, is a matter for the three governments. Unless an agreement is reached on open economic issues, the US will block the release of the gold, and this is not retaliation but a tool for obtaining international compensation, the State Department informed Homer S. Fox, the new US commissioner at the TGC in Brussels. In 1952, Ambassador to Prague Ellis O. Briggs also entered into this intra-American communication, when he urged that US intentions to refuse to release the Czechoslovak gold should not be revealed, as this could make it more difficult for him to negotiate the release of imprisoned William N. Oatis. The State Department accepted this and even briefly suspended consultations with British and French diplomats for fear of possible disclosure.6 And in the following year, the game of hide-andgo-seek with words continued—the US said it was carefully studying the technical and legal issues of gold recovery and would not announce its position until compensation is resolved.

6 NAR, f. TGC, box no. 18, Secret Security Information, draft 12/18/53.

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The submitted archival sources of the TGC in the early 1950s confirmed the well-known fact that the TGC was a “toy” in Washington’s hands, and the allocation, as well as the return of gold to Czechoslovakia, would be a complicated and long-term process linked especially with compensation for nationalized American assets. Also of interest was how State Department officials disagreed as to whether or not the blocking of gold was an important lever in forcing Czechoslovakia to negotiate the compensation. It certainly was not compared to the nationalized amount, but the expected compensation was only twice as high, so the non-release of 18.4 tonnes of gold was still of great value. Another point of interest was that in 1953 the US physically held only a portion of the Tripartite gold in its FRB account in New York, exactly 10,411.3690 kg, while 43,059.9306 kg were held at the BOE in London and only 2342.9663 kg in the Banque de France.7 Thus, of the total 55.8 tonnes of gold waiting to be redistributed in 1953, one-third of it (18.4) belonged to Czechoslovakia. Official negotiations between Prague and Washington on resolving open economic and trade issues were interrupted in 1949 due to the reluctance of the Czechoslovak side to accept compromise positions. However, Czechoslovakia continued to lobby intensively and permanently on the soil of the Brussels TGC for its share of monetary gold, which the State Department, understandably, did not agree with, offering again the opinion—if there is no compensation, there will be no gold. In instructions to its ambassador to Prague in October 1954, it summarized four American priorities—compensation to American citizens, the financial demands of the US government, the handling of profits from rolling mill sales, and the handling of Czechoslovak monetary gold in the TGC. Ambassador Ural Alexis Johnson confirmed the mentioned priorities retrospectively in a confidential memorandum to the State Department’s headquarters in Washington in December of the same year, stating: in the case of official negotiations we (the US) have two weapons—a complete one over the money for the rolling mill and indirect one with the gold— and these need to be used in negotiations for obtaining compensation. If the US is to negotiate over the gold, then it will emphasize the interest in

7 NAR, f. TGC, box no. 1, Letter of United States Commissioner Homer S. Fox to Otto P. Fletcher, Monetary Affairs Staff, Department of State, 13 October 1953.

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expanding trade; however, the return of gold is only possible in the case of a compensation agreement.8 Although the TGC ended its “investigative” activities in 1952, while formally and officially continuing its work, the Czechoslovak monetary gold remained deposited in the US and the UK. For the US, it represented, together with the proceeds from the sale of the wide strip rolling mill, pressure capital with which it could force Czechoslovakia to agree to compensation for the nationalization of American property. Although the stance was discriminatory on the part of the US, undoubtedly motivated not only by compensation but also by broader political reasons, it showed that the Czechoslovak Republic’s refusal to associate gold with open economic issues would be unsustainable. This fact was fully confirmed by the Czechoslovak–American talks on open economic issues, which stalled for nearly five years and then reappeared in the mid-1950s. It was specifically at the time of the preparations for the negotiations on open economic issues that the American side once again hinted that it intended to link the issue of gold restitution with the US claims against Czechoslovakia. According to embassy note no. 407 of 3 May 1955, the US will not consider as reasonable any proposal that does not take into account the issue of fair compensation for nationalized and other seized property in the Czechoslovak Republic that belonged to American citizens and the settling of the Czechoslovak government’s unfulfilled obligations towards the US with due regard to such assets that are or will be available to Czechoslovakia for settling these obligations, such as, for example, the proceeds from the sale of the rolling mill, any additional amounts of monetary gold which will later be allocated to Czechoslovakia by the TGC and Czechoslovak proceeds from trade with the US. At the negotiations themselves on 21 March 1956, the American side proposed that, in regard to the method of paying global compensation, 19 million USD of the proposed global amount be paid out in Czechoslovak monetary gold.9 This statement indicated that the US knew at the time what 8 NAR, f. Confidential US State Department Special Files. Records of the Office of the Legal Advisor for Educational, Cultural and Public Affairs, Part 4: Records Relating to the Tripartite Commission (Legal Advisor and Tripartite Commission), reel 8, Johnson’s Memorandum on the Czechoslovak Share in the Gold Pool, 23 December 1954. 9 AMZV CR, ˇ f. MPO, Dokumenty k …., part II. (1949–1957), p. 179, The issue of the restitution of Czechoslovak monetary gold in the negotiations on open economic and financial issues between the Czechoslovak Republic and the US.

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the Czechoslovak gold allocation would be from the TGC, and that the TGC was actually prolonging its activities artificially. The Czechoslovak side rejected the American proposal and on 5 July 1956 and offered its view on the gold and the global compensation: as part of the compensation, it would pay 1 million USD as soon as it received at least an advance of at least 50% of the relevant gold in proportion to the Czechoslovak restitution claim, registered with the TGC.10 The Czechoslovak negotiating position was clear: return the gold, then we will compensate for the nationalization with small amounts. In contrast to this, the US set a specific level of global compensation and, in deducting its financial liabilities to Czechoslovakia, demanded the difference in payments from the gold in a single instalment, valued at 11 million USD. At the same time, it stated that it is difficult for the American side to say what the amount of this gold ration will be, “if and when” it will be granted to Czechoslovakia. Based on a 50–60% share, they perceived it as likely that the Czechoslovak Republic would get an amount that would exceed 16 million USD by several million dollars. The US derived the sum of 16 million USD from the current price of gold, taking into account the 50% share of Czechoslovakia’s gold refund claim by the TGC. Therefore, as a sign of their accommodation in their own view, they proposed to the Czechoslovak side at further negotiations on open economic and financial issues in July 1957 that after acknowledging the share of gold, the Czechoslovak Republic transfer 6 million USD in cash to the US. The Czechoslovak side took a small step towards the American offer— it agreed with the amount of 2 million dollars. The new American proposal of 11 December 1957 was again a concession. They changed their original proposal again and proposed that a net global compensation for nationalization of 15 million USD be paid, in addition to using the proceeds of the sale of the Czechoslovak wide strip rolling mill and gradual instalments of the proceeds of Czechoslovak exports to the US, “by transfer of 3 million USD in cash after Czechoslovakia receives another part of its share of monetary gold, managed by the Tripartite Commission”.11 However, the Czechoslovak side did not agree even with this

10 AMZV CR, ˇ f. MPO, ibid., p. 180. 11 AMZV CR, ˇ f. MPO, ibid., p. 181.

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American position.12 The difference between the two positions was in the form and pace of repayment, as well as in the amount of global compensation (the difference was 4 million USD). The Czechoslovak side formulated a new position at the end of December 1957 in the form of basic principles, which were both general and specific. Understandably, these principles were founded mainly on the needs of Czechoslovakia and emphasized, in particular, the fulfilment of American obligations. The general character of the principles was expressed by the statement that both parties will endeavour to create favourable conditions for expanding and strengthening their mutual trade relations. For this purpose, the US government was to issue a statement in support of trade relations between the US and Czechoslovakia and to agree with the establishing of a trade department in New York with the Czechoslovak Embassy in Washington. At the same time, the US government was to agree to issue an advance on the share of monetary gold, to cancel the provision of the Decree of the Treasury Secretary Snyder no. 655 from 19 February 1951 (the ban on transferring funds from American public funds to recipients in Czechoslovakia), to release all blocked and vested Czechoslovak property in the US and permit its transfer to the Czechoslovak Republic, and to grant export permits for goods purchased in the US in the past by Czechoslovak companies. In contrast to this, the mentioned principles set the following approach for the Czechoslovak side: global compensation of 11 million USD will be paid in stages, the first 2 million USD after the delivery of at least part of the held gold, and an additional 9 million USD would be charged globally for the rolling mill. The Czechoslovak side will further release the crowns account of the US military, the so-called Pilsen account,13 ˇ in the amount of 7,161,569.92 crowns, as well as a kept in the ŠBCS special account of 887,718.70 crowns, i.e. the account of the American ˇ the so-called film account, because it was usually Embassy in the ŠBCS, used for the purchase of US films for cultural propaganda in Czechoslovakia. In the proposed principles, Czechoslovakia also undertook to renew 12 AMZV CR, ˇ f. GS – T 1955–1964, box no. 33, m. no. 013.13.1/58-5, Information on the 37th Session on Open Economic and Financial Issues between Czechoslovakia and the USA of 7 March 1958. 13 The agreement on the creation of the so-called Pilsen account was signed on 25 July 1947 and according to it, this crown account could be used by the US Embassy only to purchase for the current needs of the US Army only in the Czechoslovak Republic.

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the debt service on Czechoslovak dollar-issued securities under conditions agreed on among the representatives of the holders of these securities and the Ministry of Finance.14 These principles mainly followed Czechoslovak interests and were elaborated through Czechoslovak optics. Evidence was in the fact that they emphasized the proposed solutions under the assumption that the Czechoslovak Republic receives at least part of its share of Tripartite gold. The Czechoslovak side also prepared a supplement to the principles themselves, which was a kind of explanatory “manual”. For example, on the question of global compensation, all claims of the American side were to be included, i.e. including those which at that time were in US court proceedings (the Augsteins vs Živnostenská banka and the ˇ ŠBCS). The Czechoslovak side in effect did not offer any helpful steps; therefore, the negotiations on the global compensation and the gold at the level of experts of both parties were again completely frozen. The blocking of the Czechoslovak–American dialogue on compensation and gold, however, motivated by one side or the other, prompted the Czechoslovak government to new unofficial explorations at the TGC, using in them the information base of bilateral negotiations with the UK and France. These bilateral talks were reflected in an official document, i.e. note no. 79 of the British Embassy in Prague from 13 June 1958, addressed to Deputy Foreign Minister Jiˇrí Hájek, that the French and British commissioners in the TGC are willing to sign the necessary documents for handing over a portion of the Czechoslovak gold amounting to 18,433.4733 kg, under the assumption that the necessary documents were signed by all three commissioners and that there would be no other changes.15 Alongside the given condition, the note also stated that the amounts of gold transferred to another state in 1958 had been, in line with the commission’s practice, rounded down to the nearest 50 kg below the quantity to be eligible for final distribution. Thus, if Czechoslovakia had been given an allotment in 1958, it would have received 18.4 tonnes of gold. This distribution was not yet final, because the commission was expected to have even less gold for the next distribution.

14 AMZV CR, ˇ f. GS—T 1965–1969, box no. 35, Principles for resolving open economic issues between Czechoslovakia and the US. 15 AMZV CR, ˇ f. MPO, Dokumenty k otázke reštitúcie cˇ eskoslovenského menového zlata 1958–1979 [Documents on the Question of Restitution of Czechoslovak Monetary Gold, 1958–1979], p. 34, m. no. 1491/59.

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This information indicated that the TGC had unanimously decided on the amount of the Czechoslovak allotment, but the US commissioner refused to sign the relevant documents, making it impossible to carry out restitution. Therefore, Czechoslovakia’s Ambassador Extraordinary and Plenipotentiary to the IARA, Dr. František Josíf, handed over to the head of the commission, Col. Ronald Wingate, on 18 August 1958 a memorandum containing the position of the Czechoslovak government, which was that examination of all the claims submitted by the commission created the foundations for the termination of its work and the final distribution of the gold “pool” to the relevant states. “However, given the fact,” the memorandum added, “that the US government’s obstructions for years have made it and still make it impossible to eliminate the issue of restitution gold, the Tripartite Commission has decided on a measure whose discriminatory nature is downright striking. The pool of gold is to be divided, but the Czechoslovak allotment will continue to be withheld as a result of pressure from one great power that is abusing its mandate in order to deliberately discriminate against Czechoslovakia. The restitution of monetary gold is thus denied to the state which was one of the first victims of Hitler’s Germany”.16 According to the memorandum, these unjustified delays were causing considerable harm to the Czechoslovak side. As the American commissioner in the TGC, Richard B. Freund, informed the State Department on that same day, Czechoslovakia had requested that the commission publish the results of its work as soon as possible.17 In the previously mentioned memorandum of 18 August 1958, Prague also stated that denying this gold restitution was in conflict with the agreement on German reparations, on the founding of the Inter-Allied Reparations Agency and on the restitution of monetary gold and labelled as regrettable the fact that 12 years of work was not enough for the governments of the US, the UK and France to comply with this provision. What’s more, it had lodged a resolute protest against the discriminatory approach of the TGC and demanded that the relevant share of gold be issued to

16 AMZV CR, ˇ f. MPO, Dokumenty k … zlata 1958–1979, p. 8, Czechoslovak Memorandum to the TGC of 18 August 1958. 17 NAR, f. Legal Advisor and Tripartite Commission, reel 8, Czechoslovak protest to the TGC, 19 August 1958.

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the Czechoslovak side without further delay.18 This outraged and justified protest by the Czechoslovak government was accompanied the next day by a note from the Ministry of Foreign Affairs addressed to the US ambassador in Prague, as well as the above-mentioned memorandum to the commission. In the note, the Ministry of Foreign Affairs expressed extreme wonder at the position of the US and its representative in the TGC, i.e. if not for the negative American stance, restitution could have taken place a long time ago. The Czechoslovak ministry also expressed regret that, despite the clear provisions of the Paris Reparations Agreement, adopted in December 1945, the restitution of monetary gold had not yet taken place.19 The TGC prepared a response to both Czechoslovak documents of that August in the form of two extensive memoranda (the US did not respond at all, and it was evident that the American side would not be forced to act in a matter that would weaken its possible bilateral negotiations on compensation). The first took the form of a sketch and mapped out the history of the commission, its role, as well as the responsibility of the three governments for delivering the shares to the applicants. Since by the rules, this required the consent of all three governments, and in the case of Czechoslovakia this had not occurred for various reasons, while the TGC had granted Prague 43,999.3638 kg, an appropriate aliquot could not be returned. At the same time, in the memorandum, the TGC assured the Czechoslovak government that it had earmarked an appropriate quantity of gold so that it could be handed over to Prague with the consent of the third member of the commission. The TGC also refused to make public the results of its work, namely for the reason that it had no secrets, but at the beginning of its work, it made a commitment to all the applicant governments, including the Czechoslovak government, that the information submitted in support of applications would be treated as confidential.20 The TGC’s second reply also did not take the form of an official document, and the US ambassador to London described it as 18 NAR, f. TGC, box no. 6, Unofficial translation, Ministry of Foreign Affairs, No.

119.881/58-5, 19 August 1958. 19 AMZV CR, ˇ f. MPO, Dokumenty k …zlata 1958–1979, p. 21, note of the Czechoslovak Ministry of Foreign Affairs to the US Embassy in Prague on 19 August 1958. 20 NAR, f. TGC, box no. 6, Draft reply by the TGC to the Memorandum of the Czechoslovak Government.

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“simply a piece of paper”, which was intended only to serve as an internal explanation of the British position, i.e. London’s consent to the issuing of the gold, mainly due to binding negotiations on the repayment of intergovernmental Czechoslovak debts to the UK. The document further stated that Her Majesty’s government was nevertheless open to further negotiations and believed that American consent would come soon.21 Neither of these two “drafts” was an official document and neither was sent to the Czechoslovak side. The mute opinion of the TGC in this spirit could be anticipated, if only because the commission was merely a technical body and its actions were determined by Washington. Czechoslovak–American talks on open economic issues continued at the end of October 1958. Ambassador Allison presented a new American proposal to Deputy Minister of Foreign Affairs Jiˇrí Hájek on 31 October. In it, he said the US was willing to reduce its demand for a global compensation by 1 million USD. Furthermore, if the Czechoslovak side were to accept the other parts of the American proposal, the US State Department would agree to further reduce the global compensation to 11 million USD, i.e. to a level corresponding to the Czechoslovak proposal. And what were the other parts of the American proposal? The US government will not insist that the framework agreement on open economic and financial issues also include the resolution of surplus credit issues, which the State Department planned to address later. Further, the American side was willing to use the US military’s crown account to purchase consumer goods in Czechoslovakia, and these goods would be used for the needs of the US military in Europe. The purchase was to be done in line with the agreement of 1947, thus 25% in crowns and 75% in dollars, i.e. this would be a purchase of 1 million USD in crowns and 3 million USD in dollars. The US government further linked its consent with the establishment of a Czechoslovak sales department in New York to resolve the issue of IBM’s assets in Czechoslovakia. A component of the last US proposal was that the US cannot accede to the Czechoslovak request that compensation for nationalized or otherwise affected US property in Czechoslovakia which a US court offered to a claimant from confiscated Czechoslovak property in the US (Otto Augstein) be deducted from the agreed global compensation. The acceptance of this request would mean that the US government

21 NAR, f. TGC, box no. 6, no signature or dates.

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would actually be overturning the US court’s decision, which is unacceptable under the US Constitution. The State Department, however, was willing to agree with the Czechoslovak side on a formulation that would be mutually acceptable.22 The Ministry of Foreign Affairs worked up an opinion in response to the American proposal almost immediately—from an economic point of view, it appeared to be quite advantageous for the Czechoslovak Republic, as the US was approaching the Czechoslovak positions on the primary issues of contention. According to the ministry, reaching such an agreement could facilitate trade relations with the US and thus also with Latin America, strengthening the negotiating position of Czechoslovakia in talks on open issues with the UK, as well as strengthening Prague’s international prestige. But this economic dimension quickly proved to be secondary. Two other aspects—the political one and that of obtaining gold—were primary. In discussions on the open economic and financial issues, the Czechoslovak side initially assumed they would run in two stages: the first, in which a preliminary framework agreement would be laid out to settle a whole set of issues, and the second would be in the hands of experts on the details and would result in a final agreement. From a political point of view, the Czechoslovak position showed that it is more advantageous for Prague not to sign the final agreement, but only a framework agreement in the form of an “agreed record of negotiations”, which would focus only on the main issues. And the Czechoslovak side saw these to be the transfer of monetary gold to Czechoslovakia, the declaration on Czechoslovak–American trade and the establishment of a business branch in New York, an agreement on the use of a US military crowns account, and the settlement of advance payments (excluding wide strip steel-rolling mill). After the concluding of such an agreement, in the Czechoslovak view, other partial issues would remain to be resolved, namely: releasing blocked and vested Czechoslovak property in the US, renewing the debt service on Czechoslovak dollar-issuing securities, releasing the so-called film account of the American Embassy in Prague, repealing the so-called

22 AMZV CR, ˇ f. GS—T 1965–1969, box no. 35, Information report on the 39th session in the negotiations on open economic and financial matters of 31 October 1958.

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Snyder Regulation no. 655, and paying the so-called certificates of imprisonment, patents and trademarks.23 If, however, such an approach was politically inappropriate, the information report concluded, then other proposals and instructions should come for the Czechoslovak delegation to negotiate with the US. The document does not specify what these “others” were to be; it can only be assumed that the Czechoslovak side was supposed to cause the negotiations to freeze with its unbearable demands. The delegations of both countries discussed the American proposal on 11 February and 9 April 1959. The record of the talks itself is more a Czechoslovak interpretation and summary of the American proposal: 1. The American side will accept the Czechoslovak proposal that IBM’s assets be settled within the global compensation. 2. The American side also starts from the idea that mutual compensation for the claims of IBM and Živnostenská banka for the property that was seized in a dispute with Otto Augstein before a New York court should be considered. The American side proposed a solution that those parts of the seized property of Živnostenská ˇ that were owned by the Czechoslovak state under banka and ŠBCS Czechoslovak law would be granted sovereign immunity. The property of the Czechoslovak state would thus be excluded from the court proceedings, released and in the framework of an interstate agreement transferred to the American government. The global compensation would be raised by 11 million USD, which will also cover IBM’s assets. The securities of the Czechoslovak state, which were deposited in New York banks by means of Živnostenská banka ˇ and were seized, according to the Czechoslovak side, and the ŠBCS amounted to around 580,000 USD (the other assets of both banks in the US amounted to 320,000–400,000 USD). 3. The American side proposes that the wording of the Czechoslovak– American agreement on the so-called Pilsen account from 1947 be amended to exclude the mention of the “US military” and the phrase “US government” be used instead. 4. The American side proposed that student–teacher exchanges be funded from the so-called film account of the embassy. 23 AMZV CR, ˇ f. GS—T 1965–1969, box no. 35, ibid., p. 30–32.

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5. The American side agrees that separate negotiations will be held between the representatives of the holders of Czechoslovak dollarissuing securities and the Ministry of Finance of the Czechoslovak Republic. If these talks do not end by agreement within six months, the governments will negotiate them.24 Of these five points, the Czechoslovak side viewed the second as sensitive, which is why it paid increased attention to it. Namely, from the start of the negotiations on open economic and financial issues, and then repeatedly during them, it warned US representatives that the negotiations could be endangered if the US authorities or courts were to take further action against Czechoslovak property in the US. Prague strongly emphasized that the value of the Czechoslovak assets that the US courts used in their unilateral decisions to satisfy claims against Czechoslovakia under the title nationalization and similar measures will be deducted from any agreed global compensation. The Czechoslovak government considered it essential to apply this principle for two reasons: a. It was impossible to acknowledge that this same claim be applied twice, once within the agreed global compensation and the second time in legal proceedings, b. The compensation agreement is important for Czechoslovakia only if it protects Czechoslovak assets in the US from legal action. The total assets seized in the legal proceedings against Živnostenská ˇ were worth almost 1 million USD, i.e. almost onebanka and the ŠBCS tenth of the global compensation. The status of the court proceedings was such that a temporary administrator had been appointed for the ˇ property in the US and the transfer of the property to a permaŠBCS nent administrator was not possible without further court proceedings. A permanent administrator had already been appointed for the assets of Živnostenská banka in the US, but he only had securities in his hands and the cash in Živnostenská banka’s account amounted to almost 240,000 USD. The securities of Živnostenská banka’s clients were in the process of a legal proceeding which had not yet been completed. Therefore, the Czechoslovak government warned the US regarding the consequences of 24 AMZV CR, ˇ f. GS—T 1955–1964, box no. 33, m. no. 020.989/59-6/1.

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the liquidation of the relevant assets of Czechoslovak banks in the US and expected the US government to undertake the steps needed to prevent the execution of the US courts.25 It did not state what steps the US government should take in this matter, but if it did nothing, then Prague would not feel bound by the negotiations reached on open economic and financial issues. The results of the talks between the delegations of both countries were finally recast into the form of a compromise document, the so-called “Declarations on the Principles of Resolving Open Economic and Open Financial Issues between Czechoslovakia and the USA”, which Deputy Foreign Minister Jiˇrí Hájek and US Ambassador Edward T. Wailes signed at the Ministry of Foreign Affairs in Prague on 8 December 1961.26 At the same time, they agreed that the final negotiations on a final agreement would begin on 3 January 1962. The American ambassador optimistically declared that these negotiations would be concluded within 10 days, since the merits of the issues had already been agreed. As it quickly turned out, however, this statement was unrealistic and more propagandistic; it certainly did not express the opinion of the ambassador himself. Czechoslovak–American negotiations on open issues of mutual bilateral relations continued in the following years, continually, but sporadically. Although a partial positive shift occurred in the views of both delegations in early 1962, four basic areas of concern remained unresolved on the table. The first was the fact that the American delegation, contrary to the wording of the agreed principles of December 1961, refused to agree that the provision on trade issues, as stated in the principles, should become part of the text of the final agreement.27 The US planned instead to issue a State Department press release in the form of a trade declaration which would only include a reference to the founding of a Czechoslovak detached trade department in New York. Doing so would only give these provisions the nature of a declaration, and they would lose the nature of 25 AMZV CR, ˇ f. GS—K 1965–1969, box no. 35, Main points of the declaration in the case of Živnostenská banka. 26 AMZV CR, ˇ f. GS – K 1955–1964, box no. 33, m. no. 130.227/61-6/1. 27 In the principles, the commitment of both governments to “strive to create favourable conditions for the expansion and consolidation of mutual trade relations ” was accepted, as was the US contractual commitments to issue a declaration of support for trade with the ˇ CSSR and to approve the establishment of a detached trade department in New York.

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treaty obligations. The American side justified this change in its position by saying that the inclusion of these provisions in the agreement could complicate the approval process in the US, because Congress could object to the fact that such a provision went beyond the nature of an “executive agreement”,28 and the provisions should be subject to ratification. The Czechoslovak side rejected this American stance because it was the US that had included this trade provision in the text of the agreement in 1959. In line with the approved directives, the Czechoslovak side endeavoured to make the provision of trade a proper part of the agreement in the form of an article or an annex to it. ˇ which The second issue was the US military’s account in the ŠBCS, amounted to about 7.1 million crowns. The account started with a deposit of crowns that the US military had purchased for dollars just before leaving Czechoslovakia in the autumn of 1945. According to the agreement, the purchase of Czechoslovak goods was to be made either from 25% of the funds on the account and 75% by direct dollar vouchers, or freely. These funds were to be made available to US officials when using these goods in Czechoslovakia at a rate no less advantageous than 50 crowns of the old currency for 1 USD. With the monetary reform in 1953, the account balance was recalculated at a ratio of 6.944:1, i.e. as with foreign exchange accounts. In the negotiations on the principles, the same use of the account balances was agreed on as those provided for in the 1947 agreement. Instead of the foreign exchange clause from that time, which guaranteed the US a constant exchange rate for domestic use, a general provision was then approved that the exchange rate cannot harm either of the contractual parties versus the situation valid at the time of signing the agreement. The American side wanted to keep the foreign exchange value of the balance when the exchange rate changed between the dollar and the crown. This clause was advantageous for Czechoslovakia, so long as the US used the funds in the account to purchase Czechoslovak export goods. If, however, they used these funds exclusively within the Czechoslovak Republic, then in the event of a devaluation of the dollar or revaluation of the crown, they would have fewer crowns available in their account. On the other hand, in the event of a dollar revaluation and a crown devaluation, the crown balance would be higher. 28 This was a type of agreement that normally included all the compensations agreements that the US signed, i.e. which did not require ratification and about which the State Department only notified the Congress.

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The Czechoslovak side thus could not refute the American argument that with the recalculation in 1953, it had acknowledged that the account was originally created in dollars. The third unresolved issue remained that of the gold transfer. The Czechoslovak side demanded the issuing of 18.4 tonnes of gold in Prague, where a cheque for 2 million USD would then be simultaneously handed over to the US. In contrast, the US submitted a proposal stating ˇ that the CSSR should get about 10.2 tonnes of the gold in London from the BOE and about 8.2 tonnes in New York from the Federal Reserve Bank. Czechoslovakia did not agree with the place of gold delivery in the US and in the UK, which the American partner effectively accepted. Its ˇ counterproposal lay in the fact that the CSSR would first sell the gold it received in New York and London to a Swiss or Swedish bank, which would at the same time the gold is credited to its accounts in London and New York write the same amount of gold or equivalent in free currency ˇ in Switzerland on behalf of the Czechoslovak government or the ŠBCS or Sweden. The American side also recommended discussing this issue in the TGC.29 There were also several different positions on the other issues. For example, the Czechoslovak side refused to pay compensation, i.e. emigration claims after 1948 and also refused to allow US representatives to ˇ examine nationalized property in the CSSR. Other provisions on the blocked and vested assets of Czechoslovak, on the issuing of licences for Czechoslovak goods seized in the past in the US and on the Czechoslovak liability from dollar bonds were agreed on in principle. The bilateral Czechoslovak-American talks, which began in 1955, were finally concluded successfully in December 1961. Their results were entrenched by both parties in the aforementioned “declaration of principles”, which experts from both parties then subsequently prepared in the form of an agreement to be signed by their respective governments. This agreement contained the following basic provisions: ˇ 1. The CSSR will pay 12 million USD as global compensation. The 9 million USD obtained by the US government through the sale of 29 AMZV CR, ˇ f. GS—K 1955–1964, box no. 33, Status of negotiations on open economic and financial issues, information from the Czechoslovak Ministry of Foreign Affairs of 20 January 1962.

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the rolling mill and the 1 million USD seized by the Czechoslovak ˇ entity in the Otto Augstein vs Živnostenská banka, or the ŠBCS dispute, will be used to pay this amount. Thus, in effect, 2 million USD would remain to be paid. 2. The US gives the TGC its consent to release 18.4 tonnes of Czechoslovak monetary gold. 3. The Czechoslovak government will release the US military’s crowns account, the so-called Pilsen account (7.1 million crowns) and the so-called film account (0.8 million crowns), to the US government. 4. The US government will release blocked Czechoslovak assets and receivables in the US in the amount of about 1.6 million USD. 5. The US Government will grant an export licence for goods purchased by Czechoslovak companies and still held in the US (0.7 million USD). 6. The US Government will lift the restriction on the transfer of money ˇ from US public funds to beneficiaries in the CSSR (pensions and life insurance). ˇ 7. The Government of the CSSR will renew payments of debt service for Czechoslovak bonds in US dollars within six months of the Agreement’s entry into force.30 Two annexes were also part of the agreement text. The first specified the release of the sequestered cash and securities of clients of Živnostenská ˇ in the US. If the assets were to be released as a banka and the ŠBCS whole, the Czechoslovak government would provide the US government with 1 million USD. If they were only partially released, then the amount of 1 million USD would be reduced by the cash and exchange rate of the securities that will not be released. If none of the seized assets were ˇ released, the government of the CSSR would not be obliged to pay the 1 million USD and the said article in the agreement will cease to be valid. The second annex to the agreement was related to the Czechoslovak monetary gold. It specified exactly the procedure for handing over and taking over the gold, the instructions of the US government to the TGC in Brussels, the Czechoslovak power of attorney, the agreement of the Secretary General of the commission and the Czechoslovak representative on the exchange of documents and orders. Quantitatively, this was gold 30 AMZV CR, ˇ f. GS—T 1955–1964, box no. 33, Annex to no. 020.171/62-6/1.

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in coins from the BOE in London weighing 10,190.5641 kg and from the Federal Reserve Bank weighing 206.7523 kg, also in coins, as well as 8002.6836 kg of gold in bars. In the case of the FRB gold, the transfer order was to be executed after the FRB received 2 million USD from the ˇ CSSR for the US government. After receiving this amount, the gold was ˇ to be made freely available to the ŠBCS. But the preparation of the agreement on open economic and financial issues did not resolve the given issue between Washington and Prague. Negotiations continued at the level of experts and diplomats for the next two years, when a consensus was sought on the question of the physical handing over and taking over of the said gold, as well as in the text of the unilateral Czechoslovak aide-mémoire on trade. The talks on 25 April and 15 May 1963 in Prague played a crucial role here. At the April meeting, delegations exchanged the agreed-upon provisions, and the US government agreed that the gold transfer would take place through the Schweizerischer Bankverein in Zurich. Questions still remained about the ˇ exclusion of the CSSR from circular no. 655 of the US Secretary of the Treasury and the releasing of blocked and vested Czechoslovak assets in the US. The negotiations of the delegations in mid-May 1963 contained three main points. In the first two, the delegations found a common position, while in the third Prague offered two solutions. The Czechoslovak aidemémoire was an accompanying statement of the Czechoslovak stance on mutual trade relations on the occasion of the agreed text of the agreement. This was related to the fact that in the framework agreement, the US agreed with the founding of a Czechoslovak trade office in New York and that the Czechoslovak side welcomed the US government’s declaration on the promotion of mutual trade relations as one of the preconditions for expanding mutual trade. The Czechoslovak government, however, was also of the opinion, said aide-mémoire, that the ˇ “final normalization of trade between the CSSR and the USA can only ˇ be achieved by removing unilateral US measures in trade with the CSSR, mainly by renewing the most-favoured-nation clause between the two countries ” and it expects Washington to take appropriate measures to achieve full normalization of trade relations.31 The reply to the Czechoslovak

31 AMZV CR, ˇ f. GS—T 1955–1964, box no. 33, m. no. 024.319/63-6/1, Annex no.

1.

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position was the stance of the US government, as prepared by the State Department. The US government agreed with the founding of a trade section in New York headed by an economic or business adviser or an economic or commercial attaché. He alone would have diplomatic privileges and immunity and would be included in the diplomatic charter of the State Department as a diplomatic worker of the Embassy of the ˇ CSSR. Other workers—his subordinates—would be employees of the Czechoslovak government who will not be required to submit their travel plans to the US in advance or to pay US income taxes and social security fees. The department may not be used as a general diplomatic or consular post, and the American side did not commit to the most-favoured-nation clause, or did not express an opinion. It simply refused it. The two variants of the principles of gold transfer, as elaborated by the Czechoslovak side and presented to American partners for consideration, were summarized in five articles. The first article of both variants was the same. It stated that the simultaneous transfer of 2 million USD by the Czechoslovak government to the US government and the depositing of gold for the Czechoslovak government’s share in the gold administered by a TGC of 18.4 tonnes would take place as follows: the American commissioner with the TGC will sign off on the Czechoslovak share (which the French and British commissioners will also sign simultaneously), then the commissioner-general of the TGC will subsequently notify the Czechoslovak government of the allocation of 10,397.3164 kg of coins in coins and 8002.6836 kg in bars at the Schweizerischer Bankverein in Zurich. At the same time, it will ask the Czechoslovak government to designate full power of attorney to an envoy in Brussels, who will be authorized to take over the issuing orders and to issue a confirmation of their acceptance. The Czechoslovak government will authorize the envoy with power of attorney and instruct him to inform the commissioner-general of the TGC that the orders for releasing the gold addressed to the stated bank in Zurich should be issued at the Czechoslovak Ministry of Finance.32

32 The second variant was supplemented at this point by the fact that issuance orders are to be adjusted such that 10,397.3164 kg of gold in coins and 6225.3324 kg in bars are issued exclusively at the disposal of the Czechoslovak Ministry of Finance and 1777.3512 kg of gold, which is valued at 2 million USD at a gold parity of 35 USD per troy ounce, should be made available exclusively to the US Treasury Department.

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Another principle was related to the setting of a date for the exchange of documents by the Secretary General of the TGC, who would send the signed duplicates of the issuing orders to the Swiss bank in Zurich. The last point of the principles was also an alternative. In the first case, it stated that, upon signing the agreement, the Czechoslovak government would hand over to the US government a letter addressed to a Swiss bank instructing it to sell the gold in the issuing order immediately, in an amount equivalent to 2 million USD, and to make this available exclusively to the US Treasury Secretary. The second alternative on this point was that the US government will pay the Czechoslovak government the amount it would spend over 2 million USD on the sale of gold transferred to the US Treasury Department.33 What was the American opinion regarding the Czechoslovak proposal of 15 May 1963? The US accepted variant no. 2, and on 20 December 1963, it formally announced this to the Czechoslovak side at a joint meeting. At the same time, they formulated their own proposal, which was based on the Czechoslovak proposal no. 2 and as an additional step, they proposed to initiate negotiations with the Swiss bank first only on the basic question, i.e. whether it will ensure the sovereignty and immunity of the gold.34 Several negotiations and exploratory talks on the place and method of transferring the Czechoslovak monetary gold preceded the Czechoslovak proposal of 15 May 1963. On 15 February 1963, at a joint CzechoslovakAmerican meeting, the American side responded negatively to the Czechoslovak proposal of 21 September 1962, which had Prague as the place of handing over the gold. Instead, they proposed carrying out the act in some neutral country, with Switzerland the first choice, followed by Austria, Sweden, Finland, and, in theory, India as alternatives. The American delegation also announced that it was considering the possibility of transferring gold to the Czechoslovak border, though they ultimately rejected this option as too complicated. The American proposal was essentially based on the condition that the transfer take place in the bank of a neutral country, and this bank must also be acceptable to the US. The proposal to take over gold through a “neutral” was acceptable to

33 AMZV CR, ˇ f. GS—T 1955–1964, box no. 33, m. no. 024.319/63-6/1, Annex B, first and second variant. 34 AMZV CR, ˇ f. USA TOT 1965–1969, box no. 5, cˇ . j. 129.741/63-6/1.

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the Czechoslovak side and was in fact approved before as an alternative by a resolution of the Political Bureau of the Central Committee of the Communist Party on 7 August 1962 and the Government Resolution no. 805 of 23 August 1962.35 In this context, Prague approved the order of “neutrals” as follows: Finland, Sweden and Switzerland. Minister of Foreign Affairs Václav David determined the following as another Czechoslovak approach in this matter: 1. To observe the order of the “neutral” countries and to explore which of the countries can be used. If the US insists on Switzerland, this is not a problem. 2. Developing countries are not considered suitable for gold transfer. 3. The takeover of gold at the border is risky because it presupposes its physical transport through the territory of Germany or Austria. The Czechoslovak probing in Finland took place through the embassy in Helsinki on behalf of the Ministry of Foreign Affairs. On 4 April 1963, Czechoslovakia’s ambassador to Finland, František Malík, visited the CEO of the National Bank of Finland, who notified him that their bank had never made such a transaction and that he had to consult about it. Their follow-up meeting never took place. It was not until 10 April 1963, that the embassy in Helsinki sent a telegram announcing that Finland had taken a negative view of the Czechoslovak exploration. Therefore, a new attempt was made, this time in the Swedish state bank Riksbank ˇ on whether it would be possible in the form of a letter from the ŠBCS ˇ investigated whether to transfer gold through it. In this letter, the ŠBCS the Riksbank would be willing to open a gold deposit account for an institution other than a bank. The Swedish position was likewise negative as the Finnish one, meaning that the bank would have to change its statutes, which would have to be approved by their parliament. Simply put, it cannot accept foreign gold into deposit. The Riksbank also stated a lack of suitable and safe vaults as another argument against this. Thereˇ fore, only the Swiss bank remained in play for the CSSR, and that was, after all, acceptable to the US government. However, due to a final and crucial American disagreement with the amount of the global compensation, the prepared agreement did not get 35 AMZV CR, ˇ f. USA TOT 1965–1969, box no. 5, cˇ . j. 111.960/63-6/1.

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signed. It then took another 10 years for both parties to reach a new agreement. What the Czechoslovak side failed to achieve in the years 1958–1963 and even in later negotiations with the US, it managed to get done in 1964 with France and the UK. First, at the beginning of 1964, it signed with the French side the aforementioned Protocol on the Adjustment of Disputed Czechoslovak–French Financial Issues, in which the two governments undertook to end the gold issue.36 This was followed on 12 November 1964 by a similar protocol with the UK, which furthermore stated that within six weeks of handing over the gold to the Czechoslovak government at a bank in Zurich, representatives of both countries would meet to discuss open financial issues. The British government will instruct its representative in the TGC to prepare everything for the transfer of the gold. The Czechoslovak side will pay 1 million Lstg to the British government as the first payment to a joint account in the BOE within seven days of the gold transfer, with further Czechoslovak instalments to follow. After negotiations on the settlement of outstanding financial issues ended, or 108 days after the start of the negotiations, the amount in the joint account (1 million Lstg) will be transferred to the account of the UK Government.37 Jiˇrí Hájek signed the protocol for Czechoslovakia, and Howard Smith, head of the Department for the USSR and Eastern Europe in the Foreign Office, signed on behalf of the British government. Although both protocols were a success for the Czechoslovak government, they remained only on paper and in archives. They had no effect on the US position or the release of gold. Likewise, additional French ˇ diplomatic steps initiated by the CSSR did not play any role. First, in a note to the Ministry of Foreign Affairs, the French Embassy in Prague on 16 April 1967, raised the question of releasing the deposit of 18.4 tonnes of Czechoslovak “Tripartite” gold, when the unanimity of three commissioners was not yet reached, despite repeated interventions by the Czechoslovak government. The French Ministry of Foreign Affairs, in a note on 19 December 1967, informed the Czechoslovak Embassy in Paris that the French government had just intervened with the US government, where it brought up the wish it had repeatedly expressed that the issue be 36 AMZV CR, ˇ f. MPO, Dokumenty k …zlata 1958–1979, p. 36–37, CzechoslovakFrench protocol from 16 January 1964. 37 AMZV CR, ˇ f. MPO, Dokumenty k …zlata 1958–1979, p. 38, Czechoslovak-British protocol on the issuing of monetary gold from 12 November 1964.

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resolved as soon as possible.38 The question is, why did French diplomacy take such steps during this period, when we know that the British government did not take any similar initiative on behalf of Czechoslovakia? The roots of this stance, of course, were not in Czechoslovakia itself but were much more extensive, or they resided in the French understanding of the policy of détente. President Charles de Gaulle refused to allow his country to be part of the divided East–West status quo and sought to restore France’s status as a great power in Europe. What’s more, France at this time was no longer part of the North Atlantic military structures and had completed a successful atomic bomb test. This is one reason why steps were taken so that France would seem not to belong anywhere, or as if it lay outside the bipolar world. Official discussions between Czechoslovakia and the US on open economic and financial issues, like those with France and the UK, also came to a successful conclusion in 1964. But the American side later refused to approve the initialled agreement, because it did not consent with the agreed amount of global compensation. In its view, global compensation of 12 million USD had been negotiated, for which the Czechoslovak side only had to effectively pay 2 million USD, after the 9 million USD for the confiscated rolling mill and 1 million USD for the seized assets of the State Bank of Czechoslovakia were deducted. I would only like to reiterate here that the US cited the low global compensation as the main reason for refusing to grant its consent to the issuing of 18.4 tonnes of gold. The successful completion of the legitimate Czechoslovak claims for the release of monetary gold from the TGC thus again was in a stalemate. After reaching an agreement with France and the UK, or after their consent, it was again the US government that continued to block the physical transfer of the gold. Czechoslovak diplomacy also probed the new American position in 1967. Again, it effectively called on the American side to sit at the negotiating table with new cards. Washington’s response took the form of a State Department memorandum on 7 November 1967 and it addressed open economic issues as well as the gold. The memorandum consisted of six parts: 38 AMZV CR, ˇ f. MPO, Dokumenty k …zlata 1958–1979, p. 42, note of the French Ministry of Foreign Affairs to the Czechoslovak ambassador in Paris from 19 December 1967.

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1. The Czechoslovak government would pay and the US government would receive 44 million USD to fully cover the claims of US citizens for property nationalized in Czechoslovakia; the full price of the rolling mill purchased in the US in 1947 by a Czechoslovak enterprise, representing 17 million USD, would be made available in favour of this amount; the balance would then be repaid as follows: 2 million USD three months after the signing of the treaty and the rest in the form of seven equal annual instalments beginning 15 months after the signing of the treaty. 2. The US government would agree that the TGC immediately release 18.4 tonnes of gold for Czechoslovakia. ˇ 3. The Government of the CSSR would again resume regular payments of the principle and interest within the US Surplus Agreement and would repay the amounts due from 1952, representing 3.1 million USD in the principle and 1.9 million USD in interest by paying 1 million USD within three months of signing the treaty and the balance, representing some 4 million USD, by the same annual instalments starting 15 months after signing the treaty. First, however, the interest had to be paid, then the principle. 4. The US Government would modify US Treasury circular no. 655, the so-called Snyder Order (the ban on the transfer of money from ˇ the US to the CSSR), such that the restrictions on financial transfers from US public funds to the recipient in Czechoslovakia are lifted within 30 days of the signing of the treaty. The paying of retroactive claims in the range permitted by law and the renewal of payments to authorized persons in the scope of social security and laws on retired employed railway workers, as soon as the rights of such persons have been verified. 5. Within 30 days after the signing of the agreement the US Government would release the seized Czechoslovak assets, rights and interests related to US property, and during the same period Czechoslovakia would release the binding crown accounts owned ˇ by the US Government in the CSSR. ˇ 6. The Government of the CSSR would renew interest and other ˇ fees on Czechoslovak dollar debt subscriptions issued by the CSSR and various municipal authorities in Czechoslovakia no later than 12 months after the signing of the agreement. The terms of this resumption of payments would be agreed between the representatives of the US holders of promissory notes and the Czechoslovak

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ˇ Ministry of Finance. The government of the CSSR would negotiate this matter with representatives of American holders of promissory notes within three months of signing the agreement.39 The American document presented had three major points, i.e. the amount of the global compensation, instalments and the monetary gold. The other points of the proposal were of a technical nature, although important as components of the still open economic and financial issues being addressed; however, they were not substantive and controversial. The clear American commitment to return gold and the determination of a global compensation fully demonstrated the fact that no qualitative shift will occur without the simultaneous solution of both issues. It also needs to be noted that the sum of 44 million USD was set by the American side as the maximum possible minimum limit. The Foreign Claims Settlement Commission40 initially came to a global compensation base of 72 million USD, with interest accrued since 1962 making up a further 41 million USD. This US commission arrived at this amount only after examining and considering claims that originally amounted to a total of 300 million USD. The US, declaring its intention to settle outstanding financial disputes in the note of November 1967, was willing to proceed with the 44 million USD global compensation.41 The Czechoslovak side obviously rejected this American proposal again. The main change in the memorandum of November 1967 compared to the Declaration of Principles of December 1961 and the text of the agreement initialled in 1964 was that the US government was requesting a new global compensation, i.e. 44 million USD compared to the previous 12 million USD. The US was to deduct 17 million from this increased 44 million USD in global compensation for the rolling mill, while 9 million USD was previously to be deducted from the 12 million global compensation for the rolling mill. These numbers meant that there was an increase of 24 million USD in the new global compensation compared to the original sum agreed in 39 NAR, f. Legal Advisor and Tripartite Commission, reel 8, Department of State,

Aide-mémoire, 7 November 1967. 40 The Foreign Claims Settlement Commission was established in 1954 from the original two commissions, which since 1949 had been in charge of recognizing American citizens’ claims for losses caused by war events and the nationalization of their property. 41 AMZV CR, ˇ f. MPO, Dokumenty k …zlata 1958–1979, pp. 39–42, State Department memorandum from 7 November 1967.

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1961 and 1964. Thus, in the view of the Czechoslovak government, the American side had gone back to the beginning of negotiations in 1955,42 ˇ and this was unacceptable to the CSSR. Therefore, the 6th Department of the Ministry of Foreign Affairs (the American Department) proposed not accepting the American offer, to insist on the agreed facts of 1961 and 1964, to reject the linking of gold with open economic issues and to examine the possibility of using USSR assistance as a superpower coresponsible for post-war Europe, i.e. ask it with help to return the gold. However, the involvement of the Soviet Union in Czechoslovak affairs in the near future (spring 1968 and the August invasion) occurred on a completely different level. ˇ Negotiations between the US and the CSSR on the gold and on compensation had evidently failed to reach an agreement. It was merely a matter of time before there was a radical change of opinion on one side or the other; otherwise, the bilateral negotiations could have gone on indefinitely and without any real effect. At the beginning of the following year, Czechoslovakia’s ambassador to Washington, Karel Duda, also commented on the above-mentioned American memorandum of November 1967. In a letter dated 31 January 1968 to the Ministry’s headquarters in Prague, he declared the American proposal (memorandum) unacceptable. He declared the achieving of a mutually acceptable settlement as unfeasible, of having no chance. Seeing the strong stance of the US, he agreed that the Czechoslovak monetary gold should be part of bilateral negotiations on open economic and financial issues, or he described such a path as being the only practicable way. He proposed to answer the American memorandum with Czechoslovak counterdemands, and he labelled the reintroduction of the most-favoured-nation clause as the primary one, even though it was clear ˇ to him that the CSSR would not obtain it at present. Regarding the protection of Czechoslovakia’s property interests, he proposed addressing them separately from the open economic and financial issues associated with the change in US legislation on pension vouchers and social security benefits.43 What exactly was this about? Czechoslovakia was being threatened with the confiscation of large sums of money if these issues were

42 AMZV CR, ˇ f. USA TOT 1965–1969, box no. 5, cˇ . j. 027.982/67. 43 AMZV CR, ˇ f. USA TOT 1965–1969, box no. 5, note of Ambassador K. Duda no.

05/68 from 31 January 1968.

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not resolved. In the relevant note from the end of January 1968, Duda ˇ proposed notifying the US that the CSSR was willing to unblock one or both American crown accounts (the Pilsen and film accounts) in Prague ˇ in exchange for excluding the CSSR from Snyder Order No. 655.44 This rule damaged Czechoslovak interests in three basic areas: 1. Payments of American military pensions to Czechoslovakia. Recipients of these payments in Czechoslovakia were notified by a US Embassy circular in Prague on 21 March 1951 that: “The US Treasury Department, under Act 828, has suspended all payments to persons receiving them from US authorities in several countries, including Czechoslovakia. When the reasons for this measure have ceased to exist, it will be possible to consider retroactive reimbursement from the eligible beneficiaries ”.45 This was no doubt a political decision by the American administration. Originally, the pension payments were made such that the US Embassy sent cheques to ˇ (formerly the recipients and they presented them to the ŠBCS ˇ the NBCS) for reimbursement. The last cheque was paid out in this way on 11 March 1950. It was not possible to quantify the damage caused in this way, because no institution in Czechoslovakia ˇ estimate, recorded the mentioned receivables. Based on the ŠBCS this was about 2000 USD per month. Over the years, however, the amounts may have been lower, as some pensioners either died or lost their claim. 2. Applications of Czechoslovak residents for the cashing of American securities and collection vouchers to Czechoslovakia. These cases did not involve large amounts.46

44 Snyder’s circular no. 655 of 1951 followed on from Act no. 828 of 9 October 1940. Both documents jointly stipulated that cheques or so-called warrants (bills of sale for goods in warehouses) issued from the US in US funds could not be sent to a foreign country without a guarantee that the recipient will receive the cheque or warrant in full and can dispose of it fully and freely. 45 AMZV CR, ˇ f. USA TOT 1965–1969, box no. 5, note of Ambassador K. Duda no. 05/68 from 31 January 1968. 46 Three Czechoslovak cases were known: (1) The request of Ivan Findrik and Estera Martinˇceková from Bratislava for the cashing of “US Saving Bonds” deposited with the National City Bank of New York. This bank refused to transfer the bonds named, with reference to Snyder Regulation no. 655. (2) Mária Simonidesová—it also did not comply

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3. Inheritances—this was a group of people living in Czechoslovakia whose inheritances in the US were detained. This involved about 60 cases totalling 1 million USD.47 These three areas demonstrated that Law “828” and Regulation “655” not only affected public payments but also private legal relations. The total amount of proceeds held back was about 1.1 million USD. In regard to the text of the Snyder standard (“655”), i.e. that the Czechoslovak recipients will not have access to the remitted values in full, this was a politically oriented act, because the recipients got the full equivalent of the remitted amounts, treated with standard and applicable bank fees. However, this is the place to note that the content of the American memorandum of November 1967 or the reaction of Ambassador Duda to it in January 1968 were not factors that would affect the forthcoming Czechoslovak-American relations even a little in the near future. More the opposite, as fruitless bilateral negotiations about more or less substantial open issues receded into the background. The Czechoslovak revitalizing process of “socialism with a human face” under the leadership of Alexander Dubˇcek moved to the forefront, and its international and domestic dimensions were dictated by Moscow, first with threats, then with tanks. When characterizing the positions of the US regarding the Czechoslovak process of revitalization, several issues that are much more important for the US must be taken into account. In terms of their internal development, this was mainly the long and unsuccessful war in Vietnam and the preparation for the 1968 presidential election. From the international point of view, this was respecting the status quo of bipolar superpower relations within the policy of détente. These superpower relations were stable, and furthermore showed a tendency to improve, which was in the interests of both of the main players—the US and the USSR. Their common aim was to preserve the given spheres of influence and not to interfere with one another.

with her request when she sent securities from the USA for collection due in Czechoslovakia worth 6,000 USD. (3) Bohuslav Mužík, who had 16,500 USD in the American Trust and Saving Association in Los Angeles. This bank refused to respect the owner’s order (Mužík’s) and refused to pay the securities. 47 AMZV CR, ˇ f. USA TOT 1965–1969, box no. 5, note of Ambassador K. Duda no. 05/68 from 31 January 1968.

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Again, it was Ambassador Karel Duda who interpreted the official views of the State Department on the Czechoslovak democratization process in the dispatch of 19 March 1968, stating that “any step by the United States could worsen the situation, but some administration officials believe that State should express its willingness to address open economic issues and gold”.48 The US apparently had no intention of getting involved on behalf of Czechoslovakia, in order to not disrupt its relationship with the USSR. It was interested, however, in resolving bilateral issues that had burdened Czechoslovak–American relations for several years. In particular, these were unresolved economic issues regarding compensation for nationalized American property in Czechoslovakia after 1945 and the issue of the most-favoured-nation clause, the blocked Czechoslovak monetary gold, IBM’s assets and others. US excuses, or rather their reluctance to support the Czechoslovak revitalization process, was also confirmed in other reports from the Czechoslovak Embassy in Washington. Although the dispatch of 4 April 1968 stated a positive response in the US to the overall trend develˇ oping in the CSSR, Ambassador Duda also warned that, in an election year, American politics would be lukewarm and passive, because an active gesture of liberal support would damage the Czechoslovak democratization process and could be seen as an attempt to interfere in the internal affairs of another state. This could raise concerns in the USSR that the ˇ US is trying to untie the CSSR from the Warsaw Pact and alliances with socialist countries. The dispatch further proposed that the only way to activate American interest was to resume a bilateral dialogue with the US on Czechoslovak monetary gold and to involve the USSR in it. Its support would thus work against the argument that the US cannot ˇ actively negotiate with the CSSR on the gold in order not to get into a power confrontation with the USSR.49 How did this issue of the most-favoured-nation clause develop? Unfavourable for Czechoslovakia, as Ambassador Jacob D. Beam told former diplomat Charles E. Bohlen in a personal letter on 26 April 1968. He described the gold and the bargaining value of the potential clause 48 Mezinárodní souvislosti cˇeskoslovenské krize 1967–1970 [International Contexts of the Czechoslovak Crisis of 1967–1970], (eds. Vondrová, Jitka–Navrátil, Jaroslav) díl 4 / 1. svazek, Brno, 1995, p. 68. 49 AMZV CR, ˇ f. USA TOT 1965–1969, box no. 5, dispatch no. 0117/68 from 4 April 1968.

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as two key factors that alone can help break down the main problem of the past: legitimate compensation for nationalized property. “This is a serious question”, Beam further stated, “whether you need to keep both of these factors in your hands now. I am firmly convinced that the second factor will be decisive and that we will not be able to settle our claims in the near future at the level we want (the new global compensation of 44 million USD), so long as we only want to benefit from the chance to renew the mostfavoured-nation clause”.50 Beam thus indicated that these were connected vessels, that Czechoslovakia will not agree to a new global compensation of 44 million USD (US aide-mémoire of 7 November 1967), if the clause remained only on the theoretical level of possible negotiations. In contrast, Prague took the opinion that it was necessary to actively work on the US government and on Congress and reckoned that granting the clause would be possible only in a joint process with other socialist states and that this would certainly not happen in 1968. American loans also had similar prospects, as obtaining them was almost impossible for ˇ the CSSR from a legislative point of view. The only possible path was to operationally change the structure of the goods on offer, the development of tourism, scientific exchange, university cooperation and cultural and sporting contacts.51 A note of the Czechoslovak Ministry of Foreign Affairs addressed to the US Embassy in Prague from 2 May 1968 also dealt with the return of gold and the renewal of the most-favoured-nation clause. First Secretary of the Central Committee of the Communist Party, Alexander Dubˇcek, ˇ and Prime Minister Oldˇrich Cerník also agreed with it. In addition, the note referred to the State Department’s aide-mémoire of 7 November 1967 and stated with regret that the US government had shown no willingness to comply with a legitimate Czechoslovak demand (expressed in a note of 24 February 1967), i.e. by immediately issuing the relevant share of the Czechoslovak monetary gold, while consent with issuing it remains conditioned on the resolution of the so-called open economic and financial issues between the two countries. The note also pointed out that the US had ignored the results of bilateral negotiations, enshrined in two documents (in 1961 and 1964), and in an aide-mémoire demanded

50 NAR, f. Legal Advisor and Tripartite Commission, reel 8, from Jacob D. Beam to Charles E. Bohlen, 26 April 1968. 51 AMZV CR, ˇ Praha, f. USA TOT 1965–1969, box no. 1, dispatch no. 0119/68.

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new global compensation for the nationalized property of its citizens. Compared to the originally agreed 12 million USD from 1961, this was now 44 million USD, with the US deducting 17 million USD from this amount as the value paid by the Czechoslovak side for the wide strip steel-rolling mill. The Czechoslovaks described the American proposal for resolving mutual claims as completely unacceptable and an unsuitable basis for new negotiations. The ministry’s note again emphasized the demand for the return of Czechoslovak gold from the US, originally seized by the Germans during the Second World War, and recalled the US commitment to the post-war Paris reparation agreements (the Tripartite Commission for the Restitution of Monetary Gold of 1946), which should not be linked to other bilateral issues. Czechoslovakia repeatedly requested that the US government change its frivolous and unacceptable approach and urgently take steps to issue the deposit of Czechoslovak gold of 18,433.4733 kg (worth 20.7 million USD). The Czechoslovak note stated that by fulfilling this request, the American side would create the preconditions for negotiations on other open economic and financial ˇ issues between the CSSR and the US.52 Although Czechoslovak diplomacy was not lacking any effort to actively engage on bilateral and general issues, a certain hesitation and caution in starting can still be observed, resulting from fears of the potential reaction of the USSR. Therefore, it came as no surprise that on 1 June 1968, Foreign Ministry employee Zdenˇek Trhlík submitted a proposal that Prague consult with the Soviet side regarding its positions on Czechoslovak–American relations. The document referred to Minister Hájek’s talks with US Ambassador Jacob Beam, who announced on 28 May 1968 that the US would soon submit new proposals to the Czechoslovak government to address open economic and financial issues, which were said to be in response to the Czechoslovak note from 2 May. According to Trhlík’s recommendations, possible negotiations in Moscow would be a kind of “directive” for the next approach to the US. That’s why, he proposed to explain to the USSR the nature of the holding back of the Czechoslovak gold and the cancellation of MFN, while consultations on the Soviet Ministry of Foreign Affairs (MID—Ministerstvo Inostrannych Del) could take place at the end of June or the beginning

52 AMZV CR, ˇ Praha, f. USA TOT 1965–1969, box no. 5, m. no. 022.816/68-6.

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of July 1968 with Jaroslav Žantovský, the newly appointed advisor of the Czechoslovak Embassy in Washington, taking part. Deputy Foreign Minister Václav Pleskot rejected consultations in Moscow on 4 July 1968, saying that he did not consider special consultations on this topic as necessary, because the quality of current Czechoslovak–Soviet relations was not such as to create a favourable atmosphere for an impartial and fruitful exchange of views. Pleskot went even further in his rejection, stating that even for “the future, the concept of consultation as an effort to reach an agreement and to coordinate the process and to obtain the partner’s consent to our procedure will have to be avoided. It should always be an equal exchange of information, views and assessments, which enable both sides a broad view of the issue, so that they can form a reliable, well-founded opinion”.53 Although the opinion of the Czechoslovak diplomat showed the effort to keep an active position, its reality was problematic. The already mentioned lukewarm position of the US State Department ˇ regarding the CSSR at the beginning of the summer of 1968 was not shared by some American congressmen and senators. Democrats Walter F. Mondale, Claiborne Pell and Thomas J. Dodd, in particular, called for a more active stance in the US. The first of the three, Democratic Senator Walter “Fritz” Mondale, from Minnesota, presented a bill in the Senate called the Czechoslovakian Trade Act of 1968. In his opinion, the US President should be ˇ empowered to negotiate a trade agreement with the CSSR that would include a most-favoured-nation clause, including the return of gold and the satisfaction of American claims to nationalization on the basis of the 1961 agreement. Senator Mondale emphasized the political motive of his proposal that Czechoslovakia should now be helped, and that the US would be showing sympathy with the ongoing revitalization process in Prague. After Mondale, Thomas Dodd, a senator from Connecticut, spoke. On 15 July 1968, he addressed the US Senate with a speech in which he drew attention to the imminent danger of armed intervention by the Kremlin and its satellites in Czechoslovakia. With the support of an additional twelve Democratic senators, he urged the Senate to adopt a resolution on the repeated support for the so-called Captive Nations Week, held annually in the US since 1952. The proposed resolution was to express 53 AMZV CR, ˇ f. USA TOT 1965–1969, box no. 1, m. no. 023.518/68 and annex to the document from 4 July 1968.

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the hope that the people behind the Iron Curtain should be able to freely decide about their own future without the threat of external intervention. On 22 July, Dodd spoke again in the Senate about the crisis in the ˇ CSSR and proposed publishing a UN report on Hungary in 1956. In this way, he wanted to remind the world of the events of not so long ago in Budapest. He further called on the State Department for an energetic policy, as he said that American diplomacy was doing nothing.54 Rhode Island Senator Claiborne Pell also proposed concrete steps ˇ against the CSSR. In a report of the Senate Foreign Affairs Committee, he first mapped out Czechoslovakia’s political and economic developments over the past twenty years, as well as Czechoslovakia’s foreign policy relations with the USSR and the US. He summarized his position on how the US should proceed in relation to Prague in eight points, three of which were important: 1. The US should focus on trying to resolve the problem of claims of American citizens for their nationalized property from 1945. A resolution on this issue could allow the return of the Czechoslovak Tripartite gold. A mediator from the ranks of Congress who would reach a compromise between the American applicants for compensation and the Czechoslovak government should play a positive role here. 2. The US administration should be more accommodating in ensuring the passability of legislation enabling the countries of Central Europe, including Czechoslovakia, to renew the MFN, thus showing a willingness to improve their mutual relations. 3. Congress should lift the restrictive measures that prevent American exporters and importers from trading with the whole of Central Europe, blocking the benefits of loans and guarantees from the Export–Import Bank.55 However, even after these initiatives and after discussions regarding the crisis in Czechoslovakia between State Department officials and a group

54 National Czech and Slovak Museum and Library (NCSML), Cedar Rapids, f. Czechoslovak National Council of America (CNCA), box no. 6. 55 Pell, Claiborne. Czechoslovakia 1968, Report to the Committee on Foreign Relations United States Senate. Washington DC, July 1968, pp. 7–8.

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of congressmen in Washington on 24 July 1968, the position of American diplomacy remained unchanged. The State Department took a negative view of their intention to submit a resolution to Congress condemning Soviet pressure on Czechoslovakia. It also distanced itself from individual statements by Congressional senators condemning the threat of Soviet military intervention.56 The overall cold attitude of the US towards the Czechoslovak Spring and the military invasion of Czechoslovakia in August 1968 was captured in the memoirs (Witness to History 1929–1969) of outstanding American diplomat Charles E. Bohlen, one of the Chief Advisers to Secretary of State Dean Rusk in this period. In his view, American policy, which he labelled a policy of disinterest, was a reflection of several factors, including the fact that the administration of President Lyndon B. Johnson had no unified idea regarding the position of Moscow in the case of unforeseen developments in Czechoslovakia. At a meeting with the Secretary of State, Bohlen characterized the decision for the Soviet invasion as the symbiosis of four elements. The first was ideological—Czechoslovakia under Dubcek’s leadership represented the liquidation of the Soviet system. The second element was the weakening of the buffer satellite zone along the border with the West; the third was Ulbricht’s fear that ˇ a successful centrifugal movement in the CSSR would provoke similar efforts in the German Democratic Republic, and the fourth element or factor that Bohlen cited was Moscow’s fear that this “infection” could ˇ strike through the shoulder, i.e. the CSSR’s neighbour—Ukraine—right 57 in the heart of the USSR itself. Bohlen’s argument can be supported by the fact that the US knew of the invasion in advance and did nothing to prevent it (in reality, it could not have). They assessed the entire situation as a “movement” that was not directed against the interests of the West, but as an internal matter of the Eastern bloc. Like Bohlen, another member of the US diplomatic elite, former US ambassador to Moscow and author of the US’s strategy of détente, George F. Kennan, spoke out regarding the Soviet invasion. During a private lecture tour through Scandinavia, he stopped at the US Embassy in Copenhagen, where he expressed serious concerns about the irrational

56 Mezinárodní souvislosti cˇeskoslovenské krize 1967–1970. díl 4 / 2. svazek, Brno, 1996, p. 33. 57 Bohlen, Charles E. Witness to History 1929–1969. Toronto: Norton, 1972, p. 532.

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Soviet stance in occupied Czechoslovakia. These events forced him and like-minded people to change their political thinking when a miscalculation from the past raised doubts about Soviet reliability. In Kennan’s opinion, the entire Western world must now change its political and military constructions due to the impossibility of fully revealing Soviet positions. In light of the development, Kennan expressed the view that the US administration should be very careful in its commitments towards ˇ Prague. He labelled the compromise from Moscow between the CSSR and the Soviet leaders as incomprehensible so as long as the occupation lasted. And Washington should publicly pressure Moscow to explain— now that you’ve done this to Prague, what guarantee do we have that you won’t do something like this again? Kennan also speculated about how, why and when Moscow came to the decision to intervene. In his view, this not only involved a lack of a political guarantee of the Czechoslovak side and government apparatus but also the need to penetrate the structures of the middle cadres and among the workers in order to gain control of the counterrevolution. In essence, according to Kennan, the Kremlin was upset by the idea of individual freedom, which could endanger the security of the apparatus internally. And the loss of internal political control could infect the entire Soviet system.58 In this regard, he shared the view of Charles Bohlen. President Lyndon B. Johnson presented the basic philosophy of his ˇ foreign policy at the time, but also towards the invasion of the CSSR, on 11 September 1968, when he declared: “It appears that the leaders of the USSR decided that the shift towards a humane version of communism in a small friendly country is a threat to their security – despite the fact that the Czechs remained their allies in the Warsaw Pact. Military and political threats have grown out of this aggressive act which require even closer and deeper cooperation from the Western Allies. We have undoubtedly taken clear steps that the use of force or the threat of force will not be tolerated in areas of shared responsibility, such as Berlin, for example”.59 How should Czechoslovakia, occupied by the tanks of five states, decipher this general statement from the leader of the most powerful country in the world? The US accepts the given situation, but further expansion

58 NAR, f. The Czechoslovakia Crisis, 1968, The State Department’s Crisis Files, Telegram from AmEmbassy Copenhagen to SecState Washington DC, No. 1922. 59 NAR, f. CIA Records, CIA-RDP79-01194A000400060001-6.

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to the east by force could be a problem, but only if it does not concern only the Soviet bloc. Ambassador Duda confirmed such a position of the US, and indeed of the entire democratic West, in his reports from Washington. In a dispatch of 20 September 1968 to the Ministry of Foreign Affairs in Prague on the reaction of Western diplomats to the events in Czechoslovakia, he wrote that among Western diplomats in the US, there was a strong view that the West demonstrate political opposition to the intervention of five Warsaw Pact states by selective restriction in bilateral relations. On the other hand, the state of the intense Cold War should not be restored so as not to disrupt the existing results of political contacts. According to Ambassador Duda’s report, the escalation of the situation in Europe would narrow the scope for an independent Czechoslovak policy. Furthermore, the American side had no interest in crossing a certain line of great power conflicts, so as not to worsen Soviet-American relations. This opinion was also confirmed by the Democrats in Congress, who publicly declared that the relationship between the two great powers was more important than all of Czechoslovakia.60 Karel Duda further informed the Czechoslovak Ministry of Foreign Affairs that Western diplomats were leaning towards the idea of continuing the development of dialogue between East and West, despite the Soviet intervention in Czechoslovakia.61 American “inaction” at this time was also evidenced in the fact that during this time the Western power had nothing to do with the 62 The unresolved Czechoslovak compensation for American propˇ CSSR. erty nationalized after 1945 and Czechoslovak monetary gold were the 60 The position of Democratic senators in Congress was not shared by Thomas J. Dodd, a senator from Connecticut. On the contrary, he insisted on a tough stance against the USSR in a memorandum of 5 September 1968 calling on the US to impose an immediate trade embargo on all USSR goods and its invading satellites. He also called on the Johnson administration to convene a special UN General Assembly to address the Czechoslovak crisis. Dodd finally declared that with the invasion the myth of détente had fallen apart. NCSML, Cedar Rapids, f. CNCA, box no. 6, Statement by senator Thomas J. Dodd on the floor of the Senate, September 5, 1968. The meaning of Czechoslovakia. 61 Vondrová, Jitka, Navrátil, Jaroslav. Mezinárodní souvislosti cˇeskoslovenské krize 1967– 1970, Záˇrí 1968 – kvˇeten 1970 [The International Context of the Czechoslovak Crisis of 1967–1970, September 1968–May 1970]. Brno: Doplnˇek, 1997, p. 61. 62 Regarding the stance of the US towards the CSSR ˇ in 1968, see Michálek, ˇ Slavomír. Rok 1968 a Ceskoslovensko, postoj USA, Západu a OSN [The Year 1968 and Czechoslovakia, Stance of the US, the West and the UN]. Bratislava: Prodama 2008, pp. 25–66.

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only two issues that burdened Czechoslovak-American relations at this time. These issues, however, “lingered” in the air until the early 1980s. It can be generally stated that the benevolent approach of the US government to the military intervention in Czechoslovakia, which it presented as a “family dispute”, i.e. as a matter for the Eastern bloc, generously overlooking its previous critique of “Stalinism”, is in stark contrast to its own military expeditions, which it presented to the world in the best possible light so as not to run into domestic or foreign resistance. Therefore, it is not surprising that opinions appear in the literature that “the Czechoslovak revival process of 1968 was not to the liking of Moscow or Washington. The West, led by the United States, remained only at the level of Platonic sympathies, and the brutal invasion of Soviet troops provoked no response. It merely delayed the policy of easing tensions ”.63 At the beginning of October 1968, the US administration returned again to the open issues of bilateral Czechoslovak-American relations. The answer to why it did this at that time can be sought in the fact that it was trying “cover up” its easy acceptance of the new reality in the ˇ CSSR; in addition, the outgoing administration still wanted to demonstrate goodwill. Such a position of the US was effectively confirmed by a secret dispatch of the Czechoslovak Embassy in Washington on bilateral Czechoslovak-American relations, addressed on 10 October 1968 to the Ministry of Foreign Affairs in Prague. It stated that the US was taking a ˇ wait-and-see approach towards the USSR and the CSSR. Further, aside from domestic events (the approaching change of administration), uncertainty about whether the entry of Warsaw Pact troops was only a partial step or part of a broader plan for several countries played a decisive role here, with the greatest concerns directed at West Berlin. Regarding the ˇ CSSR, there was both pessimism and optimism in American considerations, depending on what alternatives Czechoslovakia’s future offered. The US view of the USSR, i.e. whether this was seen as only a temporary episode or as a return to Stalinism, was also associated with this. According to the dispatch, the US will undoubtedly attempt to take ˇ advantage of the current situation in the CSSR for propaganda purposes in order to discredit socialism and erode the unity of the communist movement, while in practice it had already frozen contacts with the “five”

63 Listy, roˇc. III., August 1973, no. 4, pp. 24–25.

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ˇ countries. In the case of the CSSR, it will continue to wait for the situation to develop in the near future. This led to a clear tendency for the US not to undertake any action on its own initiative and not to propose and justify this external passivity in an effort not to worsen the position of the Czechoslovak government. And what approach did the Czechoslovak Embassy in Washington propose? To the extent possible, to support Czechoslovak exports to the US as a source of dollar income and, for the same reason, to try and draw American tourists, as well as support scientific and technological exchanges. The embassy proposed the following approach to the two main issues being debated—the monetary gold and the most-favoured-nation clause: to intensively apply for the return of monetary gold, although the US was still linking it to the global compensation for property nationalized and confiscated in the Czechoslovak Republic. Since the most-favoured-nation clause was signifˇ icantly more advantageous economically for the CSSR than the return of gold, the embassy proposed that another attempt be made by Congress to authorize the President to grant the country a most-favoured-nation clause.64 Duda announced in Prague, however, that there is no need for great illusions about this. Although Czechoslovak–American relations were long burdened by the two main issues already mentioned—the gold and the compensation for nationalized property, which was also linked with the return of the most-favoured-nation clause—their resolution found itself in a new situation at the beginning of November 1968, i.e. depending on Soviet ˇ influence on the future steps of the CSSR. How else to interpret the secret ˇ dispatch of Karel Duda, Ambassador of the CSSR in Washington, on 3 November 1968 to Zdenˇek Trhlík, head of the American Department at the Ministry of Foreign Affairs in Prague, about consultations with the Soviet Ambassador Anatoly Dobrynin in Washington. Duda stated that these talks should not replace official consultations with the MID in the sense of the Moscow agreements, but should only acquaint headquarters with the personal views of Dobrynin, who agreed to the Czechoslovak approach to the US on the issue of recovering the monetary gold. In the case of the most-favoured-nation clause, he pointed out that only ˇ the CSSR could, in reality, acquire it, that he saw it as unlikely for the

64 AMZV CR, ˇ f. USA TOT 1965–1969, box no. 1, dispatch no. 0265/68.

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USSR, Hungary and Bulgaria. He also pointed to US pressure to withdraw the clause from Poland, which had held it since 1957. Dobrynin was negative in regard to the issue of renewing the consular agreement ˇ between the CSSR and the US, given that under US law it must be ratified by Congress, which could provoke various declarations regarding the events in Czechoslovak, and the USSR has no interest in reviving this issue in Congress.65 A telegram from Jacob D. Beam, US ambassador to Czechoslovakia, sent to the State Department on 18 November 1968 about Czechoslovakia’s efforts to resume negotiations on Czechoslovak gold issues and demands for the nationalization of American property in the Czechoslovak Republic bore a similar spirit. According to the text of that telegram, the discussions of Beam with Zdenˇek Trhlík on 14 November 1968 clearly showed that pressure from the USSR must be seen behind Czechoslovakia’s initiative to return gold see, as they blamed Czechoslovakia for not being able to pressure the US itself. Beam assured Trhlík that Czechoslovakia did not have to worry about resolving its own affairs alone, that the US was ready to discuss the issue of the gold and the most-favoured-nation clause and to repeat its offers to resume talks from before 21 August 1968. When Trhlík asked Beam whether there are at present better prospects for achieving the most-favoured-nation clause ˇ due to US sympathies for the CSSR, Beam denied this and refused to link the issue of the most-favoured-nation clause with current Czechoslovak policy.66 ˇ Ambassador Beam’s view of the CSSR in the autumn of 1968 was also evident in his telegram of 29 November 1968, addressed to the State Department, which was a kind of brief assessment of the current state of Czechoslovak–American relations.67 He used known data to argue the US position. He also did not avoid the issue of the most-favoured-nation 65 AMZV CR, ˇ f. USA TOT 1965–1969, box no. 1, dispatch no. 0283/68. 66 FRUS 1964–1968, Volume XVII, Eastern Europe, telegram from the Embassy to the

Department of State, Prague, 18 November 1968. 67 Beam said in the telegram that the turnaround in the development of Czechoslovakia did not mean the complete end of the reforms, and he offered proposals for solving problems that were still open in the context of bilateral issues and which the two countries had so far viewed differently. In his view, they had begun to deteriorate historically from the end of the war, and he cited the nationalization of foreign assets and Beneš’s panSlavism before the communist coup as examples. After February 1948, anti-Americanism prevailed on the Czechoslovak side. On bilateral issues, Beam focused on a complex set of economic and financial problems, mentioning the US refusal to return 20 million

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clause, which he said had been cancelled by the US in 1951 unilaterally for political reasons, making Czechoslovak goods unsaleable in the US due to the high tariffs. He considered the high degree of Soviet control over Czechoslovakia as being the most important of the American reasons. He recommended resolving the issue of the return of the gold, together with ˇ ˇ other open issues related to American assets in the CSSR, when the CSSR 68 was no longer under the thumb of the USSR. The Czechoslovak approach to the US in the autumn of 1968 on the issue of open economic and financial issues was approved by a government resolution on 20 September 1968. The main motive was increasing the efforts to obtain the retained monetary gold. This general statement in the resolution said nothing about how to achieve this aim or how to at least get closer to it. This was the task of the inter-ministerial meeting of the Ministries of Foreign Affairs, Foreign Trade and Finance on 7 November 1968. It stated that the American note of 2 May 1968 did not in fact respond to the Czechoslovak note, and the whole meeting was ˇ at a standstill. What starting point did this meeting suggest? The CSSR should insist on a stance based on the initialled principles (1961) and the agreement (1964). It labelled the aim of acquiring the MFN, the nonˇ existence of which harmed the CSSR annually by 4–5 million USD due to the difference in customs rates, as the top priority for the Czechoslovak side. Therefore, in negotiations with the US, this issue needs to be bound more flexibly to the question of reaching a final agreement on all open economic and financial issues. The proposal that emerged from the meeting envisaged a change in Czechoslovak tactics. This change resided in the fact that it was necessary to start Czechoslovak–American negotiations in Prague in order to find out whether the American side would be willing to compensate for Czechoslovakia’s willingness to negotiate all open issues by acknowledging the Czechoslovak clause in the GATT. And this, of course, was under the assumption that a reasonable and acceptable ratio between the global compensation and the Czechoslovak “profits” is achieved.69 Czechoslovakia’s plan in the coming years can be deduced ˇ from all this: the CSSR will negotiate starting from the agreements of USD worth of Czechoslovakia’s gold seized by the Nazis in response to Czechoslovakia’s reluctance to close the issue of compensation for nationalized American assets. 68 FRUS 1964–1968, Volume XVII, Eastern Europe, telegram from the Embassy to the Department of State, Prague, 29 November 1968. 69 AMZV CR, ˇ f. USA TOT 1965–1969, box no. 5, cˇ . j. 119.112/68-6.

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1961 and 1964 and will try to link a possible increase in global compensation with the effective return of the MFN. The returning of gold thus gave way to the most-favoured-nation clause as Czechoslovakia’s primary demand. Such an approach, however, had no hope of success. The American side rejected the question of the return of MFN in the same way as it refused to return the gold. This was confirmed by the negotiations between the two sides in the years that followed.

CHAPTER 7

The Position of Washington up to 1980

The Czechoslovaks initiated a new round of negotiations on open ˇ economic and financial issues between the CSSR and the US in the autumn of 1972. A session of the UN General Assembly in New York served as the impetus for establishing contact between Minister of Foreign Affairs Bohuslav Chnˇ oupek and US Secretary of State William Rogers. After returning to Prague, Chnˇ oupek submitted a report on his negotiations with the US Secretary of State, which was adopted by a resolution of 3 November 1972 by the Presidium of the Central Committee of the Communist Party, which further agreed to resume the interrupted negotiations on resolving property issues. It also consented to start negotiations on a consular agreement and an agreement on scientific and technological cooperation. At the same time, it commissioned Minister Chnoupek ˇ to cooperate with the Ministries of Finance and Foreign Trade to develop comprehensive material for the next Czechoslovak move. After subsequent discussions on all aspects of the property issues, representatives of the involved ministries concluded that it would be appropriate and possible to resume negotiations with the US in the first quarter of 1973.1 1 The negotiations with the American side were held in Prague under the auspices of the Federal Ministry of Foreign Affairs, and the Czechoslovak delegation was led by Vladimír Pavlíˇcek, the head of the American Department at the ministry.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Michálek, Nazi Germany and the Role of the US in the Fate of Czechoslovak Monetary Gold, https://doi.org/10.1007/978-3-031-38758-6_7

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According to their analysis, the necessity to connect the property issues with the return of the MFN was fully evident. At the same time, they anticipated that the US would be willing to return the clause only within a trade agreement. Therefore, it was necessary to make the validity of the agreement on property issues conditional on the return of the clause in the trade agreement. This link could possibly be ensured by being enshrined directly in the agreement on property issues or by simultaneous signing both agreements or their simultaneous entry into force. In practice, this meant negotiations on a trade agreement with the US that would regulate trade and political relations and ensure the normalization of Czechoslovak-American trade and economic relations. The mentioned analysis of the three ministries went even further: with the anticipated gradual increasing of Czechoslovak exports to the US under the conditions of cancelling the trade discrimination (i.e. the return of the MFN clause), all Czechoslovak liabilities arising from the agreement on property issues with the US (as well as the UK) could be covered only by net savings and by streamlining exports in a period of 5–10 years based on the results of property rights negotiations and the range of Czechoslovak exports to the US. The analysis also indicated that, according to an internal valuation, the Czechoslovak side estimated the US claims for compensation for nationalized assets at 23 million USD. In contrast, the Czechoslovak claims against the US were 18.7 million USD; therefore, the payment of the Czechoslovak side was to be 4.3 million USD. However, according to the “principles” of 1961 and the ˇ agreement of 1964, the CSSR was to pay 2 million USD to the US, though the 1961 and 1964 documents provided no link to the return of the MFN. In view of the intended new comprehensive solution to bilateral relations, the expected normalization of trade relations and the anticipated disagreement of the US side with the originally agreed financial results, a rise in the Czechoslovak surcharge could be expected, and the Czechoslovak estimate for this was 10 million USD. Bearing in mind all these presumed facts, a working group made up of representatives of the ministries (Foreign Affairs, Foreign Trade and Finance) recommended that the Czechoslovak government and the Presidium of the Central Committee of the Communist Party approve the seven-point directive for property negotiations with the US: 1. During the property negotiations with the US, the Czechoslovak delegation will try to obtain the most advantageous conditions for

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the mutual settlement and repayment of Czechoslovak obligations. The maximum amount of the surcharge for the global compensation after paying the US claims and Czechoslovak counterclaims for the Czechoslovak delegation is 10 million USD. 2. The US must immediately release the seized Czechoslovak monetary gold upon the agreement entering into force, and this must be a condition for fulfilment of the agreement by the Czechoslovak side. 3. The conditions for releasing the blocked Czechoslovak assets in the ˇ US, the US accounts in the CSSR and Czechoslovak bonds in US dollars will be negotiated in accordance with the 1964 agreement. 4. The Czechoslovak delegation may negotiate the conditions for the repayment of liabilities from the surplus loan, possibly in crowns, and will try to reduce these liabilities and interest. 5. The most advantageous form of repayment of Czechoslovak liabilities is the separating of Czechoslovak exports to the US in the amount of 4–5% of Czechoslovak exports annually (i.e. according to the volume then of about 1.5 million USD). 6. In the event of favourable developments of the negotiations per the above points, the Czechoslovak delegation is authorized to initial the new text of the agreement. The initialled agreement will be ˇ approved by the government of the CSSR before the final signing. 7. It must be clear from the agreement on property rights that its fulfilment will take place only if the MFN status is returned.2 The Czechoslovak side also assumed that Washington would push some requirements that would be commercially unfavourable for Prague, and the Czechoslovak delegation was to reject such requests. If taking such a stance jeopardizes the signing of a trade agreement, the Czechoslovak approach will be revised, or considered in broader contexts, particularly in regard to the property agreement, i.e. in addressing open economic and financial issues. In this situation, what were the starting positions and possibilities of the Czechoslovak side for further negotiations with the US? With acceptance of the assumption that Washington will base its ˇ negotiations with the CSSR on the contents of its November 1967 2 AMZV CR, ˇ f. USA TOT 1970–1974, box no. 5, m. no. 026.625/72-6. Draft justification report for the Presidium of the Central Committee of the Communist Party and ˇ the Government of the CSSR on negotiations with the US.

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memorandum, the US demands would thus represent 44 million USD in compensation, 7.8 million USD in surplus, 1.2 million USD in the Pilsen and film accounts, and 3.9 million USD in dollar loans, for a total of 56.9 million USD. Although the Pilsen and film accounts were in crowns, these payments, too, were to be considered as foreign exchange payments, since ˇ dollar subsidies for the needs of the American Embassy in the CSSR were to be reduced from this part. On the other hand, Czechoslovak claims against the US consisted of: 17 million USD for the price of rolling mill, 1.6 million USD in blocked receivables, 1 million USD in funds confiscated by a Czechoslovak entity in the Augstein lawsuit, and 0.7 million USD in damages arising from the sale of Czechoslovak machinery for which US authorities refused to issue export licences, for a total of 20.3 million USD. The Czechoslovak deficit would thus represent 36.6 million USD, which, based on US proposals, should be repaid in instalments. In ˇ contrast, the CSSR would receive its monetary gold, worth 22 million USD according to the current official valuation. If Czechoslovakia were to start from its internal valuation of US compensation claims of 23 million USD and only take into account the Czechoslovak surplus liability without interest (4.9 million USD) and the payment of 60% of Czechoslovak liabilities from dollar loans (2.3 million USD), then the Czechoslovak deficit together with the Pilsen and film account (1.2 million USD) would represent a total of 31.4 million USD. Taking into account Czechoslovak assets in full (20.3 million USD), this alternative would mean a repayment by the Czechoslovak side of 11.1 million USD and a return of gold worth 22 million USD. This alternative, however, would mean reducing the US compensation claims by 50%, which appeared unacceptable from the US side. A somewhat different situation would arise from the viewpoint of these amounts if Prague were to take as the basis of its calculation a compromise valuation of US compensation claims of 33.5 million USD, representing the mean between the Czechoslovak valuation and the last US demand, payment of capital from the surplus of 4.9 million USD, payment of 60% of the value of dollar loans (2.3 million USD) and release of the Pilsen and film account (1.2 million USD). This would then lead to a total Czechoslovak liabilities of 41.9 million USD. If the Czechoslovak assets were to remain at the full amount of 20.3 million USD under this alternative, the Czechoslovak side would arrive at a deficit of 21.6 million USD, which would have to be repaid gradually in order to obtain monetary gold worth USD 22 million.

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The mentioned financial calculation as well as the consequences of ˇ property rights negotiations between the CSSR and the US had a direct ˇ association with the financial results of talks between the CSSR and the UK. The conclusion of the Czechoslovak–American agreement and the release of the Czechoslovak monetary gold would automatically initiate property negotiations with London in view of the Czechoslovak– British protocol of 12 November 1964. Based on this protocol, the UK government expressed consent to release the Czechoslovak gold and also stipulated that within one week after receiving the gold, Prague would transfer 1 million Lstg (about 2.4 million USD) into a joint Czechoslovak–British account as an advance on Czechoslovak financial liabilities resulting from intergovernmental debts and within six weeks negotiations on these liabilities will commence. The protocol further stipulated that if no agreement were reached within six months, the amount of 1 million Lstg would be deposited into a separate British account. What was the status and what were the open financial issues between Czechoslovakia and the UK? First of all, these were intergovernmental debts contracted during the war, which according to the Czechoslovak– British agreement from 28 September 1949 totalled 20.9 million Lstg, i.e. about 50.6 million USD. This sum comprised the so-called Munich loan, originally provided in the amount of 4.4 million Lstg as financial assistance for the economic reconstruction of the country after the Munich dictate; the so-called “war loan” in the amount of 13.4 million Lstg, which was intended to cover military and civilian expenditures abroad during the war; and interest at a rate of 1% until 1954 in the amount of 3.1 million Lstg. Further, British claims remained open for compensation for the property affected after the conclusion of the compensation agreement in 1949, land reform and the national administration, as well as the value cancelled in 1953 by Czechoslovak monetary reform, in all 5.3 million Lstg, i.e. about 12.8 million USD. The third “package” of open questions represented the Czechoslovak claim for releasing the values of Czechoslovak entities that were blocked during the war according to British regulations on the so-called enemy assets in the amount of 0.5 million Lstg, i.e. about 1.2 million USD.3 Thus, Czechoslovak liabilities

3 AMZV CR, ˇ f. USA TOT 1970–1974, box no. 5, Draft explanatory report for the Presidium of the Central Committee of the Communist Party and the Government of the ˇ CSSR on negotiations with the USA. Confidential.

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totalled 63.4 million USD. Upon deducting the Czechoslovak assets of 1.2 million USD, the total Czechoslovak deficit was 62.2 million USD. The presented data shows that if in the negotiations with the UK, the Czechoslovak side managed to get the payment of the so-called Munich loan excluded and the war loan halved, Prague would come to an amount of about 8.25 million Lstg, or about 20 million USD. If it further managed to get excluded the values abolished by the monetary reform of 1953 and other disputed items from the new British requirements, it would reach an amount of about 2 million USD. In this case, the entire Czechoslovak liability to the UK would be only about 22 million USD, and after deducting the property under the Czechoslovak blocked assets of 1.2 million USD, the total Czechoslovak deficit would be 20.8 million ˇ USD. The second case would be a much better position for the CSSR, if it succeeded in getting the interest payments on the mentioned loans lowered to 20% in the negotiations with London (i.e. 3.3 million Lstg, which was around 8 million USD). With the other items unchanged, as mentioned in the first case, the total Czechoslovak credit balance against the UK would total 8.8 million USD.4 Mentioning all these figures is not an end in itself. If we were to compare the consequences of possible further property negotiations with the US and the UK together, the following conclusions would follow for ˇ the CSSR: a. when considering the Czechoslovak assets and liabilities in full, the Czechoslovak deficit would represent about 98.8 million USD, b. if the possibility that Prague could succeed in halving its basic liabilities is taken into account, the total Czechoslovak liabilities would be around 42.4 million USD, c. in the case that Prague managed to achieve a maximum reduction in Czechoslovak liabilities in the negotiations, Prague would then have total liability to the US and the UK of 20 million USD. In all the alternatives, 22 million USD worth of monetary gold would be released to Czechoslovakia.

4 AMZV CR, ˇ f. USA TOT 1970–1974, box no. 5, ibid.

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In assessing the three presented options, it needs to be stated that the first was out of the question, because it could be assumed that the negotiations would still succeed in reducing Czechoslovakia’s commitments. In contrast, the third option seemed too optimistic or rather too unrealistic, as its approval by Washington and London was unlikely. The most realistic option was the second one, but its outcome presupposed even more demanding and complicated bilateral negotiations. The interest of the Czechoslovak side in concluding successful negotiations on open economic and financial issues had its reasons not only in the efforts to regain the monetary gold or conclude a proper trade agreement, but also in regaining the most-favoured-nation clause. Its absence, along with the broader ideological or bipolar issues, was a fundamental negative factor that restricted and often prevented the growth of CzechoslovakAmerican trade. Czechoslovak exports to the US had been subject to autonomous US tariffs, not MFN tariffs since 1951. This status was the result of the previously mentioned unilateral suspension of this clause by ˇ the return of the the US Government within the GATT.5 For the CSSR,

5 It should be noted, however, that the customs discrimination of Czechoslovak goods was not the same as in the beneficiary countries. It varied significantly from item to item in the U.S. Customs Tariff. On the whole, it affected in 1970 more than 70% of export items, and the total customs burden was 32.02%, compared to 11.3% paid by a US importer during the existence of the MFN. At the beginning of the 1970s, Czechoslovak products in the USA were affected by a tariff difference of about 3 million USD annually. Therefore, in this situation, Czechoslovak exporters were significantly discriminated against. For example, according to an analysis of Czechoslovak exports to the USA in 1967, in terms of customs discrimination, American importers had to pay a duty of 69.2 million crowns, i.e. on average 35.46% of the value of Czechoslovak exports. If the goods had been cleared through MFN in that year, US importers would have paid only 33.1 million crowns, i.e. 16.97% customs duties. The resulting difference of 36.1 million crowns was then paid by Czechoslovak exporters in the form of lower export prices. For ˇ a comparison with 1967, the situation in 1970 basically did not change for the CSSR. Czechoslovak exports to the USA in that year totalled 169 million crowns, while American importers paid an additional 38 million crowns in customs duties. The percentage difference in 1970, i.e. 32.02% versus 11.3%, was caused by tariff rebates under other GATT tariff concessions. The loss in 1970 was again entirely at the expense of Czechoslovak export companies. The above overview of customs differences documented that discrimˇ ination against Czechoslovak goods reduced their efficiency. AMZV CR, f. USA TOT 1970–1974, box no. 5, Annex to m. no. 026.625/72-6, Customs Discrimination and Prospects for Trade with the United States.

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MFN would mean not only more efficient exports, but also more space and an expansion of the range of goods.6 The Czechoslovak side entered into the new negotiations on resolving open economic and financial issues and the monetary gold in an uneasy position. What’s more, with a question mark: how will it be able to turn the observed problems in its favour? Prague’s unfavourable position was confirmed by a report from 8 September 1969 by Martin J. Hillenbrand from the European Department of the State Department, in which he addressed the issue of Czechoslovak monetary gold and Czechoslovak– American negotiations on open economic and financial issues. In this report, Hillenbrand first mapped out the history of Czechoslovak gold since 1939, its discovery in 1945, and the post-war talks in Paris. He further mentioned the issue of the rolling mill, the negotiations in 1961 and 1964 and the low global compensation. In relation to the monetary gold, he referred to the US Memorandum of 8 November 1967 and described the sum of 44 million USD for global compensation as ˇ a reasonable and balanced American demand (the CSSR rejected it in May 1968). Hillenbrand further mentioned the US proposal of August 1968, according to which a sum of 2–3 million USD would be paid from the global 44 million USD immediately after the agreement was reached, the rest after achieving the MFN (the US in the end did not submit this proposal). However, the invasion of “friendly” troops came, and so according to Hillenbrand, the State Department evaluated the negotiations on compensation and gold as out of date. After the approval of this American approach in the spring of 1969, Martin Hillenbrand continued his report, and the so-called Kissinger Memorandum of 16 August 1969 followed.7 This clearly stated that until the US Congress

6 Available archival documents show that the CSSR ˇ paid a duty two- to seven-times higher on its goods to the US in 1968 than the states that had MFNs. For example, tractors and typewriters were duty-free, but looms and knitting machines were subject to a 40% duty, compared to only 13% and 11.5% in the MFN countries. Bicycles were burdened by a 30% duty, furniture by 42–45%, and shoes by a 10–75% duty. States that had an MFN paid only 20, 42–45 and 4–22% customs duties on these same goods in ˇ the USA. Passenger cars were subject to the same 45% duty in all countries. NA CR, f. Ministry of Foreign Trade (MZO) 1945–1989, box no. 89, duties on trade with the USA. 7 Kissinger’s memorandum of 16 August 1969 is not in the documents of the State Department related to Czechoslovakia; its contents are known only from the Hillenbrand report.

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approved the most-favoured-nation clause for all communist countries, neither the administration nor the President would initiate negotiations ˇ with the CSSR on monetary gold and compensation claims.8 If the Amerˇ ican side were to observe this approach of Kissinger, the CSSR had to take the initiative. However, with Czechoslovakia’s urgent insistence on the return of the MFN, there was no chance of a shift in resolving the problems around gold and compensation. Certainly not in the immediate future. New proposals by the American side for negotiations aimed at finding a compromise in open economic and financial issues did not appear until 10 September 1973 and continued until July 1974. Again, the impulse for these talks was a meeting of the US Secretary of State William P. Rogers ˇ and the Minister of Foreign Affairs of the CSSR Bohuslav Chnˇ oupek in Prague in July 1973, which initiated a new round of talks of expert delegations from both countries from 1 February 1974 and resulted in an agreement on 4 July 1974, initialled the following day on 5 July 1974. Negotiations in Prague at the beginning of February 1974 were started on the initiative Czechoslovakia, or a proposal combining open economic and financial issues with monetary gold and the MFN clause. The American position presented by Ambassador Albert W. Sherer on 12 February 1974 in a discussion with Minister Chnoupek did not fully correspond to this proposal. In brief, on 20 February, expert delegations met in regard to these issues. The Czechoslovak delegation was headed by Jaroslav Žantovský, head of the American Department of the Ministry of Foreign Affairs, and the US delegation by Robert Wortzel, the American chargé d’affaires of the embassy in Prague. The introductory “Žantovský – Wortzel” meeting already indicated that no joint approach was going to take place in the near future. Regarding the Czechoslovak draft of a provision to link the global repayment to the MFN, which was to be in the property law agreement, Wortzel declared that the US government is currently unable to resolve this matter. This supposedly did not mean a rejection of Czechoslovakia’s proposal or a change in the American position on granting the MFN clause to Czechoslovakia. According to Wortzel, this American position had no effect on Czechoslovak–American relations, but was related only

8 NAR, f. State Department and Czechoslovakia 1967–1969, box no. 8, No. 2040, No. 13590.

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to American legislative issues which the US government has in relation to its powers over Congress. Therefore, he suggested continuing the negotiations, with the US government confirming its policy of returning the ˇ clause to the CSSR as soon as it is authorized to do so. In other words, when Congress agrees. The second Czechoslovak proposal related to the technical procedure for returning the Czechoslovak monetary gold. The US government completely agreed with the proposal that, like in 1964, the gold would be delivered by the Tripartite Commission for the Restitution of Monetary Gold to a bank in Zurich; the bank would then hand over the first instalment of the global compensation to the US government and the balance of the gold would be made available to the Czechoslovak government. Washington, however, was willing to accept a different approach, if after the conclusion of the agreement, the gold were to be delivered to the ˇ Czechoslovak government directly to the CSSR, and upon obtaining it, Prague would then pay the first instalment for the global compensation. Wortzel also took note of the significant increase in the price of gold. This remark in reality indicated that the American side would be demanding higher global compensation. Žantovský’s negative response was a mix of outrage and reproach—the new US conditions will worsen Czechoslovakia’s position; the US included the surplus loan into the repayment and refused to include the MFN in the agreement; it also demanded a double increase in the first global compensation payment. All of this, in his view, will affect Czechoslovak public opinion, such that Czechoslovak workers have to pay disproportionate amounts to the country that is considered to ˇ be the richest in the world. According to Žantovský, the CSSR still has an eminent interest in the MFN, which is not merely a one-sided advantage ˇ for the CSSR. Prague is willing to negotiate further, however, without including the MFN clause in the agenda, which the American side understands as an extremely serious concession. Žantovský presented Wortzel with five priority points of the Czechoslovak stance: 1. The principle should be adopted that the agreement will enter into ˇ force only when the CSSR obtains its monetary gold. 2. The US side should reconsider its demand, set at a Czechoslovak surcharge of 21 million USD. 3. The US side should consent to extend the instalment payments of the surcharge from 10 to 15 years.

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4. The Czechoslovak side would welcome if the US side were to agree with payment of the surplus loan in crowns. 5. The Czechoslovak side agrees with the fixed amounts set for annual instalments and is willing to expedite them by splitting them, if there were normal trade relations between the two countries, i.e. the MFN.9 Of the five points presented, the first was the main one for the Czechoslovak side. The gold once again became a priority in Prague, particularly because the return of the MFN seemed unfeasible. The others, however, tactically presented as important, did not have the “weight of the gold”, and this was due mainly to the fact that in this period the price of gold had already been relaxed, and it was significantly higher on world markets. Although finding a common agreement at this time was more or less not in sight, the Czechoslovak political and party elite already had a signing scenario prepared. In March 1974, Minister Chnˇ oupek informed the Secretary of the Central Committee of the Communist Party, Vasil Biˇlak, how the signing of the document should take place and what the ˇ CSSR could gain from it in terms of propaganda. Chnoupek proposed taking the political decision to invite President Nixon to Prague. This ˇ would mean increasing the political prestige of the CSSR internationally and “would be a significant contribution to the overall efforts of the countries of the socialist community to alleviate international tensions between states with different social institutions ”,10 or it is necessary to explore such a visit and prepare them in advance. The agreement would be initialled by the Secretary of State and the Foreign Minister in Washington and signed at the highest level, i.e. in connection with the planned trip of President Richard M. Nixon to Moscow in June 1974. In his letter, Chnˇ oupek further exhorted Biˇlak that the replacement agreement is too little, that an agreement on scientific and technical cooperation, a cultural agreement, a consular agreement and an aviation agreement are needed, that Nixon’s visit must be used to obtain a promise that after the approval of the 9 AMZV CR, ˇ f. USA TOT 1970–1974, box no. 5, m. no. 011.372/74-6. Minutes of ˇ the meeting of delegations at property negotiations between the CSSR and the US on 20 February 1974. 10 AMZV CR, ˇ f. USA TOT 1970–1974, box no. 5, m. no. 011.924/74-6, Confidential.

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Commercial Act by Congress, the MFN will be returned to Czechoslo11 ˇ vakia and that loans from Exim Bank will be released for the CSSR. The proposed steps to achieve the signing of the mentioned agreements in a short time were more the fruits of the imagination or of “wanting” than of sober judgement on the part of the Czechoslovak Minister of Foreign Affairs. On the other hand, it was undoubtedly farsighted on the Czechoslovak side to count on the alternative of signing at the highest level in advance, thus simultaneously pursuing three aims—economic, ˇ political and propaganda. However, to the detriment of the CSSR, no signing of an agreement took place in that year, and property rights negotiations were suspended for nearly another seven years. A short recapitulation with a short assessment of this next round of Czechoslovak–American negotiations on compensation and gold is needed. The talks took place on the basis of resolutions of the Presidium of the Central Committee of the Communist Party and the Government ˇ of the CSSR of 1 February 1973 and 6 September 1973. They were held in Prague and lasted from 10 September 1973 to 4 July 1974, and on 5 July 1974, the heads of the negotiating teams initialled the agreement. The first phase of the negotiations showed that the US had retreated on key issues, i.e. from the original Czechoslovak arrears of compensation for nationalization in the amount of 26 million USD, it agreed to 21 million USD. They considered this sum to be a threshold, as it represented just over 40% of the claimants’ demands, which was the share used in the discussions with other socialist countries. The US rejected, however, the linking of the agreement with the MFN clause and was ready to agree to the transfer of Czechoslovak monetary gold. Compared to 1964, Czechoslovakia’s commitments under the 1946 credit agreement for the purchase of the US Army surplus, which gave Czechoslovakia the opportunity to use these goods worth up to 50 million USD, went beyond the framework of the negotiations. Until the unilateral stoppage of purchases, 7.6 million USD was expended and 2.73 million USD paid in the years that followed. The outstanding capital as of 1 July 1974 was 4,869,868.10 USD and the outstanding interest on that capital was 2,894,697.45 USD. Further, the delegations agreed that if the State Department obtained from Congress the power to grant the MFN to

11 AMZV CR, ˇ f. USA TOT 1970–1974, ibid.

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the Soviet Union, it would be no problem to return it to Czechoslovakia, as well. Therefore, the Czechoslovak delegation did not insist on the return of the MFN and focussed fully on acquiring the monetary gold. Ultimately, the Czechoslovak side: • achieved a reduction of the global compensation to 20.5 million USD, • by compromising, extended the repayment period for the global compensation balance, i.e. 16.5 million USD in 12-year instalments ˇ of 1.375 million USD, with the CSSR paying the first 4 million USD when the agreement enters into force, • enforced the principle that the agreement will enter into force only after the receipt of the monetary gold, • got the surplus loan divided into instalments—2.8 million USD upon entry into force of the agreement, 2 million USD in two instalments in 1975 and 1976, 2.9 million USD in crowns in three instalments—750,000 USD in crowns in 1974 and 1975 and 1.4 million USD in crowns in 1976, • the US agreed to pay for nationalized property by earmarking 4% of Czechoslovak exports to the US with a two-year delay. On the issue of the physical return of gold, both delegations adopted the text of an annex that described how the gold transfer would be done through a Swiss bank. A second annex spoke of the “technique” for the transfer of Czechoslovak cheques worth 4 million USD and 2,869,868.10 USD to the US government. The Czechoslovak delegation succeeded in achieving another significant success in the negotiations, i.e. that the agreement will enter into force only after the transfer of monetary gold. It was this return of 18.4 tonnes of gold bars and coins that could be seen as the primary victory for Czechoslovakia in these negotiations, and not only for its physical recovery, but also for its current market value, which at the beginning of July 1974 amounted to 97.6 million USD, i.e. the market price was 165 USD per troy ounce in bars or ingots. Since there were also 10.3 tonnes of coins among the gold, their price would increase by about 25% if sold, i.e. an additional 24.3 million USD.12 The total value of gold at 12 AMZV CR, ˇ f. USA TOT 1970–1974, box no. 5, m. no. 016.432/74-6.

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a given exchange rate could thus be higher, while the price of gold on world markets continued to rise. The rise in the price of gold thus caused an interesting phenomenon— gold at the original price of 35 USD per troy ounce (i.e. around 22 million USD) as a part of Czechoslovak assets resulted in a Czechoslovak deficit towards the US. As the price skyrocketed, however (to 165 USD per troy ounce), this position changed—Czechoslovak assets vis-à-vis the US were higher than its liabilities. The agreement of 5 July 1974 stipulated that the government of the ˇ CSSR would pay an effective surcharge of 20.5 million USD to the compensation for nationalization after deducting 8.5 million USD for the confiscated Czechoslovak rolling mill; it would pay 7.8 million USD for the so-called surplus loan, including interest; it would release the US military’s koruna account to the US government and the so-called film account in the total amount of 8 million crowns, and within 6 months after the agreement entering into force, negotiations would begin on the settlement of liabilities from Czechoslovak dollar loans in the amount of 3.9 million USD, including interest. In total, Czechoslovakia undertook to pay 42.6 million USD to the US, which had originally demanded 75 million USD. In contrast to this, according to the agreement, the US government would no longer prevent the transfer of the Czechoslovak claim to the US in the amount of 1.43 million USD. Further, it was stipulated that the agreement would enter into force on the day when the Czechoslovak government received the 18.4 tonnes of monetary gold, administered by the TGC. Simultaneously with the receipt of the gold, ˇ as already mentioned, the government of the CSSR was to pay the US government 4 million USD in cheques as the first instalment for the above-mentioned global surcharge of 20.5 million USD; 2.9 million USD in cheques as the first instalment on the principal due of the so-called surplus loan, and 750,000 USD would be deposited in the account of ˇ the US government in the CSSR as the first instalment of interest due on this surplus loan. The payment terms of the following instalments were more complicated, but acceptable to both sides. The payment of the balance of the global compensation was spread over 12 years with an accelerating condition linked to a possible increase in revenue from Czechoslovak exports to the US. If 4% of this revenue exceeded the annual fixed payment of 1.35 million USD, then this amount would

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increase, and the repayment period would be shortened.13 The amount of global compensation represented 42% of US claims. By initialling the text of the agreement, as well as signing it, the Presidium of the Central Committee of the Communist Party demonstrated its consent ˇ on 6 September 1974, and the Government of the CSSR followed on 12 September 1974 in Resolution no. 262. The signing of the agreement was prepared by both parties for October 1974. However, these preparations were adversely affected by the decision of the US Senate Finance Committee, which on 11 September 1974 voted on amendment no. 408 to the US Trade Reform Act.14 This was the so-called Long - Gravel amendment, which required the US administration to negotiate a new ˇ agreement with the CSSR that would be more advantageous to the US. It was to be resubmitted to the US Congress, with no release of the gold before the agreement is approved by Congress. What exactly did the proposal of the “Czechoslovak” amendment no. 408 on the Trade Reform Act (H.R. 10710—Trade Reform Act of 1974) states regarding trade relations with countries that did not have MFN status? “Notwithstanding any other legal provisions, it is not desirable for Czechoslovakia to receive the most-favored-nation clause or to participate in any US government program, to extend loans or loan guarantees, directly or indirectly, and the US government does not consent to the release of any Czechoslovak monetary gold it controls under the provisions of the Paris Reparations Agreement of 14 January 1946 or such other provisions, until the Czechoslovak Government first pays the amounts owed to US citizens or firms and which were until now rejected by it and which were acknowledged by the US Foreign Claims Settlement Commission according to provisions of public law no. 85–604”.15 As I have already stated, the Senate Finance Committee approved this amendment on 11 September 1974. The reasons why it decided to take this action were that it described the initialled agreement of 5 July 1974 13 AMZV CR, ˇ f. MPO, Negotiations on the return of Czechoslovak monetary gold

1980–1982, vol. II, part B. Information on the property settlement with the United States of America. 14 AMZV CR, ˇ f. MPO, Rokovania o …., ibid. 15 NAR, f. Legal Advisor and Tripartite Commission, reel 1, Proposed Amendment to Title IV. – Trade Relations with Countries Not Enjoying Most-Favoured-Nation Treatment.

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as unilateral, disadvantageous, and especially dangerous for the US and its citizens at a time when other states were threatening American property with nationalization and non-compensation. This political argument was aimed primarily at domestic political councils and American citizens, as US Senate elections were about to take place. The finance committee negotiations were presented three days later to US Secretary of State Henry Kissinger by the Heads of the Economic, Legal and Congressional Departments of the US State Department in a confidential memorandum. They stated that the action of the Senate Committee had blocked the conclusion of the negotiated compensation agreement. The committee urged the administration, i.e. the State Department, to negotiate a new agreement that would resolve the issue of “100 cents on the dollar” compensation, as the current market price of blocked gold was around 90 million USD. At the committee’s deliberations, the three heads of the State Department sections objected that the Czechoslovak side would reject such a proposal, arguing that other countries had paid only about 40% (i.e. 40 cents on the dollar) of the required compensation claims, that the UK and France, who have long agreed to the release of gold, would not support the proposed amendment, and that gold is Czechoslovak property and cannot be used to meet American demands for compensation. Senators Russell B. Long, Maurice R. Gravel and Harry F. Byrd, Jr., did not want to accept the fact that the gold belonged to Czechoslovakia and argued that the nationalization of American property was illegal. They reportedly did acknowledge, however, the argument that illegality on the part of the American side should not be the answer to the illegality on the Czechoslovak side. In the discussion, Gravel noted that the US does not have to sell the gold; sitting on it will suffice. Long and Byrd expressed the hope that the State Department understood the committee’s position and would be very unhappy if the ˇ negotiated agreement with the CSSR was formally concluded, despite the committee’s objections. The analysis of the three top State Department officials expressed disappointment that, thanks to the amendment, the entire legislative process is not in the hands of the State Department and the agreement with Czechoslovakia will actually be “sunk” by Long and his committee. They did not give up hope, however, because they believed that the Finance Committee would eventually recognize their convincing arguments. They drew attention to the consequences and at the same time suggested to Kissinger what to do next—the Czechoslovak response will

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be strong and negative; therefore, they need to be informed that gold is legally theirs and the State Department supports mutual trade expansion. Ambassador Albert Sherer of Prague allegedly described the amendment ˇ as highly unfortunate, if the CSSR were to be exempted from the benefits of the trade law reform. This is one reason why the above-mentioned analysis described the amendment as excessively harmful.16 Two days later, the State Department made a direct attempt to overturn the committee’s decision. Deputy Secretary of State for Congressional Affairs, Linwood Holton, delivered a letter to the head of the Finance Committee, Russell B. Long, in which he first thanked him for the opportunity to present objections to the amendment on the committee’s premises. He reiterated the views of the UK and France, which were in conflict with the “Czechoslovak” amendment to the trade law reform, as well as their opposition to the selling of the Tripartite gold and using it for compensation. He repeatedly referred to the Paris Reparations Agreement and expressed the conviction that the amendment adopted by the committee would not have the expected effect and that he did not believe that the Czechoslovak government would be willing to accept such compensation for the gold sold in the near future. He labelled the Czechoslovak stance regarding the return of gold as justified, as it had been captured by Nazi Germany when Czechoslovakia was an American ally. He described the initialled agreement of early July 1974 as satisfactory, because the recognition of the payment of 29.5 million USD equals 42% of the required nationalized assets, and he described the expected material benefits anticipated from the amendment as unfeasible. In conclusion, Long said that “the State Department would like to hope that the committee will reconsider the decision taken in this matter”.17 However, the Senate Finance Committee did not change its decision. On 20 September 1974, the Ministry of Foreign Affairs informed the Presidium of the Central Committee of the Communist Party about the 16 NAR, f. Legal Advisor and Tripartite Commission, reel 1, Arthur A. Hartman, Linwood Holton, J. Wallace Hopkins, Briefing Memorandum to the Secretary, 16 September 1974. 17 NAR, f. Legal Advisor and Tripartite Commission, reel 1, Linwood Holton, Assistant Secretary for Congressional Relations to Russell B. Long, Chairman, Committee on Finance, United States Senate, 16 September 1974.

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complications that had arisen through the interference of the US Senate Finance Committee in the negotiations on a trade agreement just before preparation for the signing of the “Agreement between the US Governˇ ment and the CSSR on the Settlement of Certain Open Claims and Financial Issues”. At the same time, the party elite was made familiar with some of the proposals for a further Czechoslovak approach in the interest of getting the agreement signed. In this information, the Ministry of Foreign Affairs stated that the nearly two years of discussion on a trade law with the US was accompanied by discussions on the granting of MFN to the USSR and other socialist countries, and that the intervention of the Senate Finance Committee in this in the form of the so-called Czechoslovak amendment is a manifestation of internal disputes in American foreign policy. On the one hand, there were strong conservative forces that want to dampen and slow the process of reducing international tensions currently taking place; on the other hand, there was—although (according to the Ministry of Foreign Affairs) in a distorted American conception—the work of realistic groups, including the Nixon administration, to which the new President Gerald Ford had joined. Conservative circles in American politics viewed the property law agreement as advanˇ tageous for the CSSR, mainly due to the increase in the market price of gold, and demanded that the compensation for nationalization be proportional to the current price of gold. The State Department, on the other hand, defended the agreement. This internal dispute in the US was also affected by the Senate and House of Representatives elections held on 5 November 1974, in which members of the Democratic Party, which— reinforced by the protectionist tendencies of the American unions of the AFL-CIO, which strongly influenced US economic policy—were said to be extremely adamant in foreign relations with the countries of the world socialist system, won more than a two-thirds majority. On one side were opponents of the trade law (a strong group around Senators Long, Byrd, Gravel) and on the other, the State Department defending a situation in which any proposal from opposition groups in the Senate could lead to an immediate change in US government policy. The stance of the State Department, i.e. support for signing the property agreement, was also confirmed on behalf of Secretary of State Henry Kissinger by his Deputy Robert S. Ingersoll in a letter sent to Minister of Foreign Affairs B. Chnˇ oupek on 29 October 1974, referring to his statement in

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the Senate Finance Committee of 26 September 1974.18 What did Ingersoll say in this opinion? It was a direct action to renegotiate Part IV of ˇ the Trade Reform Act, which concerned the CSSR. Ingersoll said that the proposed amendment stipulated that the Czechoslovak government should fully settle all outstanding claims granted by the Foreign Claims Settlement Commission. The amendment was based on the fact that less than “100 cents on the dollar” would not be in the interest of American claimants and that the gold, the MFN and the loans should not be released until such a settlement. Ingersoll declared this position as obvious and understood; however, legalizing the proposed amendment would not bring these results. Before the Finance Committee, Ingersoll then discussed four basic areas—the Czechoslovak Tripartite Gold, the initialled agreement, the demands of the claimants for compensation, and Czechoslovak–American relations overall. Ingersoll took a clear stand in regard to the gold—refusing to block it or sell it and thus satisfy the demands of domestic American claimants. He pointed out that the gold had been seized by the Germans, and Czechoslovakia had an indisputable and firm right to it. He also noted the obligation of the 1946 Tripartite Commission to return the gold. Tying the gold to the full settlement of the claimants, i.e. pressure on the Czechoslovak government to come to a different settlement than ˇ that agreed, would not pressure the CSSR in negotiations. In his view, it was also clear to the Czechoslovak side that the US has the obligation to return this monetary gold, that they have been waiting for it for almost 30 years in Czechoslovakia, and as the price of gold increases, they will be willing to wait further. This was a realistic stance and none other remained to the Czechoslovak side. Ingersoll described the initial settlement of claims as satisfactory in regard to US claims; the Czechoslovak government had agreed to 20.5 million USD, which together with the rolling mill meant 29.5 million USD. He also said that it was important that Prague agreed with the US position that 9 million USD had been 18 Only five senators were among the 17 participants in the in the discussions of the Finance Committee on 26 September 1974, three of whom—Long, Gravel and Byrd— steadily advocated the adoption of the amendment. According to Long, the communists in Czechoslovakia had trampled on all freedom and stolen the property of American citizens, and the State Department wants to return 18.4 tonnes of gold to them. He will in no way allow American taxpayers to pay extra for a unilateral agreement; on the contrary, if Czechoslovakia had stolen property from American citizens, the US could steal Czechoslovakia’s gold. In Trhlík, Zdenˇek, p. 619.

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accepted into the settlement account, and not the 17 million USD that Czechoslovakia had originally paid for the rolling mill. The mentioned 29.5 million USD was about 42 cents on the dollar of the principal set by the Foreign Claims Settlement Commission in connection with compensation for nationalization. He compared this with Poland (39 cents) and Romania (37 cents) and with Western European countries, where the settlement (compensation) usually did not exceed 25 cents on the dollar. And the maturity of 12 years, in Ingersoll’s view, was also advantageous for Washington compared to, e.g. Poland (1960) and Hungary (1974), where it was extended for as long as 20 years. He also emphasized that ˇ the so-called “speeding up clause” would in the case of the CSSR reduce the repayment of the global compensation to 8 years. Although such a clause was linked to the return of the MFN in the case of Hungary, in the Czechoslovak case this link was not in the agreement. Ingersoll further defended the initialled agreement because it included a full settlement of all claims related to the surplus loan. On the issue of the claimants, he said in the Senate Finance Committee that the majority of claimants were in contact with the State Department and were satisfied with the terms of compensation. Regarding the issue of Czechoslovak-American relations, he presented the view that the approval of the Czechoslovak amendment in the trade agreement will have a negative impact and political effect in ˇ the CSSR and referred to the words of Secretary of State Henry Kissinger, who on the question of Senator Claiborne Pell of the foreign committee about his opinion on a proposal to block the concluding of an agreement ˇ with the CSSR, answered that this would be an unfortunate solution, because the process of détente with the USSR should be accompanied by improved relations with the whole of Eastern Europe. In other words, it would not be appropriate to improve relations with the USSR and leave aside its satellite countries, with which the US has traditionally had good historical ties. At the end of his speech, Ingersoll declared that the time had come for the agreement to be signed and that the activities in the Finance Committee against it were counterproductive.19 How did Senator Harry Byrd respond to Ingersoll? With this: what the Czechoslovak government did when it confiscated American property

19 AMZV CR, ˇ f. USA TOT 1970–1974, box no. 5, Statement by Robert S. Ingersoll, Deputy Secretary of State in connection with the talks on part IV of the Senate’s Trade Reform Act, which concerns Czechoslovakia, of 26 September 1974.

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without adequate and effective compensation was an illegal act; therefore, he still refused to change his mind and defended amendment no. 408. “We realize that ”, said Ingersoll’s representative, Kempton Jenkins, “but the implementation of one illegal act accompanied by a similar illegal counter-action is not the best way to restore international law and justice”.20 In other words, one injustice should not be linked to any other injustice, and at the same time Czechoslovakia’s right to its own gold is indisputable, what’s more on the basis of the doctrine of sovereign immunity of state property. Certainly, neither Ingersoll, Pell or Kissinger could be considered advocates of communist Czechoslovakia. This needs to be seen more as a stream of American foreign policy with a realistic vision that took into account, and even considered as predominant, the promotion of balanced and non-conflicting bipolar relations. In association with the agreement with Czechoslovakia, Ingersoll, Kissinger and others in the State Department also relied on the fact that domestic claimants for compensation for nationalized property were interested, even given the time lag of nationalization and their age, to receive compensation immediately. In this context, and with regard to reinforcing the position of the State Department towards the Senate, Deputy State Department John Armitage came up with a new proposal for the Czechoslovak side. Armitage informed the embassy in Washington that in the interest of promoting the signing ˇ of the property law agreement between the CSSR and the US, the State Department, in its efforts to eliminate the so-called Czechoslovak amendment to the trade law, would be greatly helped by a gesture of goodwill from the Czechoslovak side, which was that the agreed amount of compensation for American property in Czechoslovakia (20.5 million USD) would be paid in three instalments (10 million USD for the first year, 5 million for the second USD and 5.5 million USD), or in eight with the application of the acceleration clause, which depended on Czechoslovak exports to the US, as envisaged in the initialled agreement. In his view, this gesture could be useful as an argument against the

20 Settlement of Claims Against Czechoslovakia. Hearing and Markup before the Subcommittees on Europe and the Middle East and on International Economic Policy and Trade of the Committee on Foreign Affairs House of Representatives Ninety-Sixth Congress, Second Session on H.R. 7338, August 19 and September 30, 1980. Washington DC: US Government printing Office, 1981, p. 196.

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view that the US is undertaking to hand over the Czechoslovak moneˇ tary gold immediately, while the CSSR will repay the replacement global 21 over 12 years. Armitage acknowledged that such a “gesture” would be taken into consideration, under the assumption that the fulfilment of all Czechoslovak claims (the monetary gold, MFN and loans from Exim Bank) would be guaranteed from the American side. Given the complexity of the situation, the growing pressure from conservative forces and their growing influence in Congress, it was not hard to predict whether or not the State Department’s position would prevail. Thus, implementing the Czechoslovak–American property law agreement was made directly dependent on the positive conclusion of negotiations of the trade act, whose significance far exceeded the framework of bilateral Czechoslovak–American trade relations. What position should Czechoslovakia take in this context? Undoubtedly, the right step meant using all acceptable opportunities for fulfilling Czechoslovak interests. Given that the American side’s idea of a Czechoslovak gesture, as presented by Armitage—although it interfered with the agreed instalment plan—did not affect the other crucial “elements” discussed in the agreement (global compensation of 20.5 million USD and entry into force until after the physical takeover of monetary gold), it proved desirable to agree with it. Prague could also have used another approach, e.g. ignore the idea of the US with the fact that promoting the initialled agreement is currently a matter for the State Department, which would represent passivity from the Czechoslovak side, or to link Czechoslovak’s willingness only to a direct link with the MFN. What approach did the Federal Ministry of Foreign Affairs propose to the Presidium of the Central Committee of the Communist Party, i.e. the crucial “head” of the state within the state? This was a pragmatic ideological position: 1. The Czechoslovak side of the argument assumed that the complications surrounding the signing of the agreement are fully the responsibility of the US side, and it is up to the State Department to look for a solution in the Senate. The ministry proposed keeping full

21 AMZV CR, ˇ f. USA TOT 1970–1974, box no. 5, m. no. 017.662/74-6, Confidential, letter of the Minister of Foreign Affairs B. Chnˇ oupek to the Prime Minister of the ˇ CSSR Lubomír Štrougal from 18 November 1974.

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responsibility in the State Department and in Congress for fighting ˇ for the policy towards the CSSR. ˇ 2. To make it clear to the American side that the CSSR has gone without normal contacts with the US for more than 25 years, and that their further development does not depend on whether or not it obtains the gold stolen by the Nazis and seized by the Americans. Therefore, the ministry proposed postponing the Czechoslovak response to US proposals (e.g. to postpone the response to US requests concerning the opening of a consulate in Bratislava, eventually the proposals to continue negotiations on a cultural agreement or agreement on scientific and technical cooperation) until Congress had made a final decision. 3. To maintain reasonable restraint in publicity in the Czechoslovak press until the situation is finally resolved. 4. To agree with the State Department’s idea for the Czechoslovak side’s promise to increase the first instalment for the global compensation from 4 to 10 million USD, with additional annual instalments of 5 and 5.5 million USD, with the condition that the American side promotes the removal of the so-called Czechoslovak amendment in Congress and accelerate the signing and implementation of the initialled agreement, including the physical transfer of monetary gold. 5. If it were not possible to reverse or acceptably adjust the socalled Czechoslovak amendment to the trade law and if the whole ˇ matter were to end negatively for the CSSR, it will be necessary after consultation to assess the new situation and to coordinate an approach against the US within the common position of the socialist countries.22 The presented position was the result of an inter-ministerial meeting (the federal ministries of Foreign Trade, ˇ Foreign Affairs and Finance and the ŠBCS) at the so-called 6th Territorial (American) Department of the Ministry of Foreign Affairs on 19 November 1974 under the leadership of Jaroslav Žantovský. In essence, three alternatives to the possible Czechoslovak position emerged at this meeting:

22 AMZV CR, ˇ f. USA TOT 1970–1974, box no. 5, m. no. 017.351/74-6, Explanatory Report of the Federal State Department, Annex no. 3.

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• to wait for the final discussion of the Trade Reform Act in the socalled conference proceedings (i.e. the joint sitting and voting of both chambers of Congress). This position was not recommended by the meeting, as it would no longer be possible to influence its wording once the law had been discussed. • to offer a gesture to the US side to reduce the payment of compensation to 3 years, but to link this step to the signing of the agreement and the return of monetary gold, as well as to the granting of MFN and a loan from Exim Bank. To formulate the bond such that Prague would have the right to stop payments, if the MFN were not reinstated. The meeting, too, rejected such an approach, stating that a similar commitment to the MFN clause had already been rejected ˇ by the US several times during negotiations with the CSSR, with the note that it did not have authorization from Congress to do so. This alternative could endanger the signing of an agreement that the Czechoslovak side was interested in. • to offer the mentioned “acceleration” gesture, to link its implementation to the signing of the property law agreement and to promote in the negotiations that the moment the administration has the prerequisites laid down by the trade law, it will do so quickly. This alternative most suited the Czechoslovak side, and on 19 November 1974, the previously mentioned inter-ministerial meeting recommended that the Presidency of the Central Committee of the Communist Party accept it.23 Although the Czechoslovak party leadership approved the proposed approach, nothing became valid for it. All possible Czechoslovak steps were “resolved” in a short time by the US Congress, which approved the final wording of the Trade Law reform, and it was not lacking the so-called Czechoslovak (Gravel’s)—controversial or rather unacceptable for Prague—amendment. Its ratification effectively blocked the return of gold, the granting of the MFN clause and compensation for American nationalized property and was labelled as an act whose ˇ importance exceeded the property law issue between the CSSR and the US. The original draft of this amendment stipulated that the ˇ CSSR, which owed US citizens 105 million USD for expropriation in 1945, will not be eligible for the MFN, any US loans, credits or 23 AMZV CR, ˇ f. USA TOT 1970–1974, box no. 5, Inter-ministerial meeting of 19 November 1974.

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the release of gold held by the US government as security for expropriation debt, until that country pays the basic amount it owes to US citizens. The principle amount was said to be 64 million USD. ˇ The renewal of the MFN could mean new business for the CSSR, and the market value of Czechoslovak gold had increased from 20 million USD in 1946 to about 100 million USD in 1974. For this reason, the proposed amount of the Czechoslovak–American expropriation agreement seemed unacceptable. Another proposal, from Senator Gravel of Alaska, was that the Czechoslovak gold be used to ˇ pay the principle, i.e. 64 million USD if the CSSR does not pay. This second Gravel amendment—approval of the sale of Czechoslovak gold—was rejected by the competent Congressional committee. The final text of Gravel’s amendment contained a change in the fact that the demand for full payment of the so-called “principle amount” of 64 million USD was dropped. Congress kept the right to decide whether adequate compensation will be achievable when a new draft treaty is submitted to it for approval. Although the right to conclude compensation and property agreements with foreign states had been held by the American President since 1799, the “doctrine of coordinated control” had spread after Second World War, the result of which was the constitutional power of Congress to pass legislative measures to restrict the US President from concluding intergovernmental agreements. In the opinion of Czechoslovak legal experts at the Ministry of Foreign Affairs, if the US Congress took the intended step to sell off Czechoslovak property (gold bars and coins), it would be violating the general principle of “good faith” in international law. What’s more, in their view, the American side had violated the principle of “good faith” (“an act of good will”) in negotiating the Czechoslovak–American agreement, in that: • it initialled the agreed upon agreement without first consulting its other constitutional authorities prior to initialling it; ˇ • it did not warn the Government of the CSSR that the agreement must be approved by the American constitutional authorities (Congress, the President) and that its terms cannot be considered final. In regard to renegotiating the agreement, experts from the Czechoslovak Ministry of Foreign Affairs indicated this as the only way to ˇ save Czechoslovak gold and prevent the CSSR from receiving inflationary

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US dollars; a purposefully provided guarantee by the American side that the negotiated and agreed terms of the agreement will be acceptable to ˇ the American constitutional authorities would be in favour of the CSSR. With this approach, according to Czechoslovak experts, the Czechoslovak side could demonstrate that the US government has thus far approached ˇ the negotiations with the CSSR in a non-serious way and has not accepted the principle of “good faith” in respecting the terms of the 1974 treaty. If a new agreement were to be initialled, according to these Czechoslovak experts, consideration should be given to whether the Czechoslovak side should ask the US to give its consent to: ˇ a. the CSSR gold in the US and the UK will either be deposited into a third state outside the Tripartite Commission (e.g. Switzerland), b. or to demand that the US consent to the release of the gold stored in the UK, c. where appropriate, at least the part containing the gold coins will be released to Czechoslovakia as a show of “good faith”.24 The US Trade Reform Act was passed on 20 December 1974, and the Czechoslovak–American property agreement was returned to the State Department for renegotiation. This process was justified by the fact that the initialled agreement is disadvantageous for the US when comparing the amount of the Czechoslovak compensation with the market price of monetary gold. According to the influential Senate Finance Committee, the low global compensation was discussed from the US point of view. Therefore, in the trade law, the Senate Finance Committee approved Amendment no. 408 as follows: “a) the Agreement initialled on 5 July 1974 in connection with the settlement of claims by US nationals and citizens against the Government of Czechoslovakia shall be renegotiated and submitted to Congress as part of any agreement reached with Czechoslovakia in accordance with this Act, 24 The issue of gold handling by third countries (Switzerland) was not new. On 24 July 1974, the Czechoslovak Ministry of Foreign Affairs, in a note to the Tripartite Commission for the Restitution of Monetary Gold, proposed, or formally requested, that this gold, when it becomes available, be first physically deposited with the Swiss National Bank in Zurich in an account opened on behalf of the TGC and then handed over to the ˇ Czechoslovak government. AMZV CR, f. MPO, Rokovania o …., vol. II, part A. The Czechoslovak monetary gold–legal aspects.

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b) the United States shall not release any gold belonging to the Czechoslovak Socialist Republic and controlled directly or indirectly by the United States under the provisions of the Paris Reparation Agreement of 24 January 1946 or any other agreement until this Agreement has been approved by Congress”.25

ˇ The fundamental, supremely negative result for the CSSR was the fact that the issue of the return of Czechoslovak gold remained unresolved. Under the given circumstances, the Czechoslovak side had only minimal room for manoeuvring. It was based on the position that the collapse of the property rights talks was the fault of the US; therefore, it is up to them to come up with a new realistic official proposal to lead the negotiations out of the impasse. On the other hand, the US government argued politically, emphasizing that the unfavourable atmosphere in relations was caused by the negative attitude of the American public towards human ˇ rights violations in the CSSR. How did the gold and compensation issues further evolve? In essence, the situation remained preserved for several years, with no shift in favour of or against Prague. The Czechoslovak monetary gold remained in American (and British) safes, and from 1974 to 1979, only a few unofficial exploratory messages were sent on the American side. Among them was the activity of the head of the American part of the Czechoslovak– American Economic Council, David C. Scott, who in 1976 submitted a “Memorandum on the Possibilities of Resolving Open Property Rights Issues between the Czechoslovak Socialist Republic and the United States”. Scott’s probe regarding negotiations with Prague did not take any precise or concrete form that would express any American commitments or facts about how much compensation (the memorandum only spoke of an increased global compensation) and in what time horizon Washington wants to negotiate. Probably for this reason, the Prime Minister of Czechoslovakia, Lubomír Štrougal, said in an interview with Ambasˇ sador Thomas R. Byrne that the CSSR would like to have a guarantee that the new agreement reached and approved will be “implemented”

25 Settlements of Claims Against Czechoslovakia, p. 190. In addition, another clause was added to the Trade Reform Act. This was addendum no. 402, called the “freedom of emigration”, known as the amendment of Congressmen Henry M. Jackson and Charles A. Vanik, in which the property interests of the Czechoslovak post-February emigration were to be taken into account in the Czechoslovak–American talks.

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by the American side, not like the previous ones. Štrougal’s “condition”, according to Byrne’s report, went further, in those negotiations on the MFN would take place simultaneously with negotiations on compensation, if they were not a current part of it. He did not expect proposals from Scott but from the US government.26 Byrne suggested a way forward with Prague in this report. It is time to negotiate, as Senator Long had agreed to a “lump sum” of 32 million USD in compensation, but he did not know whether Prague would accept it. In any case, he proposed reassuring the Czechoslovak government that neither Congress nor US courts would block the entire process and that the gold would be released after this satisfactory agreement. On the issue of the MFN, he further suggested that the US publicly declare that it is prepared to negotiate it, if Congress in the end rejected Amendment no. 408, and at the same time that Congress will certainly approve the MFN clause for Czechoslovakia at the same time as for its Allies. Byrne saw two possible scenarios: ˇ 1. to enter into negotiations with the CSSR for a compensation agreement as soon as Congress approves a lump sum of 32 million USD and to not block the return of the gold, plus offer negotiations on the MFN but not approval, 2. to enter into negotiations on a new compensation agreement and promise that Czechoslovakia will obtain the MFN at the same time as its Allies (USSR, Hungary and others) and not have to wait for the clause after them, which could be an effective element in reaching an agreement on compensation claims and serve as a “sweetener” for these negotiations. In his view, both approaches had pros and cons, but he was inclined towards the second scenario.27 Ambassador Byrne subsequently probed the Czechoslovak position in early 1977 with a proposal similar to that of Scott. In addition to the fact that both exploratory messages requested an increase in the global compensation, they did not provide any guarantees that a possible new agreement would not again be rejected by the US

26 NAR, f. Legal Advisor and Tripartite Commission, reel 1, AmEmbassy Prague to SecState, September 1976, No. Secret 5326. 27 NAR, f. Legal Advisor and Tripartite Commission, reel 1, ibid.

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Congress. Therefore, Prague rejected these American semi-official initiatives with reference to the agreement initialled in 1974. The domestic (American) activities of the authors of amendments no. 408 and no. 402, Senator Long and Congressman Vanik, followed Scott’s and Byrne’s initiatives in the spring of 1977. Both wrote to Secretary of State Cyrus Vance, but with diametrically different contents and conclusions. Russell B. Long’s letter of 22 March 1977 referred to the reasons for Amendment no. 408 of the trade law and the consequences of not releasing the Czechoslovak monetary gold, which he interpreted as a result of the Czechoslovak side’s refusal to pay adequate compensation to American citizens and companies for their nationalized property, with both issues directly related to the MFN issue. He warned the secretary of state that in no case can he come to negotiations with Prague with assurances that even if the issue of compensation were to be satisfactorily resolved, Congress would agree with the Ministry of Finance ˇ for the CSSR. According to his information, negotiations with the Czechoslovak government reportedly fell apart because the Czechoslovaks were unwilling to accept the amount of the 1974 agreement. He ˇ described the CSSR’s refusal to negotiate over an amount of 20 million USD when the debt legally admitted by the commission for settling the claimants’ compensation was 200 million USD as literally “total irritation”, which he and other members of the Senate Finance Committee felt. In his view, the amount of compensation should be doubled, i.e. to about 40 million USD. At the same time, he had come to the opinion that the US government should ensure these demands and claims from the gold currently controlled by Washington. According to the London Stock Exchange, the real price of this gold at the time was 94.75 million USD, which was about half of the 194.61 million USD admitted to US claimants in March 1977. In order for this long and frustrating episode to be soon closed, in Long’s view, he proposed talks between the two states as soon as possible, and with the participation of Richard N. Cooper, Under Secretary of State for Economic Affairs.28 Long’s letter also had an appendix that specified that by that date, US citizens had filed a total

28 NAR, f. Legal Advisor and Tripartite Commission, reel 1, Russell B. Long to Cyrus Vance, 22 March 1977.

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of 4,024 applications for 364 million USD and that 2,630 of them had been recognized; with interest to 1958 amounting to 41,030,571.07 USD and the principle amount totalling exactly 72,614,634.34 USD, for a total of 113,645,206.41 USD. After deducting the broadband rolling mill price of 8,540,768.41 USD in 1958, a total of 105,104,437 USD remained for compensation claims. In total, the principle amount and the interest in October 1974 were 182.95 million USD and as of March 1977 was 194.61 million USD.29 If Czechoslovakia returned only 20.5 million USD, Long’s annex concluded, it would represent only 10.5% of the claims. Congressman Charles Vanik was informed of Long’s letter to the minister by Long himself and replied almost immediately. On 4 April 1977, he wrote to Vance that he did not agree with Senator Long’s proposals on US claims against the Czechoslovak government to be satisfied with the Nazi-seized gold controlled by the Tripartite Commission, because negotiations between the representatives of the two countries were still ongoing. He also understands, however, that the sums of the claimants should have been reflected in the 1974 agreement. Prague did not even agree with Scott’s proposals for 32 million USD and will not be willing to open official negotiations again anytime soon, because unilateral increasing the sum from the gold is a breach of the agreements with the governments of the UK and France, as well as the moral obligations and principles of the US. Such an act, in his view, will destroy the US image in Czechoslovakia and undermine the efforts of the American administration to normalize mutual trade relations. Although, the US has ˇ minimal impact on political developments in the CSSR, he sees a policy of détente as the only way to increase the American presence and influence its domestic and foreign policies. At the end of the letter, Vanik also added that he understood that satisfying American demands was a priority, but the only way to achieve this was to sit at the negotiating table and push for the renegotiation of the agreement with Prague as soon as possible.30 The letters of Long and Vanik offered two different scenarios of the American position. While Senator Long insisted on the tough stance of using Czechoslovak monetary gold for compensation, Congressman 29 NAR, f. Legal Advisor and Tripartite Commission, reel 1, Russell B. Long to Cyrus Vance, 22 March 1977. Encl. Data on Claims Settlement and Czech Gold. 30 NAR, f. Legal Advisor and Tripartite Commission, reel 1, Charles Vanik, Member of Congress to the Honorable Cyrus Vance, Secretary of State, 4 April 1977.

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Vanik spoke in favour of new talks with the goal of reaching an agreement. This indicated, among other things, that the issue divided the American side not only between the administration (government, state department) and Congress, but also within the Congress itself there were sometimes even conflicting positions and opinions. In 1978, Senator George S. McGovern, on a visit to Prague, explored the willingness of the Czechoslovak side to increase compensation for American nationalized property. Congressman Charles Vanik, whose parents were of Czech origin, also expressed interest in negotiating on the Czechoslovak cause. The US showed some signs of a more realistic ˇ approach to the CSSR in 1979 upon the arrival of the new ambassador to Prague, Frances Meehan; however, these indicators of negotiations were also postponed.31 At that time, however, no one could realistically guess when and under what circumstances the standstill would be replaced by a new, mutually consensual position.

31 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A. Proposal of an approach in ˇ the matter of property settlement between the CSSR and the USA.

CHAPTER 8

Final Negotiations

A principle revival in the resolving of bilateral issues, particularly those that touched on the development of disputes over Czechoslovak moneˇ tary gold and property rights between the CSSR and the US, came about in 1980. On the one hand, Washington showed no interest in Prague, ˇ since it assumed that the CSSR was a state with a harsh communist regime and faithfully and consistently supported the Kremlin’s foreign policy. On the other hand, after almost six years of American waiting, or more or less bilateral “silence”, the US initiated a drastic solution to the whole issue. Understandably, according to its own ideas. First, on 13 May 1980, Congressman Lester Wolff submitted bill no. 7338 in the House of Representatives, according to which Czechoslovak gold held in the US was to be seized and sold to satisfy claims for nationalized American property in Czechoslovakia. Senator Daniel Moynihan subsequently submitted a similar bill to the Senate on 15 May 1980. On that same day, Moynihan published a statement addressed to the President of the US explaining why he had made a proposal similar to that of Congressman Wollf. “Mr. President, today we are no closer to negotiating an agreement than we were in 1948. For more than 30 years, the Czechoslovak government has refused to negotiate and we are equally distant from fair compensation for thousands of Americans, although Czechoslovakia has enjoyed the benefits of the expropriated property. Fortunately,

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Michálek, Nazi Germany and the Role of the US in the Fate of Czechoslovak Monetary Gold, https://doi.org/10.1007/978-3-031-38758-6_8

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Mr. President, we have here a suitable remedy”,1 by which he meant the Tripartite gold, which was actually blocked by President Harry Truman and which he identified as an important element due to the rise in its price in recent years. After confiscating the property, the Czechoslovak government, Moynihan continued in his letter to the President, had demonstrated zero inclination to compensate American citizens for their property losses. Although he had hoped for a diplomatic solution, he is not optimistic about the matter and therefore submitted the following amendment to the Senate in five points: 1. The US Treasury should be instructed to order the liquidation, at the highest possible price, of about nine tonnes of gold physically stored in the FRB, where it was frozen by President Truman as security for the Czechoslovak expropriation debt. 2. The profits from the liquidation of gold should be invested by the Treasury in such a way as to bring the greatest possible returns. 3. The income from these investments would be regularly transferred to the so-called Czechoslovakian Claims Fund at the Treasury, and from there distributed proportionately among American claimants until their approved claims are repaid to them, including interest. 4. After all the claims have been settled, the balance of the gold liquidation profits may then be released to Czechoslovakia. 5. As soon as the gold is resolved by the Treasury, Czechoslovakia can then apply for the MFN, which was rejected by the Trade Reform Act of 1974. At the same time, Czechoslovakia can apply for the release of additional gold, physically held in the BOE, which is blocked by the US.2 Senator Moynihan’s five points represented Prague a great risk of losing the monetary gold. And a nearly identical scenario was proposed by Lester Wolff, who offered to carry out Washington’s steps in four points, not via the Treasury Department but through the State Department. Compared to Moynihan’s, Wolff’s proposal was a tad more accommodating to Czechoslovakia, because he first anticipated a bilateral search

1 NAR, f. Legal Advisor and Tripartite Commission, reel 1, Statement by Senator Moynihan addressed to President of United States, 15 May 1980. 2 NAR, f. Legal Advisor and Tripartite Commission, reel 1, ibid.

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for a mutually beneficial agreement, and only if one is not reached would the US then reach for the Czechoslovak monetary gold. The co-sponsors of the proposed bill by New York Congressman Wolff to settle US claims on Czechoslovakia from the Czechoslovak government’s gold proceeds and to release the balance of the proceeds included Congressmen Joseph Fisher, Barber Conable, Richard Ottinger and Thomas Downey. The proposal obligated the Secretary of State (US Secretary of State), upon the law’s entry into force, to start negotiaˇ tions with the CSSR on full and immediate payment of all claims as recognized by the Foreign Claims Settlement Commission established in 1949.3 If the Secretary of State failed to file an initialled US Claims Settlement Agreement within 60 days of the adoption of this act of the US Congress, or if the US Congress does not approve such a settlement within 60 days of its submission, the Secretary of State was to take the following measures: 1. to take possession and control of Czechoslovak monetary gold and other gold located in the US and to sell this gold to obtain the highest possible profit; 2. to request the consent of the UK and France for the sale of Czechoslovak monetary gold located in the UK; 3. to deposit the proceeds from the sale of gold at 11% interest in securities, bonds or bank accounts. Interest, dividends and other income from the funds so deposited would then be distributed among the recognized claimants at regular six-month intervals; 4. after payment of all recognized compensation claims, to pay to ˇ the CSSR the full amount obtained from the sale of gold, after deducting administrative costs, which may not exceed 5%.4

3 This US Commission published the results of its work on 15 September 1962, when it signed a final decision on 3976 claims. Of these, 1346 were rejected and 2,630 were acknowledged. According to its final report, the total value of recognized claims was 113,645,205 USD, leaving the final requirements of the US claims at around $ 105.1 million USD after deducting 8.5 million USD from the sale of the wide-strip rolling mill. NAR, f. Legal Advisor and Tripartite Commission, reel 1, Report of the Foreign Claims Settlement Commission of the United States including a Report on the Completion of the Czechoslovak Claims Program, 31 December 1962. 4 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A. Record on the US bill on the sale of Czechoslovak gold.

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Speaking in Congress on 13 May 1980, Congressman Wolff estimated that it would take about five years to settle all US claims from interest and other profits from the invested and deposited amount obtained from the sale of Czechoslovak gold, if the UK and France agreed to sell the gold stored outside the US. If only the gold stored in the US is made available, it would take longer to repay the claims, 11–21 years. In the explanatory report to his proposal, Wolff pointed to the fact that Czechoslovakia nationalized property on its territory 35 years ago and has not yet paid compensation for this property.5 He further pointed out that claimants are now elderly people for whom obtaining compensation for their property is an urgent social issue. He also stated that the failure to resolve the issue of nationalization was an obstacle to normal diplomatic, trade and economic relations between Washington and Prague. Wolff’s bill did not address the international law aspects of the proposed procedure, in particular in relation to the Paris Reparations Agreement of 14 January 1946. It was limited to stating that the new law complements and clarifies the mentioned agreement. The concept of Wolff’s proposal was based on the assertion that the US controls Czechoslovak monetary gold directly (the part that is in the US) and indirectly (the part that is outside the US). However, this statement did not correspond to the truth from an international political point of view. The return of monetary gold had been decided in the “Agreement on Reparations from Germany, on the Establishment of the Inter-Allied Reparations Office, and on the Return of Monetary Gold” of 14 January 1946, to

5 The issue of compensation for American nationalized property did not only concern Czechoslovakia, but also other European countries of the Soviet bloc, Yugoslavia and China. According to the 1979 report of the Foreign Claims Settlement Commission, compensation was agreed as follows: Yugoslavia was to pay 20.5 million USD in 1948 and in 1964 from the US demand of 28.5 million USD; Poland was to pay 40 million USD from claims of 100.7 million USD in 1960; Romania was to pay 24.5 million USD in 1960 out of claims of 61.1 million USD; Bulgaria was supposed to pay 3.5 million USD out of 4.8 million USD in 1963, Hungary was supposed to pay out 22.2 million USD out of 62 million USD in 1973, and China was to pay out 80.5 million USD in 1979 out of 196.9 million USD. The agreed amounts to be paid were about 40% of the demanded compensation, in the case of Yugoslavia and Bulgaria over 70%. Poland and Hungary agreed to a 20-year repayment schedule with the US, and the other countries have a 2–6-year repayment schedule. The total US claim for nationalized assets in these countries “climbed” to $ 454 million, of which a total of 191.2 million USD was paid out or had to be paid out within the agreed time horizons under the compensation agreements. In Settlement of Claims Against Czechoslovakia, p. 170.

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which almost 20 states were signatories. The restitution of monetary gold was discussed in the third part of this agreement, which this work examines in the previous chapters. The issue of returning the gold was explicitly separated from the issue of reparations in the agreement. States that lost gold during the war had a claim to the restitution of that monetary gold as a result of German looting or illegal transfers. In contrast to this, the reparations were to pay for war damage and the expenses caused to those states that were at war with Germany. Under the agreement, the governments of the US, the UK and France were authorized to distribute the recovered gold among the damaged states, and they had no right to dispose of the secured gold otherwise. On the contrary, the agreement expressly placed on them the obligation to take all measures to distribute it on the basis of detailed and verifiable documents and information. Wolff’s bill for the sale of Czechoslovak gold was, therefore, a gross violation of the commitments made by the US in the agreement of January 1946. Neither the agreement nor general international law allowed for unilateral “supplementing” or “clarification”. In order for the US to sell Czechoslovak gold, it would have to change the January 1946 agreement, and the consent of the UK and France would not suffice. The agreement could only be amended with the consent of all its signatories, i.e. including Czechoslovakia. Nevertheless, the matter surrounding Wolff’s proposal in Congress ˇ developed to the detriment of the CSSR. Representatives of the Czechoslovak Federal Ministry of Foreign Affairs protested against the proposals (of Wolff and Moynihan) as such and notified the US ambassador in Prague that the US approach was unacceptable pressure against ˇ the CSSR. Shortly afterwards, on 26 May 1980, Ambassador Francis J. Meehan submitted a new official proposal from the US government to address open economic and financial issues. Based on the current high market value of gold, the US administration demanded full payment of 100% for US nationalized assets of 72.6 million USD, in addition to the interest of 41 million USD, representing almost 160% of claims. This meant a total demand of 113.6 million USD, less the 8.5 million USD ˇ the US had gained for the sale of the rolling mill. Therefore, the CSSR had to make an immediate one-time payment of 105.1 million USD (the

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settlement of other communist countries with the US on the issue of compensation was about 40% of claims).6 The new proposal from Washington was effectively based on the initialled 1974 agreement, but with one major difference: the amount of the global compensation. What did a comparison of the two texts look like? Among the primary differences was that under the 1974 agreement, Articles 1–3 stated that for the full settlement, the Czechoslovak side was to pay the US government a surcharge of 20.5 million USD, 4 million USD on the day the agreement entered into force and the rest in annual instalments of 1.37 million USD over 12 years. The new proposal of 26 May 1980 spoke about a different amount. ˇ In it, the CSSR would pay 72.6 million USD in principal and 41 million USD in interest, for a total of 113.6 million USD, minus the 8.5 million USD for the rolling mill. Thus, the total demand of the American side “climbed” to 105.1 million USD. Furthermore, in this proposal, the compensation was claimed in full on the date of entry into force of the agreement, i.e. with no multiannual instalment payments. If we compare the two texts—from 1974 and 1980—we also see a ˇ significant deterioration of the terms for the CSSR in two areas: a. regarding the total compensation claimed, i.e. instead of 20.5 to 105.1, thus nearly 85 million USD, more b. regarding the maturity, i.e. instead of repaying over 12 years, a full payment was demanded on the date of the agreement entering into force. The other points in the US proposal of 1980 did not contain any radical changes. Rather, they were merely different phrases and expressions of what was contained in the initialled 1974 agreement. For example, Art. 7 of the agreement stated that the US government would inform the Tripartite Commission of its agreement to release 18.4 tonnes of gold to the Czechoslovak government after the signing of the agreement, while point 2 of the new US proposal spoke of the date of agreement when the agreement would enter into force. And these were

6 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A, A new American proposal for ˇ resolving open economic and financial issues between the CSSR and the US, Annex B.

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two different dates. These issues, however, were only of a formulation nature and did not constitute a major departure from the 1974 agreement. In addition to these property settlement issues between Czechoslovakia and the US, there were other receivables (both American and Czechoslovak), which both parties tried to resolve in previous joint documents in 1964 and 1974. Among American receivables from Czechoslovakia were the surplus agreement (base 4.9 million USD, interest as of 31 December 1979 exactly 3.2 million USD), the blocked crown accounts (US Army Pilsen account with Živnostenská banka in the amount of 7,161,557 crowns and the US Embassy film account in Prague in the amount of 887,691 crowns) with a total value of around 1.5 million USD, and outstanding dollar bonds from pre-war loans (the Czechoslovak state loan from 1922 and 1924, the mortgage loan from the City of Prague from 1922 and the city foreign loan from Karlovy Vary from 1924) totalling 4 million USD. Together these cases totalled 13.6 million USD. The other Czechoslovak claims on the US were lower. According to the Federal Ministry of Finance, this sum moved around 2.5 million USD and included blocked, vested and other receivables, unpaid so-called prisonerof-war certificates of Czechoslovak prisoners of war from the Second World War, plus machines and equipment blocked in the US.7 We obtain additional interesting information when comparing the agreement of July 1974 with the American proposal of May 1980 in relation to the development of inflation in USD. In the years 1974–1980, global compensation increased due to inflation from 20.5 million USD ˇ to 27 million USD, which, according to financial experts from the ŠBCS, should have been taken into account in further negotiations. But even ˇ this was not the most interesting item for the CSSR. Another indicator was in play here: the rise in the market price of gold, or the change in the value of 18.4 tonnes of Czechoslovak monetary gold. While on 20 June 1974 (during the final negotiation of the agreement) the price per troy ounce was 165 USD, on 30 August 1980 it was already 670 USD and on 25 September 1980 it was still higher, up to 707 USD. In the years that followed, the price of gold fell. From these data, it was easy to calculate that 18.4 tonnes of Czechoslovak gold (excluding the weight of

7 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A, A new American proposal for ˇ resolving open economic and financial issues between the CSSR and the USA, Annex D.

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the coins, i.e. only of pure weight) was worth 97.6 million USD in June 1974, 372.7 million USD in August 1980 and 428.3 million USD in September 1980.8 These literally staggering figures were a fundamentally ˇ new reality for the CSSR (and for the US, too, of course). This happened without the “help” of the US or Czechoslovakia; the rocket rise in the price of gold completely reversed the situation—the Czechoslovak deficit with the US turned into a positive balance. The Czechoslovak side resolutely rejected the American proposal at the end of May 1980 “as gross, unjustified and unfair discrimination against 9 Ambassador Meehan presented the American reaction to the ˇ the CSSR”. Czechoslovak stance in Prague on 18 July 1980 at the Ministry of Foreign Affairs. This was another phase of the semi-official exchange of views and was formulated in a much milder tone. The ambassador suggested that compensation at the 60% limit could be the basis for a discussion that the State Department could then go to Congress with, without speaking about interest at all.10 If the 60% level of claims were to be accepted, the amount to be paid by the Czechoslovak side would be 43.5 million USD. Realistically, the ˇ CSSR could count on the 8.5 million USD calculated so far for the rolling mill, and after deducting that, then 35 million USD would remain to be paid. Under these circumstances, the Federal Minister of Foreign Affairs (FMZV) considered it expedient to respond to the new US proposal. The “spectre” of Wolff’s law being adopted was still there. In an effort to gain support for the adoption of Wolff’s law no. 7338 in Congress, presuming to satisfy the claims of American citizens from the sale of Czechoslovak monetary gold, two legal experts, attorney Leslie Logan and former State Department Legal Department employee Harry McPherson, addressed the US Senate Subcommittee for Europe and the Middle East and the Subcommittee on International Economic Policy

8 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A, A new American proposal for ˇ resolving open economic and financial issues between the CSSR and the USA, Annex E. 9 AMZV CR, ˇ f. MPO, Rokovania o …, vol. II, part A, Proposal for an approach to a ˇ property settlement between the CSSR and the USA, p. 3. 10 The opinion of the US ambassador of 18 July 1980 was confirmed on 24 July 1980 by Deputy Secretary of State Robert L. Barry in a discussion with the Czechoslovak ambassador to Washington Jaromír Johanes, and he proposed to negotiate the payment ˇ of nationalization claims at the level of 60%. AMZV CR, f. MPO, Rokovania o …., vol. II, part A, p. 4.

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and Trade, as well as in the Foreign Affairs Committee of the House of Representatives on 19 August 1980. In their view, neither the UK nor France had a valid or legitimate interest of any kind in 8.2 tonnes of Czechoslovak gold controlled by the US and physically held in the Federal Reserve Bank of New York, which is under US jurisdiction. The Tripartite Commission supposedly had the sole obligation to distribute gold, which had been fulfilled, and neither this commission nor its members allegedly have any direct or indirect jurisdiction over the gold. Both treaty documents, i.e. the Paris Reparations Agreement and the Statutes of the Tripartite Commission for the Restitution of Monetary Gold regulated the liability for the distribution of gold differently. The distribution of gold was to be done collectively and unanimously. However, the function of allocating the gold was entrusted to individual members of the TGC governments without requiring unanimity. Harry Truman also reportedly did not ask the TGC for approval when he decided to block the return of the Czechoslovak gold, nor did the UK or France take part in the bilateral Czechoslovak–American negotiations in 1974; therefore, their consent is not required. And even if the UK and France allegedly had some vague technical obligation under the Paris Reparations Agreement of 1946 or the statute of the TGC of the same year, then it was only in regard to helping to distribute the gold allocated to Czechoslovakia. But given that Czechoslovakia had violated international law by expropriating American property in the Czechoslovak Republic without compensation, this supposedly entitles Congress to change, amend or cancel the international treaty, thereby satisfying its claims from Czechoslovak property in the territory, the US under their jurisdiction.11 In the opinion of Logan and McPherson, the decision of the TGC did not have to be unanimous. This unified consent reportedly concerned only the initial determination of the gold allocation and not any subsequent action by the members of the TGC during the carrying out of the treaty. Thus, the US does not need the consent of the UK and France to sell the Czechoslovak gold. The approval of amendment no. 408 to the trade law stating that the US will not release Czechoslovak gold held directly by the US under the Paris Reparation Agreement of January 1946 allegedly establishes the right of the US to act independently, without consulting the UK and France, in ˇ disposing of the gold. With respect to the fact that the CSSR had not

11 Settlement of Claims Against Czechoslovakia, pp. 28–40.

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paid for the expropriated property, the US is entitled to countermeasures (retortion) under international law.12 The Czechoslovak side rejected all of these American arguments. The International Law Department at the Ministry of Foreign Affairs in Prague described the fact that the US constitutional authorities did not consider the compensation agreed by the US government as suitable as key in the American position in support of Wolff’s law. Just as in 1974, in 1980, too, the game over Czechoslovak monetary gold and compensation was played out in the American sense at the two centres of power—between the administration (the State Department) and Congress. This fact was confirmed by an analysis of the State Department’s Legal Department on 3 September 1980, which was in contrast with the legal analysis of Harry McPherson of 19 August 1980, which advocated the position of the stronger power player in the US—Congress. The State Department’s analysis took into consideration other legal arguments and pointed out factual errors in McPherson’s position. McPherson stated that the US, as a trustee, had a legal obligation under the Paris Reparation Agreement of 1946 to make the so-called “reprisal defence”. The State Department’s legal analysis, on the other hand, argued that the US was legally bound under the 1946 agreement to return the gold seized by the Nazis or to release it to the owner (Czechoslovakia), and a unilateral decision (i.e. legislative act) does not allow them under international law to sell this gold, invest it and then distribute the profits from it. The gold was looted by Germany during the war, and the US undertook to return it under the articles of the Paris Reparations Agreement, so it could not use it unilaterally to satisfy American citizens’ claims for compensation for nationalized property. The legal obligations placed on the US government strictly dictate this. The analysis reiterated that all this is in full contradiction with what was accepted in Amendment no. 408 in December 1974. The US has no right under international law to include this gold in any “fund” to satisfy long-standing compensation claims and, furthermore, it is not entitled to take into account the equivalent of future gold price increases, otherwise it would “injure” Czechoslovak claims. This analysis rejected the US stance, including in 12 NAR, f. Legal Advisor and Tripartite Commission, reel 1, Legal Memorandum and ˇ Statement presented by Harry McPherson, 19 August 1980 or AMZV CR, f. MPO, Rokovania o …., vol. II, part A, speech by Leslie Logan and Harry McPherson on the House Foreign Affairs Committee on 19 August 1980.

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the issue raised before the International Court of Justice. It referred to Art. Article 8 of the Paris Reparations Agreement of 1946 (the Article 8 approved by Albania, Australia, Belgium, Denmark, France, Luxembourg, the Netherlands, Norway, Czechoslovakia, Yugoslavia and other participating countries, including the US), according to which the signatory states will look for a solution (resort to) in an appeal to the International Court of Justice to resolve legal conflicts or unclear competencies through amicable settlement or arbitration. For these reasons, the unilateral US legislative act to seize and sell Czechoslovak monetary gold is in conflict with the international obligations of the US government.13 Although the above legal analysis of the State Department stated that the US could not unilaterally decide on Czechoslovak monetary gold and referred to the international commitment of the Paris Reparation Agreement of 1946, it was confirmed that Congress was the stronger power. Therefore, the State Department had no choice but to negotiate with the ˇ CSSR along its line and according to the conditions set by it. The State Department’s helpful offer for 60% compensation in July 1980 (Meehan’s offer of 18 July 1980), however, did not protect Prague from the spectre of the sale of monetary gold, as Congress rejected this “60 cents on the dollar” offer. As the debate in the House of Representatives on 19 August and 9 September 1980 showed, support for Wolff’s proposal (100% compensation) among congressmen rapidly grew. On 30 September 1980, Wolff’s proposal for “100 cents on the dollar” even gained the approval of the Joint Subcommittees for Europe and the Middle East and for International trade, and they proposed continuing the further steps of the approval process.14 Prague had to react favourably and accept the American offer. Otherwise, it would literally be gambling with the loss of its own gold. The offer was worth 105 million USD, and Czechoslovakia had a choice to make: to accept it or to insist on the amount under the 1974 agreement. With the second alternative, however, it had to deal with Congress voting on Wolff’s legislative measure, and a portion of the gold—at least that deposited in the New York FRB—would be sold and used to pay compensation.

13 NAR, f. Legal Advisor and Tripartite Commission, reel 1, Draft Czech Gold, Legal Memorandum, Department of State, 3 September 1980. 14 Trhlík, Zdenˇek, p. 683.

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Czechoslovakia could also ignore the situation, but such a position was the equivalent of refusing to accept compensation at 105 million USD. Therefore, at the end of January 1981, the Czechoslovak Ministry of Foreign Affairs officially notified the State Department that it would enter into negotiations and that it was willing to accept the American offer to negotiate. The permanent discussions taking place simultaneously in committees and subcommittees of the Senate and the House of Repreˇ sentatives, where the belief prevailed that if the CSSR did not accede to 105 million USD, the gold would be sold off, remained a threat. Put simply, Prague was driven into a corner from which it had no escape. The support of the US Congress for Wolff’s proposed law on the sale of Czechoslovak gold significantly changed (strengthened) the State ˇ Department’s negotiating position towards the CSSR. The State Department justified the raised demands for the global compensation by saying that rejecting the alternative it offered would expose the Czechoslovak side to the risk of the law on the sale of gold being adopted and then paying even more compensation. A situation was also created for the Czechoslovak side to either accept the American demands or, if not, to be responsible for further developments. The Czechoslovak side endeavoured to neutralize the US position by assuming to question the reality and prospects of the efforts to sell Czechoslovak gold. The Prague Ministry of Foreign Affairs recalled the fact that the law firm Smathers and Merrigan, which was behind the matter, was already trying in 1975 to reach a decision on the legality of the sale of Czechoslovak gold and use the funds so obtained to meet the demands of American claimants through the courts.15 Its claim was rejected as inadmissible in law in the 15 This was the legal proceeding of Frank Vacek vs. Henry Kissinger. Naturalized American Frank (František) Vacek, originally a Czechoslovak citizen, claimed damages for the nationalized property of his relatives in Prague in the amount of 32.5 million USD. In his petition, Vacek demanded that the US State Department secure the sale of the blocked Czechoslovak monetary gold and then pay compensation from the profit from the sale. The defendant was the Secretary of State, because the State Department administered Czechoslovak monetary gold, and Amendment no. 408 was valid under the adopted Trade Reform Act of the previous year. According to the District Judge of the District of Columbia (James F. Devey), there was no link between the right to compensation for the sale of gold and Amendment no. 408 by commercial law or other legal regulations and provision; therefore, Frank Vacek’s action was dismissed. The decision and the order of 15 July 1975 dismissed the petition, and the judge used the absolute immunity clause of state gold in the reasoning. According to this absolute immunity, gold as foreign property could not be used to compensate American citizens. NAR, f. Legal Advisor, reel 1,

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District Court of Columbia and in the Federal Court of Appeal, and it did not even appeal within 30 days in the US Supreme Court. This was a situation in which the courts in the US have the right to declare a law passed by Congress invalid, if it contradicts basic laws (the US Constitution, international treaties); thus, the Czechoslovak side proposed to use this for counteractions during negotiations, in propaganda or after the adoption of the law in deferments.16 According to the Czechoslovak position, the US could trivialize the Czechoslovak position in the negotiations, because the acceptance of Wolff’s law would be, or could be, contrary to American law. In the area of propaganda, the Czechoslovak Federal Ministry of Foreign Affairs, with the help of its embassy in Washington, proposed addressing prominent American journalists who would point to the American rejection of the 1974 agreement, or the fact that the Czechoslovak party is ready to challenge the law in court, i.e. in the form of litigation to the US Supreme Court. The ministry also proposed negotiating all the nuances and finesse of American law with suitable specialists in Moscow, as well as contacting former senator and prominent lawyer William Fulbright and asking for his opinion. If Fulbright were to confirm the appropriateness of the Czechoslovak approach, this judicial trump would have to be used in the subsequent talks with the State ˇ Department. In parallel, the CSSR Ministry of Foreign Affairs recommended renewing the contact of the embassy in Washington with Wolff, who was willing to “cooperate” with the Czechoslovak government in passing his proposal in Congress, not in the form of a law, but only as a non-binding resolution.17 On 22 January 1981, the Embassy in Washington supported the argument for initiating a legal dispute, but called for caution, though it did not anticipate the President vetoing the law or a US court ruling in favour of a socialist country in US–Czechoslovakia dispute. It also suggested a sober evaluation of the situation in Congress, because no congressmen had yet supported the Czechoslovak position. Regardless Complaint, Frank Vacek, Plaintiff vs. Henry Alfred Kissinger, Defendant. United States District Court for the District of Columbia, Civil Action File 75-0121S, Memorandum and Order, July 15, 1975. 16 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A, Proposal for countermeasures ˇ against the current US approach in the property rights negotiations with the CSSR of 9 January 1981. 17 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A, ibid.

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of the Czechoslovak argument about the correctness and legality of the Czechoslovak approach, fully substantiated from the viewpoint of international law, members of Congress perceived this matter as one of defence and the protection of the interests of American citizens. The Embassy in Washington proposed explaining the Czechoslovak stance and its arguments in personal contact with senators and congressmen, as well as calling for reaffirmation of the negative opinion of the UK and France, as members of the Tripartite Commission, regarding the sale of gold and actively using their opinions in negotiations with members of Congress. It also recommended carefully monitoring the progress of the new administration of Ronald Reagan and modifying the Czechoslovak position accordingly.18 What were the stronger and weaker points of the Czechoslovak position? Among the stronger ones was the international dimension of the Tripartite gold and the associated US commitments of 1946, as well as the effective and efficient propaganda that the US had robbed its ally from the Second World War. The weak sides lay in the fact that the US, as a Western superpower, did not intend to meet the demands of the Eastern Bloc satellite, which would complicate the fulfilment of intentions for the benefit of US citizens. This was shown to be unlikely. For a comprehensive understanding and explanation of the positions ˇ of the US and the CSSR on the issue of gold, it is necessary to return to the early autumn of 1980. Namely, the Czechoslovak side promoted a return to the 1974 global property agreement as the optimal solution. At the same time, as a negotiating element, it highlighted the fact that the US had denied Czechoslovakia the recognition of the MFN and the 19 ˇ release of export controls on certain types of technology to the CSSR. The Czechoslovak side considered the 1974 agreement as acceptable to both parties, but broadly agreed to the US proposal to increase the global compensation to 60%, which compared to the base amount of 72.6 million USD was 43.5 million USD, and after deducting 8.5 million USD for the wide strip rolling mill, 35 million USD remained to be paid. In addition to this direct increase in compensation, the Czechoslovak side 18 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A, Opinion of the Embassy of Washington of 22 January 1981. 19 Czechoslovak exports to the US reached 59 million USD in 1979, losses caused by discriminatory tariffs (the absence of the MFN) were 11 million USD, and the direct profit leakage for the Czechoslovak side was around 6 million USD.

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proposed a substantial shortening of the maturity date. Compared to Wolff’s proposal, i.e. instalments for 9 years, according to the US Treasury Department’s calculation in up to 21 years, these claimants would receive the claimed amounts in four and a half years based on the Czechoslovak proposal. What’s more, at an interest rate of 4 and 6%, they would receive funds from the base amount of 35 million USD over the next 16 years, which far exceeded the stated level of 60%, as follows: for 9 years this represented 64.7% and 79.2%, i.e. 47.01 million USD and 57.5 million USD, respectively, and 104% and 158% in 21 years, i.e. 75.5 million USD and 114.6 million USD, respectively.20 The presented figures and percentages calculated by the staff of the Ministry of Foreign Affairs in Prague were meaningful. They clearly showed what kind of arguments the Czechoslovak side could use in the anticipated negotiations of experts from both countries in defending the 60% limit for American demands for compensation. However, it was not at all questionable what positions would prevail in the negotiations: whether political or professional. The Czechoslovak side entered into the game of chess between the ˇ CSSR and the US with other statistical data, with which it tried to defend the approach it had taken. In information for the State Department, its International Law Department suggested that if the US rejected the 60% settlement of claims, the Czechoslovak negotiating position must return to the 1974 agreement and reject its renegotiation. At the time, however, there would be the danger that Congressman Wolff’s bill would be passed and that at least the portion of the Czechoslovak monetary gold held by the US would be sold. Furthermore, the sale would take place at a low price. If, however, an agreement were reached with the US, the entire 18.4 tonnes of gold would be returned to Czechoslovakia. Therefore, the international law department of the ministry offered its minister data on the market value of Czechoslovak gold, in addition to the values of 50 and 100% of the weight for gold coins. The market value of 18.4 tonnes of Czechoslovak monetary gold at its price in mid-October 1980 (at 680 USD per troy ounce) was 402.3 million USD. A total of 8,003 kg (worth 175 million USD) in gold bars and 206 kg (worth 4.5 million USD) in coins were deposited in the US, meaning a total of 8,209 kg (179.5 million USD). Only the Czechoslovak gold coins weighing 10,191 kg (222.8 million USD) were deposited 20 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A, thesis on the interpretation of the Czechoslovak proposal for property settlement with the US, Annex G.

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in the UK. When taking into account the share premium of the gold coins, on average 50 and 100%, the market value of Czechoslovak gold in the US was calculated at 6.75 million USD (50% share), or 9 million USD (100% share) and in the UK 334.2 million USD (50% share), or up to 445.6 million USD (100% share). When taking into account the mentioned premium, the total market value of gold in the US and the UK totalled 515.95 million USD (50% of the coin premium) or 629.6 million USD (at 100% premium). The US demand for nationalization compensation plus interest was 113.6 million USD or, after deducting the 8.5 million USD for the rolling mill, 105.1 million USD. With the ˇ market value of Czechoslovak gold, including the premium, the CSSR was to acquire (with the release of 18.4 tonnes of gold and with full payment of American claims for nationalization) 410.85 million USD (50% premium) or 524.5 million USD (100% premium). Following the resolution of these basic problems, i.e. compensation for the nationalization and release of Czechoslovak gold, other mutual receivables were to be resolved, such as debts for the so-called surplus credit, loans from the period before the Second World War, the blocked US crown accounts and ˇ blocked CSSR assets in the US, which totalled 13.5 million USD; thus, the total of Czechoslovak liabilities to the US amounted to 118.7 million USD. Czechoslovak liabilities to the UK (intergovernmental debts, the balance of nationalization requirements) amounted to 61.4 million USD. Therefore, the sum of Czechoslovak liabilities, British and American, together amounted to 189.1 million USD. Including 50% and 100% ˇ coin premiums, the CSSR would thus receive 336 million USD (50% premium), or after paying US and British nationalization claims and ancillary financial requirements, 449.7 million USD (100% premium).21 ˇ The above-mentioned dollar values of the CSSR’s liabilities and profits, arising from the market value and weight of Czechoslovak monetary gold, were a factor that motivated (apart from the fear of the US selling off the Czechoslovak gold) the Czechoslovak side to seek the most optimal steps in its approach to the US. At the same time, it showed that not resolving the issue of gold and freezing the Czechoslovak–American dialogue would be the worst variant for Prague, too.

21 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A, Information for the Minister ˇ of Foreign Affairs on the issue of property settlement between the CSSR and the US.

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After several exploratory talks, the American side announced on 16 December 1980 that it was willing to send a group of experts to Prague for negotiations on property law issues. From March to August 1981, five rounds of negotiations took place alternately in Prague and Washington between the delegations led by Ambassadors Jaroslav Žantovský and Rozanne L. Ridgway. The Czechoslovak side was motivated by an effort to gain the return of the monetary gold in fear of its being sold off by the Americans, while at the same time, it saw the gold as a form of huge profit. The American side’s priority was the demand for compensation for nationalized property. These were two main points of contention that had pushed both states for more than three decades. Other open economic and financial issues were less serious, but the key to resolving them lay in gold and compensation. ˇ The first set of five rounds of talks between experts of the CSSR and the US on finding consensus on open economic and financial issues took place on 23–26 March 1981 in Prague. On the first day, the Czechoslovak side presented its position, and on the second the partners from the US. Since the American side had an eminent interest in resolving the issue of compensation for nationalized property, it mainly informed on the procedure for negotiating and recognizing US compensation demands.22 The head of the American delegation, Ambassador Ridgway, did not bypass the question of the amount of recognized American claims, i.e. 113,645,205 USD or deducting the 8.5 million USD from the sale of the rolling mill; in her view, the US demands remained at around 105.1 million USD.23 The Czechoslovak side, however, operated with an amount of 72.6 million USD, and the head of its delegation, Ambassador Jaroslav Žantovský, justified this by saying that in all previous negotiations, the US had also operated with this amount. However, Ridgway explained that the difference in US position was the result of developments since 1974, and the US delegation would not discount, because at

22 Each US claim was registered and assigned to a lawyer who was to determine whether the claim was a valid one (US claimant citizenship, ownership of or interest in the asset, value, date and circumstances of the loss of assets). After proving these facts, the application was assessed by the commissioner, who issued a preliminary decision after analysis. If the claimant did not agree, he or she could appeal and submit new evidence. A final decision then followed. 23 NAR, f. Legal Advisor and Tripartite Commission, reel 1, Claims/Gold negotiations, First Session, 23 March 1981, Cernin Palace, Prague.

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present compensation claims of 200 million USD or more are emerging, and many US claims have not yet been reviewed. Prague wanted to stick to the 72.6 million USD offered by Ambassador Meehan in 1980, noting that the US also had a tendency to include interest in its claims. The Czechoslovak side, in its view, was not to blame for this, because it wanted to reach an agreement with the US and had signed an agreement in 1974. The Czechoslovak delegation included domestic and business property as well as securities and shares in the 72.6 million USD. At the same time, it refused to connect the issue of Czechoslovak gold with this issue. The American delegation did not want to back down from its sum, so Ridgway reiterated that the 105.1 million USD was right and fair, consisting of a principle of 72.6 million USD and 41 million USD in interest. She further explained that American experts had been brought to Prague for talks in 1980, especially the well-known proposed laws of Congress on the sale of Czechoslovak gold, thus indicating that Congress was interested in the actions of the State Department, i.e. the State Department had gotten the task of reaching an agreement acceptable to Congress. She did not see her mission in Prague as being at the level of research, i.e. about what a claim, at what interest, etc., but rather to interpret the US government’s belief that the amount they proposed has hope for approval in Congress. In effect, she openly stated that a one-time payment of 105.1 million USD, or what she is negotiating, is acceptable to the US in that it is ratifiable by the US Congress. Žantovský, on the other hand, labelled the American demand as an element that blocks the possible dialogue and agreement and, without the use of diplomatic language, he stated that only lawyers would benefit from this threshing of empty straw. Ridgway countered that her role was to find out the Czechoslovak position and that she would not discuss anything she knew in advance would be unacceptable.24 So, what was the result of these interviews? Effectively nothing, as the opinions did not converge. The fact that for the Czechoslovak’s side, it must have been definitively clear that for the negotiations of the two groups (the Ministry of Foreign Affairs and the State Department) the opinion of a third party, i.e. the US Congress, would be crucial, could perhaps be seen as a positive.

24 AMZV CR, ˇ f. MPO, Rokovania o …., zv. II, diel A, Minutes of the second sitting from 24 March 1981.

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In an effort to clarify their positions in the property negotiations, the heads of delegations agreed that they would try to find a way out at an informal personal meeting. This negotiation from the beginning was also the holding of the lines, with neither side willing to come out of the trenches; the Czechoslovak side stuck to the amount of USD 72.6 million, and the US to 105.1 million USD (i.e. 72.6 million plus interest of 41 million USD, minus 8.5 million USD for the rolling mill). Žantovský and Ridgway, however, did agree on something, namely that in the approaching official negotiations they will confirm the eminent political interest of both parties in finding a solution to compensation, and after reaching it, the US will release Czechoslovak Tripartite gold. A small shift also occurred when the Czechoslovak side, seeing the uncompromising stance of the US, abandoned the amount of 72.6 million USD (i.e. 60% compensation without interest) and offered to pay the 20.5 million USD global compensation so that the first instalment after the physical handover of gold (in natura) would be 4 million USD and the balance would be paid in 12 equal instalments (i.e. the wording of the 1974 agreement). The US ambassador responded to this opinion by dropping the 105.1 million USD and acknowledging 90 million USD.25 The third day of the first-round negotiations did not bring any movement, as neither side changed their position. Ridgway summarized the first round as beneficial, since the dimensions of the problem were determined in the context of the domestic situation in both countries. The Czechoslovak side refused to discuss an amount higher than 72.6 million USD, or the 26 ˇ sum of 105.1 million USD was completely unacceptable to the CSSR. But both parties were willing to seek a mutually beneficial solution in the subsequent negotiations. After returning to Washington, Ridgway informed not only the administration but also members of Congress about the negotiations, and on 19–22 May 1981, she returned to Prague with two American proposals: ˇ 1. The CSSR will pay 105 million USD, 65 million immediately and 40 within three years; 25 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A, Record by Jaroslav Žantovský from a private interview with the head of the American delegation, Ambassador Rozanne L. Ridgway, on 24 March 1981. 26 NAR, f. Legal Advisor and Tripartite Commission, reel 1, Claims/Gold negotiations, Third Session, 25 March 1981, Cernin Palace, Prague.

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ˇ 2. The CSSR will pay 95 million USD immediately.27 Ridgway presented the proposals as an American step forward, and called the immediate payment of 95 million USD as the most advantageous, because the first proposal with a three-year repayment horizon delayed the issue of releasing the Czechoslovak gold. Žantovský refused to negotiate under pressure, i.e. under the threat of the gold being sold by the US Congress. He reacted by giving an overview of previous negotiations with lower compensation amounts, which Ridgway described as an unnecessary historical and rhetorical exercise, as she defended the American position. She strongly rejected the new Czechoslovak proposal, which read as follows: 65% of the base of 72.6 million USD, which represented 47.19 million USD. Žantovský proposed the same percentages (65) for the rolling mill, which was 10.4 million USD, so the Czechoslovak side would be willing to pay 36.79 million USD. Ridgway proposed to suspend negotiations and continue unofficially by looking for points of contact, saying that the administration saw the lowest possible chance of obtaining congressional approval in an immediate payment of 82 million USD.28 Although the American side had again unofficially recognized a lower amount of compensation, there was no convergence ˇ of views. Neither side really wanted to back down, and the CSSR was in the worse position, because the threat of the sale of the Czechoslovak monetary gold still hung in the air.29

27 NAR, f. Legal Advisor and Tripartite Commission, reel 1, Claims/Gold negotiations, First Session, May 19, 1981, Cernin Palace, Prague. 28 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A, legal property negotiations— second round from 21 May 1981. 29 Vasil Biˇlak, a member of the Presidium of the Central Committee of the Communist Party and the head of its international department, recalled the US attempts to sell Czechoslovak monetary gold in a propaganda election speech on 25 May 1981. It can be assumed that this was his reaction to the development of the failed Žantovský—Ridgway negotiations and the related issue of gold claims. Biˇlak literally rumbled: the US government openly supports all terrorist governments and their crimes against socialist countries, communists and progressive forces. Nazi Germany stole the Czechoslovak treasure from the Czechoslovak people, and now not only is the US holding it illegally, it doesn’t even want to return it. And now they even want to pass a law to sell our golden treasure. Can this not be labelled as state terrorism by the US against Czechoslovakia, Biˇlak asked and then answered himself: they will no richer or stronger; they will only be poorer and weaker, and many nations and individuals who have their valuables stored in their banks

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The third round of negotiations, on 29 June 1981 in Prague, took place relatively quickly. Ridgway informed that she had consulted on the premises of the State Department and Congress regarding the new Czechoslovak proposal, and that this proposal—the Czechoslovak surcharge of 64.1 million USD plus 16 million USD (the Czechoslovak rolling mill payment) and 8.5 million USD (Argentina’s payment to the US for the rolling mill) was rejected by the American side, taking into account the total compensation and inflation. Ridgway said the 64.1 million USD had no hope of obtaining congressional approval and reduced the US request to 90 million USD as an accommodating gesture. Since the road through official negotiations was obviously leading nowhere, the Czechoslovak side proposed an informal dialogue. Here, the American ambassador repeated the sum of 82 million USD from the second round. Žantovský effectively accepted the American sum: the ˇ CSSR agrees to satisfy American claimants in the amount of about 80 million USD, but that this could be accompanied by the return of the MFN, which was illegally stripped away from Czechoslovakia by the US 30 years ago under the GATT. Ridgway refused to do anything, however, that was linked to the MFN clause, adding that the MFN would probably be dealt with as a matter of priority after the agreement was signed.30 ˇ The fourth round of replacement negotiations between the CSSR and the US took place on 16–17 July 1981 in Washington. The Czechoslovak delegation submitted a new proposal of 81.5 million USD, and this global compensation was to be paid in instalments. The first instalment of 15 million USD would be handed over to the US at the same time as the release of 18.4 tonnes of gold, and additional instalments should represent 15% of the annual Czechoslovak exports to the US and, in addition, the US would receive 50% of the annual increase in the volume of Czechoslovak exports to the US.31 Žantovský also stated that the

will realize what it can happen to them. NAR, f. Legal Advisor and Tripartite Commission, reel 1, Incoming telegram from AmEmbassy, Prague to SecState, no. 3990, 25 May 1981. 30 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A, record of CzechoslovakAmerican negotiations in Prague, 29 June 1981. 31 To illustrate, in 1980, Czechoslovak exports to the US reached 81 million USD. According to the Czechoslovak proposal, at this amount, the US would receive a 12 million USD instalment.

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settlement for the nationalization of American property did not actually amount to 81.5 million USD, but an amount higher by 16 million USD (the Czechoslovak payment for the rolling mill) and 8.5 million USD (Argentina’s payment to the US for the rolling mill). Ridgway again rejected the Czechoslovak offer. The question was no longer one of the amount of compensation, but of the method of payment. She insisted that ˇ the CSSR pay the 81.5 million USD in a lump sum. The Czechoslovak party finally gave up the game of nerves and the marathon negotiations. On the next day, i.e. on 17 July 1981, Žantovský notified Ridgway that the Czechoslovak side was willing to pay 81.5 million USD in a lump sum and at the same time take over the 18.4 tonnes of gold. He called this the final Czechoslovak proposal.32 The Washington positions of both delegations in mid-July 1981 came so close that Ridgway and Žantovský were able to present their work with a successful result. They left the fifth round of talks to technical experts. The question arises, however: who gained more, or who lost more, the ˇ US or the CSSR? Who was the winner and who was the loser? And was ˇ it even possible to talk about winners and losers? The CSSR won by reaching an agreement, the result of which was to be the release of 18.4 tonnes of Czechoslovak monetary gold, the holding of which gave the US a tough bargaining chip for obtaining compensation. But this was also gold whose market value in 1945 was diametrically different than it was in 1981. In 1981, it was many times higher (absolutely, but also in terms of inflationary dollars, of course). Thus, this represented the maximum ˇ possible profit for the CSSR. What did the US gain? Compensation for nationalized assets in a significantly higher amount than at the start of the negotiations (although, here inflation was only marginally accounted for). Furthermore, the return of the gold was not linked to the return of the most-favoured-nation clause. The final round of expert negotiations on the text of the agreement on the settlement of open economic and financial issues between the ˇ CSSR and the US took place on 12–14 August 1981 in Prague. Here, the question of the amount of compensation was no longer discussed, but it was based on the assumption that the role of the delegations was—based on the consensus of 17 July 1981—to adjust the text of the initialled

32 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A, record of property negotiations with the United States in Washington on 16 and 17 July 1981.

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1974 agreement. This mainly made the Czechoslovak position more difficult, as the agreement was more advantageous for the US. Changes or amendments to the 1974 text were related to the following provisions: 1. In Art. 1, the circle of American assets for which compensation is provided was redefined. It was not clear from the original wording whether this also concerned the ownership on which national administration was imposed. This evoked the danger that the American side could in theory claim additional compensation in the future. On the initiative of the US delegation, the issue of a guarantee against potential further mutual claims associated with nationalization and other practices that caused damage to the other side was again discussed. The US delegation wanted to prevent the ˇ ˇ CSSR from claiming compensation for losses incurred by the CSSR in connection with the sale of the rolling mill in the future. The provision that excluded this possibility was originally in the text of the 1964 agreement, but it was not in the 1974 text. Therefore, the Czechoslovak side promoted the text that provided both parties with guarantees that it would not be possible to make further claims. Furthermore, it linked in the negotiations the adoption of this provision with a request to amend Art. 10, which in its existing form did not permit sufficient assertion of Czechoslovak claims for the release of Czechoslovak property blocked in the US. 2. Art. 2 was reformulated. In its existing form, it did not ensure ˇ that no claims would be made against the CSSR in the future to compensate American citizens who had a certain share in companies nationalized or otherwise taken over by the Czechoslovak state. The new wording would preclude that. 3. In Art. 4, a provision stating that the US would send Czechoslovakia copies of compensation decisions together with their justification was added. In the existing text, they undertook to send only the names of the persons compensated. This would not allow the Czechoslovak authorities to find out the state of American property ˇ in the CSSR. 4. Amendments to Art. 8 and 9 were preliminarily agreed. Art. 8 from 1974 stipulated that the American Embassy in Prague would be able to use the 7 million crowns that were on its account with Živnostenská banka only after an agreement with the Ministry of Foreign

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Affairs. The American delegation demanded a complete change to this provision, because in such a form it gave the Czechoslovak side the opportunity to block these funds, and Congress would allegedly not approve of this. The Czechoslovak delegation was willing to ˇ alter the text such that the relevant funds would be used in the CSSR for the needs of the American Embassy in line with Czechoslovak law, provided that the American side agrees to the change in the text of Art. 9. The change of the text in Art. 9 was related to the provision stating that US will be able to withdraw Czechoslovak crowns from the amount of 1.5 million USD that the Czechoslovak side deposited on its account at Živnostenská banka, namely either according to the exchange rate at the time of deposit or according to the exchange rate at the time of withdrawal, according to which is more advantageous for them. This unusual provision could cause significant issues in the future; therefore, the question of what means ˇ will use to pay the exchange rate difference would have the ŠBCS to be addressed. 5. Art. 10 regulated the release of Czechoslovak property blocked in ˇ the US. The CSSR had documents for claims in the amount of 0.4 million USD. But according to unofficial information, more than 1.4 million USD was blocked in the US. Therefore, the Czechoslovak delegation insisted that the provision of Art. 10 be supplemented with a commitment from the US side to provide assistance in enforcing Czechoslovak claims for the return of the blocked property, especially to provide Czechoslovakia with its lists. In the end, the American side agreed to this, particularly when the Czechoslovak delegation conditioned its consent with the new wording of Art. 1 with the adoption of a new provision in Art. 10. 6. In Annexes A and B to the Agreement, which regulate the method of taking over the monetary gold and Czechoslovak cheques for the compensation of American property, the previously agreed method of handing over and receiving the gold in Switzerland was left as ˇ and the the only possible method, at the proposal of the ŠBCS Ministry of Finance. The US would never admit an agreement based on accepting cheques at a time when gold is on Czechoslovak territory and vice versa. The 1974 agreement, however, stipulated that a ˇ Czechoslovak letter signed by the Finance Minister of the CSSR to the relevant Swiss bank handling the takeover would be sent through

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the US government and would be irrevocable without the written ˇ consent of the US. According to the new text, the CSSR would send this letter directly to the Swiss bank; it would then only be ˇ possible to revoke it after an agreement between the CSSR and the US. The 1974 agreement further stipulated precisely the way the Czechoslovak gold was to be handed over. It defined the bank’s right of disposal and had provisions stipulating that if the cheques were not handed over and accepted, the gold would be returned to the Tripartite Commission. But it did not have similar provisions on the Czechoslovak cheques. It only obliged the Czechoslovak side to deliver them to the Swiss bank, without stipulating the purpose and obligation to return them, should the expected handover not take ˇ place. In practice, this would mean that the CSSR would have no legal right to the return of cheques worth almost 85 million USD if the US decided to thwart it on the issue of Czechoslovak gold at the last minute. Therefore, the new text was added to eliminate this danger. 7. The US delegation proposed that the gold that was to be transferred to Switzerland and deposited in a TGC account on behalf of the US, UK and French governments until it was handed over in order to fully secure its immunity from lawsuits in Swiss courts. Since this would worsen the legal status of Czechoslovak monetary gold, the Czechoslovak delegation reserved the right to assess this issue in detail. 8. Throughout the text of the Agreement and its annexes, a number of technical adjustments and clarifications were made by mutual agreement.33 However, the merry-go-round of negotiations for the return of gold did not end with the adoption of the text of the compensation agreement; it returned one more time, but only briefly, to the grounds of the Tripartite Commission and Congress. From 1 to 4 December 1981, a series of negotiations on the return of the Czechoslovak gold took place in Paris. Talks also ran bilaterally within the Tripartite Commission. Rozanne Ridgway led the American 33 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A, Information on expert negoti-

ˇ ations between the CSSR and the US on the text of the agreement on resolving financial and property law issues of both countries of 17 August 1981.

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delegation, Allan Montgomery the British one. France was represented by Jean Dalberto, its representative in the TGC, who also served as the commission chairman. The commission itself was officially represented by its Secretary General, Colin Harris. The Czechoslovak delegation was made up of Richard Král and Miroslav Kotora from the Department of International Law at the Ministry of Foreign Affairs, Jan Krejˇcí for the ˇ all experts Federal Ministry of Finance and Jiˇrí Nálevka for the ŠBCS, who had joined Jaroslav Žantovský in negotiations with the US. In Paris, the US first negotiated with France, then both together with the UK within the TGC. These talks focussed on the French–British demand ˇ that the CSSR fully assume all the risks associated with the moving of the gold to Switzerland. The negotiations then continued bilaterally: Czechoslovak–British and Czechoslovak–American. The British delegation refused to take responsibility for the risks associated with handing ˇ over gold in Switzerland and also insisted that the CSSR be responˇ sible. It further insisted that the CSSR explicitly relinquish its claims against the UK and the TGC if something unforeseen happened to the gold. The Czechoslovak delegation flatly rejected this. The entire British– Czechoslovak meeting in Paris took place in an atmosphere of tension, thanks to the nervousness of the British delegation, which responded with irritation at any mention of the Czechoslovak–American replacement agreement. After an emotional Czechoslovak argument about the moral, political and legal responsibility of the UK for the looting of the Czechoslovak gold, the British delegation adopted a compromise wording in which it did not insist on Czechoslovakia taking full responsibility. Negotiations between the Czechoslovak delegation and R. Ridgway’s delegation took place at the US Embassy shortly after negotiations with the UK. Ridgway reported on her talks with the French, who expressed themselves clearly—they did not want to be an obstacle to the handing over of the Czechoslovak gold. She also presented an approach for approving the compensation agreement in the US, which had been submitted to Congress on 30 November 1981. Before that, a special State Department team led by Lawrence S. Eagleburger, Deputy Secretary of State to Alexander M. Haig, discussed with the crucial members of Congress and with more interested senators and congressmen about how to ensure its accelerated negotiations. No problems were expected in the Senate, where the agreement should be approved without debate. In the

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House of Representatives, however, there are also strong votes against the agreement. Additional negotiations took place between the Czechoslovak delegation and its UK counterparts on 4 December 1981 at the Czechoslovak Embassy in Paris, where the provisions of the Czechoslovak–British compensation agreement, including the annexes, were discussed and most of the provisions were agreed on relatively quickly. The UK only wanted to shift the responsibility for the transport of gold fully onto the shoulders 34 The prepared agreement, for example, did not address ˇ of the CSSR. the issue of damage caused to Czechoslovakia by the Munich Agreement and the release of 23 tonnes of gold to Nazi Germany. Other issues did not seem to be controversial; both sides made compromises or accommodating steps. The British delegation made a non-binding commitment that the agreement could be signed during the visit of the British Deputy Minister of Foreign Affairs to Prague on 14–16 December 1981. ˇ The Paris negotiations between the CSSR and the Tripartite Commission also did not avoid technical issues about the takeover of Czechoslovak gold, and here four problem areas arose: 1. the mechanism for claiming any differences in the weight of gold awarded, which may arise from the fact that the gold bars and coins taken over do not have their prescribed purity. The TGC tried to reduce the significance of this issue by pointing out that thus far about 300 tonnes of gold had been distributed and there had been no complaints, or that the TGC cannot guarantee the purity of the coins and gold bars, because it has only what was entrusted to it in its administration. Ultimately, however, the commission acknowledged the legitimacy of the Czechoslovak request—even after the BOE representative confirmed that the Czechoslovak legal opinion was correct, that the very name “monetary gold” used in the text of the 1946 agreement meant that it must be pure gold. It suggested that the coins be examined prior to being handed over to the Czechoslovak side and, if some of them do not contain the prescribed amount of gold, to arrange for a remedy. The Czechoslovak delegation refused this, as this involved some one

34 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A, record of the meetings in Paris from 8 December 1981, p. 3 et seq.

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million coins and examining them would take 3–4 months, which ˇ would delay the return of gold to the CSSR. Here, the commission ˇ and the CSSR found no solution to this problem. The purity of the gold bricks was equally problematic. The commission was unable to answer the question of whether these bricks have internationally recognized purity features, i.e. whether they have the pertinent recognized certificates. 2. the Czechoslovak delegation pointed out that in the British note of 13 June 1958, it was informed that its share would be 18,433.4735 kg of gold, but the current weight is 18.4 tonnes. The commission explained that the difference of 33.4735 kg occurred because the amount of gold returned was rounded down to the nearest 50 kg. The commission also pointed out that 18.4 tonnes ˇ is just another deposit and that the CSSR will further receive about 33.5 kg in the final settlement, when the problem of Albanian gold is solved. 3. in the case of insuring the gold pending its handover to the Czechoslovak side, the TGC noted that it would ask the Swiss bank that is to arrange the transaction to draw up a specific proposal. The Czechoslovak side rejected this; it was Czechoslovak gold and therefore they wanted to pay the insurance themselves. This proposal was motivated by the fact that if a Czechoslovak insurance company participated in gold insurance, the costs for Czechoslovak would be significantly reduced. 4. the Czechoslovak side requested and finally, asserted the fundamental requirement that the wording expressing the Czechoslovak claims and the content of other essential documents must be the same as with other states.35 During the negotiations in Paris, the remaining problems regarding the UK were dealt with practically and the conditions were created for resolving the main issues related to the takeover of monetary gold in regard to the TGC. Thus, one important stage was closed. What steps should then follow on the Czechoslovak side?

35 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A, ibid, pp. 6–7.

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• The Federal Ministry of Foreign Affairs (FMZV) will submit to the Presidium of the Central Committee of the Communist Party and the Government the comprehensive material on the gold and the solution of open economic issues with the US and the UK with a proposal to sign the negotiated compensation agreements. • the FMZV will propose initialling the Czechoslovak–British agreement during the upcoming visit of the British Deputy Minister of Foreign Affairs to Prague. • the FMZV will propose to the TGC that the coins be examined in Prague by Czechoslovak experts with the participation of two experts-observers of the TGC. If coins are found that raise doubts about the gold content, they will be sealed and handed over to the Tripartite Commission for an expert review. ˇ FMZV and the Federal Ministry of Finance will elaborate • the ŠBCS, and submit to the TGC proposals for insuring the gold for its transport from New York and London to Switzerland and for its deposit in a Swiss bank until the transfer to the account of the Czechoslovak government. • the FMZV will negotiate the mechanism for the transaction with the Swiss Bank Corporation.36 The problematic ratification of the act on Czechoslovak compensation and monetary gold in the Senate and the House of Representatives took place on 10 and 15 December 1981.37 During the negotiations of draft law no. H.R.5125 (Czechoslovakian Claims Settlement Act of 1981) Congressmen Jonathan B. Bingham (State of New York, who introduced the law), Clement J. Zablocki (Chairman of the House Foreign Affairs Committee), Hamilton Fisch IV, Robert J. Lagomarsino, Bill E. Frenzel, Ed J. Derwinski, Henry J. Hyde, Don L. Bonker, Richard Ottinger and Benjamin A. Gilman spoke. Three members—Derwinski, Hyde and Frenzel—were against the adoption of the law. The arguments put forward in support of the bill were as follows:

36 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A, ibid, pp. 8–9. 37 NCSML, Cedar Rapids, f. Czechoslovak National Council of America (CNCA), box

no. 6, H.R.5125.

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• the draft compensation agreement for the American claimants means ˇ that the government of the CSSR will pay 81.5 million USD; this agreement is better than the agreement from 1974, in which Czechoslovakia had to pay only about 20 million USD; • by adopting the draft compensation agreement, the US has no commitment to provide the MFN, as was the case in 1974; • the draft compensation agreement is a more viable solution than the original proposal for the sale of Czechoslovak monetary gold and the satisfaction of American interest claimants; 81.5 million USD is the amount that would be achieved in 10 years of interest on the gold, if sold; • the advantage of the draft compensation agreement is the immediate ˇ payment of “cash” by the CSSR, which will enable the claimants to access the money as soon as possible; • such a solution in favour of the US was made possible by a bill on the sale of Czechoslovak gold (Wolff’s bill) and thus the government ˇ of the CSSR was convinced that Congress was serious about the sale. There were only two arguments against the adoption of draft law no. H.R.5125: they pointed out that not all the people who had lost their property in the last 37 years would be satisfied; and it was argued that in terms of monetary gold, this was the gold of the people, not the communist government, or that the Czechoslovak communist government does not represent the Czechoslovak people.38 This reason (i.e. the gold is not ˇ the property of the communists in the CSSR) was especially promoted by a part of the Czechoslovak political emigration in the US, those associated with the Chicago-based organization Czechoslovak Christian Democracy around the daily Hlasatel, which in December 1981 called on Illinois Senator Charles H. Percy to other lawmakers in Congress did not agree to give gold to communist Prague. At the same time, it proposed creating a so-called Czechoslovak Freedom Fund, which would be under the administration of the US Congress and would store gold in it until freedom returned to Czechoslovakia. On the other hand, the emigration associated in the most massive political organization of Czechoslovak exile in ˇ was silent, or in a the US, the Council of Free Czechoslovakia (RSC), letter to President Jimmy Carter on 25 March 1978, it expressed the

38 NCSML, Cedar Rapids, f. CNCA, box no. 6, H.R.5125.

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opinion that they did not intend to rule on the question of the final decision on how to deal with blocked gold.39 This inaction and indeˇ was shocking, and the chairman of the cision on the part of the RSC mentioned Czechoslovak Christian Democracy organization, Jan Kuncíˇr, basically called its representatives “useful idiots”.40 The US Congress eventually approved a law on Czechoslovak compensation, gold and other open economic and financial issues. The official announcement read: “Let it be known that the Senate and the House of Representatives of the US Congress agree with this act on the settlement of the so-called open economic and financial issues (which may be cited as the Czechoslovak Claims Settlement Act 1981). The Congress consents with the agreement between the US government and the government of Czechoslovakia on the settlement of open economic and financial issues, which was reached on 8 November 1981 in Prague”.41 After the assent of Congress, President Ronald Reagan signed the law on 29 December 1981, and on the following day, US ambassador to Prague Jack F. Matlock, Jr., informed the Czechoslovak Minister of Foreign Affairs Bohuslav Chnoupek ˇ of this fact. Minister Chnˇ oupek familˇ iarized the government of the CSSR regarding the status of negotiations on the gold in an extensive presentation at its meeting on 14 January 1982. His view of the current status had two basic levels—one propagandistic and the other pragmatic. For the sake of propaganda, he noted that the Czechoslovak side had been in a similar situation twice before, in 1964 and 1974, when the agreements were negotiated and initialled, but their implementation was prevented by reactionary circles in the American Congress. In the current matter, he saw that American citizens, who have been waiting for compensation for decades, have organized themselves into a pressure group and, through their legal representatives, recruited influential senators and congressmen. They supposedly had postponed political views and focussed on obtaining the greatest amount of compensation possible, either through the illegal sale of gold or through an agreement with the Czechoslovak side. According to Chnˇ oupek, the essence of the American approach was manifested in

39 Kuncíˇr, Jan. Operation Czechoslovak Gold, manuscript, Chicago, 4 April 1990. 40 Kuncíˇr, Jan. Operace …., p. 8. 41 NAR, f. Legal Advisor and Tripartite Commission, reel 6, Czechoslovakian Claims

Agreement Act of 1981.

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Congress at a joint meeting of both chambers on 15 December 1981. In the debate there the slogans of the Cold War were heard, including the fact that gold does not belong to the Czechoslovak government, that it belongs to the Czechoslovak people which is not represented by the current government. Ultimately, voices saying that compensation had to be resolved predominated, and Congress approved the agreement. Minister Chnˇ oupek further convinced the Prague government that there is currently no better solution regarding Czechoslovak monetary gold, because otherwise it may be sold off. If “Britain and the USA sell the gold,” the minister continued, “the Czechoslovak emigration in particular will benefit from this, as they will demand compensation for the property they left behind or had confiscated in Czechoslovakia”.42 Although Bohuslav Chnˇ oupek labelled the economic aspect of the gold recovery as secondary, he pragmatically pointed out that the return of monetary gold would increase Czechoslovakia’s foreign exchange reserves by 215 million USD (excluding the coins), and therefore he proposed that the government consent to the concluding of both agreements, British and American.43 The Czechoslovak government agreed at this meeting. The only positive of the approved agreement for Czechoslovakia was the American consent to the physical return of 18.4 tonnes of Czechoslovak monetary gold, moreover, with a value many times higher than the period when it was lost or when the great powers shared the first allocations from the “pool”. On the other hand, the greatest failure was that the country had not regained the most-favoured-nation clause. The agreement was signed in Prague on 29 January 1982 by Czechoslovak Minister of Foreign Affairs B. Chnoupek ˇ and American Ambassador J. Matlock,44 thus ending decades of talks on the open financial, economic and property issues between the two countries: one a pawn in the Kremlin’s orbit, the other a superpower on the opposite side of the 42 AMZV CR, ˇ f. MPO, Rokovania o …., 1980–1982, vol. I, part A, Presentation of the Minister of Foreign Affairs Bohuslav Chnoupek ˇ at a meeting of the Government of ˇ the CSSR on 14 January 1982. 43 AMZV CR, ˇ f. MPO, ibid. 44 On the same day, the Czechoslovak-British agreement was signed in Prague. Minister

ˇ Chnˇ oupek signed it on behalf of the CSSR and Ambassador John R. Rich on behalf of the UK.

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Atlantic. Prague for long years had unwisely tacked and literally speculated so much in an effort to get the most for itself, until it had “scorched” its own position. And the result? In the end, it set the precedence of signing the most unfavourable compensation agreement (“100 cents on the dollar”) for the nationalization and confiscation of the assets of US citizens and companies of all of Moscow’s satellites.

PART IV

The Gold at Home

CHAPTER 9

Operation “Return 82”

Abstract Prior to the signing of the agreement on open economic and financial issues and on gold, a few technical issues remained to be finetuned, and their resolution was to be arranged by authorized officials. They met on 14 January 1982 at the FMZV in Prague. The American working group was led by embassy attaché Martin Wenick, the Czechoslovak group by Richard Král, and the British group by chargé d’affaires Richard Thomas. The subject of the talks was the agreement on the reclamation procedure as well as insurance and measures to ensure the transaction’s security. Prior to the signing of the agreement on open economic and financial issues and on gold, a few technical issues remained to be fine-tuned, and their resolution was to be arranged by authorized officials. They met on 14 January 1982 at the FMZV in Prague. The American working group was led by embassy attaché Martin Wenick, the Czechoslovak group by Richard Král, and the British group by chargé d’affaires Richard Thomas.1 The subject of the talks was the agreement on the reclamation procedure as well as insurance and measures to ensure the transaction’s security. 1 The presented text does not follow the British participation in the negotiations and the signing of the Czechoslovak–British agreement itself, as Jan Kuklík has already described this issue in detail in the cited work.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Michálek, Nazi Germany and the Role of the US in the Fate of Czechoslovak Monetary Gold, https://doi.org/10.1007/978-3-031-38758-6_9

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Embassy advisor Wenick dispelled Czechoslovak fears of the gold lacking the prescribed purity by the fact that all gold bars to be handed over to Czechoslovakia have a properly internationally recognized label of purity, so the problem of control and reclamations is eliminated. As far as coins were concerned, the Tripartite Commission agreed with the Czechoslovak proposal that experts from the Swiss Bank Corporation (SBC) would be ˇ invited as observers when inspecting the coins in the CSSR. With regard to transaction insurance, the TGC rejected the Czechoslovak proposal that the gold be insured by the Czechoslovak State Insurance Company. Both the US and the UK feared that, in theory, the gold could be damaged or destroyed in transit and that the Czechoslovak government would then have its premiums paid but would then refuse to pay the agreed compensation. Therefore, they proposed a third party— a neutral Swiss insurance company—but the delegations did not reach a common position on this point. The third focal point of negotiations in Prague was measures to strengthen security. The US agreed that the transfer would take place on Saturday and also agreed that Czechoslovak experts would carry out a preliminary check in Switzerland before taking over the gold.2 One somewhat significant issue still remained open and that was setting the date of the “golden” operation. The method of taking over gold in Switzerland had been chosen as early as 1974 after an analysis which took into account mainly Swiss banking traditions. The truth is that the Czechoslovak side tried to push for another variant of the takeover in negotiations with the US in 1981. It proposed that the operation be carried out in Hungary, Romania, Yugoslavia or at one of the British or American bases in West Germany. ˇ The US categorically rejected these efforts, so the CSSR had to consent with the 1974 agreement as the most optimal method of all the possible variants that came under consideration. The various unavoidable risks associated with taking over gold were also interesting. Up to the moment, the gold is in Czechoslovak hands in Switzerland, these risks would be borne by the Tripartite Commission states—the US, the UK and France. Common risks, such as a plane crash, robbery, terrorist attack, etc., were to be covered by insurance. Insurance

2 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A, Information on Negotiations with Representatives of the US and the UK of 14 January 1982.

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was also to cover the possible seizure of gold by Swiss courts. An additional question remained open, however—the possibility of sequestration of the gold, i.e. a ban on the disposing of it until the right of a person who would file a lawsuit against the Czechoslovak state before a Swiss court to settle a certain claim has been resolved. When assessing this situation, or the threat of sequestration, the Czechoslovak side took three areas of facts into account: 1. The Swiss banking tradition was one of the pillars of the Swiss economy and the country’s international image. Customers considered the security, safety, discretion and protection of bank deposits to be its main features. If the Czechoslovak gold transaction did not go smoothly, this could jeopardize international confidence in the Swiss banking sector around the world. 2. The practice of the Swiss courts—although the immunity of the assets of foreign states in Switzerland was not explicitly regulated by law, the Swiss courts respected it in their practice. This was based on the concept of functional immunity, which was enshrined in international law and in the practice of many states. The sequestering and confiscation of a foreign state’s property was rejected by the Swiss courts, if such funds were intended to carry out the basic functions of a sovereign state. The courts also refused to sequester and confiscate other property of foreign states, if the claim arose in relation to the action of these states within the framework of state functions. Nationalization was also included in this category in Switzerland. 3. Bilateral seizure—a trade agreement from 1953 which limited the possibility of seizure of Czechoslovak property in Switzerland was ˇ still in force between the CSSR and Switzerland. It explicitly stated that the sequestering of Czechoslovak property “may be permitted only for private claims having a closer relationship with the Swiss Confederation”.3 Receivables towards Czechoslovak compaˇ or nies could not be asserted against the property of the ŠBCS against the property of the Czechoslovak state.

3 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A, The seizure of gold after its transfer to the account of the Czechoslovak government in Swiss Bank Corporation against possible interventions by Swiss courts, p. 2.

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From the above three facts, the Czechoslovak side concluded that the danger of the Czechoslovak monetary gold being confiscated in Switzerland was practically zero. This was also based, e.g. on the fact that the ˇ CSSR, as a state, had been a good client for Switzerland. Namely, it had a portion of its gold deposited in Swiss Banks, and in terms of quantity it exceeded the value of the gold that was to be issued to Czechoslovakia. The Czechoslovak side also informed the Swiss government of the planned transaction and asked for its cooperation, so that the entire event would not be considered a private interbank operation but as an act related to the performance of basic functions of a state, the so-called political gold statute, and therefore cannot be the subject of seizure or sequestering. It further asked the Swiss government to find out if any claim on the gold had been brought before a court in Switzerland. This possibility really did exist among emigrant circles, which protested sharply ˇ against the return of gold to the CSSR. To rule out the possibility of a last-minute attempt to seize the Czechoslovak gold, the Czechoslovak side sought to ensure that the operation took place on Saturday or Sunday, when the courts in Switzerland were not sitting. The place, date and method of taking over the gold, following an unofficial agreement with the US and the UK, remained secret. The Czechoslovak side was ˇ also prepared to transport gold to the CSSR on the day it was handed over. These specific matters, in addition to others related to the taking over of the gold, were discussed by the Czechoslovak FMZV delegation in Zurich on 18 January 1982 with representatives of the Swiss Ministry of Foreign Affairs and the SBC. The discussions ran in a constructive spirit, and the Swiss’s desire for a smooth handing over and taking over of the gold was evident. The director of the SBC unofficially announced that the bank had carried out much larger gold transactions in the past. He also recommended that no special security measures be taken at Zurich Airport, so as not to alert anyone to an exceptional event, and emphasized the need to minimize the number of people who would be informed of it. On 21 January 1982, the Czechoslovaks informed the diplomatic representatives of the US and UK governments in Prague about the results of their negotiations in Switzerland and they both agreed with them. Although the Swiss courts recognized the immunity of state property, the agreed Czechoslovak-Swiss measures to minimize the sequestration of the gold were assured by:

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1. the transaction taking place on a Saturday, 2. the gold being transported to Zurich on the night of Friday to Saturday and stored in a duty-free area at the airport, ˇ 3. the gold being transported to the CSSR on Saturday. The handing over and receiving of the gold takes place in sealed containers and not, as expected, according to individual gold bars and bags of coins. This would reduce the takeover act from 4 to 6 hours to just one or two hours, 4. so that a special Czechoslovak inspection would not have to be conducted when taking over the SBC gold and handing it over to a Czechoslovak representative, Czechoslovak experts will have access to the protected duty-free zone where the gold was to be stored, 5. the SBC will determine at the cantonal courts in Zurich and Kloten (the borders of the cantons passed through the centre of the airport) whether any sequestration order has been issued against the assets prior to the end of business on the Friday before the transaction occurs, 6. the agreed payment to the US and the UK will be made by handing over cheques. Payment by bank transfer, as originally envisaged, would require that the relevant banks in New York and London have staff present on the day the gold is received, and this would expand the range of people who needed to know of the transaction, 7. both the Swiss and Czechoslovak sides agreed to make minor adjustˇ ˇ ments to the CSSR—US and CSSR—UK compensation agreements, which would preclude the seizure of gold by Swiss courts before the gold is physically in Switzerland.4 The successful and helpful bilateral negotiations in Zurich associated with the return of Czechoslovak gold were complemented by others in ˇ Brussels on 26 and 27 January 1982 between the CSSR and the TGC. Representatives of the governments of the US and the UK as well as representatives of the Federal Reserve Bank, the BOE and the SBC also

4 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A, Securing the gold after its transfer to the account of the Czechoslovak government in Swiss Bank Corporation against possible interventions by Swiss courts, p. 3.

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took part in them, and the delegation of the Czechoslovak FMZV was led by Richard Král.5 The consensus talks were related to five areas. The first was the security of the transaction. All participants in the meeting agreed to carry out the transfer on a Saturday. The gold from London would be transported by the SwissAir on Friday evening at 8 p.m. The same would happen from New York, but arriving in Zurich on Saturday at 9:55 a.m. In the case of bad weather, the planes would land in Basel or Geneva, from where the gold would be immediately transferred to the duty-free zone of Zurich Airport. The takeover of gold in Zurich was to be speeded up by keeping the coins in sealed containers. Only their number, weight and the integrity of the container seals would be checked. Representatives of the Czechoslovak government would be present when the gold is taken over by SBC experts. The gold would then officially be handed over to the Czechoslovak representatives, and without a second check, loaded into two prepared Czechoslovak planes. A representative of the BOE would also be present during the takeover, and if any of the seals were broken during transport, he would check the contents of the ˇ and container and restore the seal together with the experts of the ŠBCS SBC. All participants in the planned operation undertook to keep the event as secret as possible. The second area was the inspection of the gold. The Tripartite ˇ Commission and the CSSR reached a common stance that the purity and weight of gold would be checked only in Prague, where containers and bags of gold were to be unsealed, including with the participation of experts from an independent Swiss institution. If differences between the claim and the received gold were found, the Czechoslovak side would submit a request to the TGC for payment of the difference. The text of such a request would be written jointly by both parties. The third area included gold insurance. In the end, the Czechoslovak side did not push for insurance to be provided by a Czechoslovak insurance company. The commission advocated that gold insurance be guaranteed by the organization that arranges its transport, i.e. the Swiss Bank SBC. The penultimate area of problems at the negotiating table in Brussels was the schedule for the individual parts of the transaction, which was 5 Other members of the Czechoslovak delegation at the negotiations with the Tripartite Commission in Brussels were Dr. Krejˇcí from the Ministry of Finance, Ing. Funnel for ˇ and Dr. Bayer, an advisor to the Czechoslovak embassy in Brussels. the ŠBCS

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arranged by the Czechoslovak side. The commission agreed with them on the fact that this should be done as soon as possible, i.e. on Saturday, 13 February 1982. Since that date was not suitable because the previous day was a holiday in the US, they agreed on 20 February 1982 as the date. The last area of the talks was related to the security of the transaction, i.e. the impossibility of bank transfers on Saturday, which required an adjustment in the text of the annexes to the compensation agreements. The final wording of their text was agreed upon in Brussels.6 The Brussels negotiations of the Czechoslovak and TGC delegations ran in a constructive atmosphere. Given that the compensation agreements were to be signed on 29 January 1982, negotiations went on non-stop. A series of details related to the Czechoslovak monetary gold transaction were discussed. On 2 February 1982, an exchange of notes ˇ ˇ was prepared, by which the CSSR—US and the CSSR—UK agreements entered into force. Their supporting articles specified that for 18.4 tonnes of gold, the Czechoslovak government would simultaneously issue an order to transfer 84,369,868.10 USD to the US Treasury Department and 24,266,619 Lstg to the UK Treasury. ˇ The “Agreement between the Government of the CSSR and the US Government on the Settlement of Certain Open Claims and Financial Issues ” itself, signed on 29 January in Prague by US ambassador to Czechoslovakia, Jack F. Matlock and Czechoslovak Minister Ing. Bohuslav Chnˇ oupek, contained 12 articles and two annexes. The articles stated that the Czechoslovak government agreed to pay the US government (and the US government agreed to accept) 81.5 million USD and released the US military’s crown account with Živnostenská banka, n. p., in the amount of 7,161,557 crowns and a special crown account of ˇ the US Embassy in Prague with the Ceskoslovenská obchodná banka, a. s., the so-called film account in the amount of 887,691 crowns. At the same time, the Czechoslovak government will pay the US government the following amounts to fully settle its obligations under the “US Army Surplus Purchase Agreement” (the so-called surplus agreement) of 28 May 1946: an initial payment of 2,869,868.10 USD and 2 million USD in two equal instalments on 1 July of each following year. On the

6 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A, Information on the negotiations in Brussels on issues related to the return of Czechoslovak gold.

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day of the settlement, the Czechoslovak government will deposit another ˇ 750,000 USD into the US government’s bank account in the CSSR. The remaining 750,000 USD will be deposited into this account on 1 July of the year following the year in which the settlement date occurred. The agreement will also specify the payment of interest.7 At the same time, it expressed that the distribution of the compensation to be received by the US will fall within the exclusive competence of the US government in accordance with American law. The US will provide the Czechoslovak government with the names of the claimants for compensation, as well as certificates of ownership of their nationalized property. ˇ In contrast, the US commitments to the CSSR were as follows: The US will inform the TGC of its consent to the release of gold to the Czechoslovak government, and the Czechoslovak government will obtain from the Tripartite Commission the deposit of 10,397.3164 kg of pure gold in coins and 8,002.6836 kg pure gold in bars. The agreement is assigned as the day of the settlement, i.e. the day that both sides will consider each other and all claims as settled, as the day of carrying out the release of the gold and the payment of the sum of 81.5 million USD and 2,869,868.10 USD. Annex “A” to the agreement specified, or summarized, the procedure for transferring 18.4 tonnes of gold through the Swiss Bank Corporation, the role of the Tripartite Commission and its general secretary and the role of the Czechoslovak proxy with powers of attorney. Annex “B” defined the SBC’s procedure and included the texts of official letters ˇ ˇ between the SBC and the CSSR, the governments of the CSSR, the US, the UK and France, the TGC and the SBC, which defined the agreed steps in handing over and taking over gold. The most interesting among ˇ them was that the SBC had a commitment to call a US—CSSR meeting, before which the Czechoslovak government would open an account in ˇ ˇ account and the name of the government of the CSSR for the ŠBCS deposit 81.5 million USD and 2,869,868.10 USD. As soon as the SBC gets the order from the Tripartite Commission to issue the gold, it will ˇ convene a meeting of the entrusted representatives of the US and CSSR governments in Switzerland. If, for any reason, the transfers are not made 7 Articles 1, 9 and 10 of the Agreement. The text of the entire agreement is published in ˇ the annex to the book. NA CR, f. Presidium of the Central Committee of the Communist ˇ Party 1963–1984 (02/1), vol. P28/82, point 10, or AMZV CR, f. MPO, Rokovania o …., vol. II, part A.

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at the said meeting or within seven days thereafter, or if such a meeting for the handover and receipt does not occur within 30 days, the SBC shall promptly arrange for the gold to be returned to the TGC on the accounts of Federal Reserve Bank and Bank of England from which it was delivered and to return the mentioned sums the Czechoslovak Government without delay. Shortly after the signing of the agreement, an exchang of diplomatic Czechoslovak-American notes took place, on 2 February 1982. The same process occurred at the level of Czechoslovak–British negotiations. Similarly, as with the US, Czechoslovakia also had some unresolved economic and financial issues with the UK. And likewise, the UK linked the return of Czechoslovak monetary gold to their settlement. ˇ The open issues between the CSSR and the UK were originally regulated contractually by two intergovernmental agreements from 28 September 1949. The first was an agreement to compensate for nationalized British property, by which the Czechoslovak side undertook to pay 8 million Lstg (this amount was paid to the British government in the 1950s). The second was the intergovernmental debt agreement, in which Prague promised to repay government loans provided by the British government in 1939–1945, in the amount of 19.7 million Lstg. Both agreements were disadvantageous for Czechoslovakia, but it had to accept them if it did not want to endanger the import of the necessary British raw materials and goods. The Czechoslovak side called this pressure “economic blackmail”, because it considered the amount of the global compensation for nationalization to be high and, in its view, the nature of intergovernmental debts was politically doubtful. Here, Prague had in mind in particular the so-called Munich loan of January 1939 for stabilizing the solvency of post-Munich Czechoslovakia and the loan of Beneš’s government in exile for maintaining its administration and Czechoslovak military units in the UK. In 1956, the British government recognized that the demand for repayment of intergovernmental debts was not fully objective in a situation when Czechoslovakia had not yet received its monetary gold and the damage caused by the war had not been reimbursed. Therefore, an agreement was made that the repayment of these debts would be suspended. After mutual negotiations, the British government followed up on this standoff with an official document, already mentioned several times in this text (aide-mémoire), from 13 June 1958 (note of the British Embassy

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in Prague no. 79), addressed to Deputy Minister of Foreign Affairs Jiˇrí Hájek. On behalf of the British and French representation in the Tripartite Commission, this note declared that the UK was willing to sign a document with the Czechoslovak government on the issuing of another allotment of Czechoslovak monetary gold (18,433.4733 kg), if the documents were signed by all three commission commissioners.8 If the British position was tied to the positive position of the US, then this was not an excuse for London, but a condition arising from the statute of the Tripartite Commission. After complex negotiations, which started in 1956 and ran almost continuously for 19 years, the Czechoslovak–British agreement was finalized on 12 November 1964. According to this agreement, the British government would give its consent to the commission to release the gold. On the other hand, the Czechoslovak government committed to deposit 1 million Lstg into a joint Czechoslovak–British BOE account within seven days of the gold transfer, and to begin negotiations with the British government on open financial issues within six weeks of the gold transfer. A part of the agreement was the provision that, if no agreement was reached within six months of these negotiations, the 1 million Lstg would be made available to the British Government. But due to the negative American stance (the known opposition to the release of gold), this 1964 agreement was never implemented and Czechoslovak–British negotiations were suspended. Afterwards followed a ˇ period of near silence between the UK and the CSSR that lasted 16 years. The British government came up with a new initiative in a note on 13 November 1980. Knowing Washington’s views and the Congressional pressure on Prague, it formally submitted a proposal to revise the November 1964 agreement to obtain more favourable conditions for paying British financial claims (the impulse was similar to that of the US) and not to link the payment of compensation to the physical transfer of ˇ gold to the CSSR, but only to its release in the Tripartite Commission. When delivering the note to the Ministry of Foreign Affairs the British ambassador explicitly stated that London would not release Czechoslovak gold until an agreement was reached on the settlement of open financial claims and openly declared that the amount of compensation should be increased to offset inflation in the British currency. 8 AMZV CR, ˇ f. MPO, Documents on the issue of the restitution of Czechoslovak monetary gold 1958–1979, note of the British Embassy in Prague of 13 June 1958.

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The Czechoslovak side rejected the British proposal and announced that it insist on compliance with the agreement of 12 November 1964, based on which the negotiations on open financial issues were to take place only after the transfer of monetary gold. It called this withdrawal from the agreement as a gross violation of international law, to which the British side did not officially respond. Thus, negotiations were suspended again. A new initiative came from the Czechoslovak side, and the trigger for this stance in Prague was the fear of the US selling the gold to satisfy American claimants for nationalized property. On 28 July 1981, Deputy Foreign Minister Meˇcislav Jablonský welcomed the British ambassador in Prague, John R. Rich, and informed him that the Czechoslovak–American negotiations had entered a final phase, which could, in his view, create the conditions for carrying out the Czechoslovak–British agreement of 1964. The British ambassador, referring to the note of 13 November 1980, stated that the UK did not feel bound by the 1964 agreement and proposed new negotiations on a property settlement, basing its position on the November note.9 Here a scenario similar to that of the negotiations with the US was outlined.10 The Czechoslovak side, driven into a corner by several circumstances, particularly, however, by the American threat to sell monetary gold, had no room for manoeuvring. Therefore, after Jablonský consulted with the secretary of the Central Committee of the Communist Party, Vasil Biˇlak, he agreed with the British proposal. From August to early November 1981, three rounds of expert Czechoslovak–British talks took place in Prague, and the initial meeting on 6 August 1981 showed no signs of early agreement. The British delegation declared that the 1964 agreement was not a possible basis for negotiations and proposed a different approach based on the notion that ˇ all British receivables towards the CSSR be settled by the Czechoslovak’s side with a 47 million Lstg deposit. This sum consisted of 19.7 9 AMZV CR, ˇ f. MPO, Rokovania o… 1980–1982, vol. III., part A, UK, Information on Czechoslovak-British property negotiations. 10 The US State Department intervened in the final negotiations on the form of the British–Czechoslovak agreement on 15 September 1981 with a memorandum addressed to both London and Prague. In this memorandum, it strongly called on the negotiating parties to resolve their bilateral open economic and financial problems as soon as possible and thus enable the fulfilment of the Czechoslovak-American compensation agreement and the return of the gold. This was, paradoxically, a rather unusual position for Washington, which had in fact blocked the return of Czechoslovak monetary gold on the grounds of the Tripartite Commission for decades. In Kuklík, Jan, p. 403.

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million Lstg to settle the intergovernmental debts recognized in the 1949 agreement, another 6.025 million Lstg to cover the private rights of ˇ British citizens against the CSSR, and 20.8 million Lstg to be paid by the Czechoslovak side as 3% interest on the two previous claims from 1954 to 30 June 1981. Prague likewise did not consider the 1964 agreement to be a fair way of resolving mutual debts, but proposed it as a starting point for the talks. It also pointed out what kind of debts made up the British demands and rejected the so-called Munich loan in particular. It also claimed that the British proposal dealt exclusively with British demands against Czechoslovakia and overlooked Czechoslovak claims, i.e. mainly a claim for compensation for the damage caused to Czechoslovakia by the loss of gold issued by London illegally to the Germans, as well as compensation for the blocked Czechoslovak assets in the UK.11 The Czechoslovak side did not agree with the 47 million Lstg as a global amount, of course, and proposed a settlement of 10.506 million Lstg.12 The biggest problem for the Czechoslovak side was the intergovernmental debts that occurred prior to and during the war, the so-called Munich and the so-called war loan. What was behind them? Shortly after Munich, the British government promised Czechoslovakia financial assistance of 30 million Lstg to overcome the difficulties that arose as a result of the Munich dictates. However, after several months of negotiations, the British offered Czechoslovakia assistance in the amount of 10 million Lstg, 6 million Lstg of which was a loan with one per cent interest and 4 million Lstg was a gift. Until the break-up of the republic on 15 March 1939, Czechoslovakia had drawn 2.5 million Lstg from the loan, and after the occupation, the remaining 3.5 million Lstg were blocked by the UK.13 After the war, the British government calculated the 11 AMZV CR, ˇ f. MPO, Rokovania o… 1980–1982, vol. III., part A, UK, Brief information on the start of Czechoslovak-British exploratory talks on open financial and property issues. 12 The amount of 10,506 million Lstg was distributed by the Czechoslovak side as follows: 1. civil expenditure of 5,854,000 (100%), 2. a military loan of 2,994,000 Lstg (40%), 3. one percent interest until 1954 in the amount of 908,000 Lstg and private legal demands for 750,000 Lstg. 13 From the blocked remainder of this loan, the UK created the Czech-Slovak Financial Claim Fund in January 1940, which was managed by the British Ministry of Finance. This fund was the subject of much speculation during the war, in which some members of British public life were involved.

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total amount of payments on the Munich loan at 4.43 million Lstg, which Czechoslovakia recognized. It needs to be added that after the occupation of Czechoslovakia in March 1939, a Czecho–Slovak Refugee Fund was created from the donation of 4 million Lstg, from which the British authorities paid support to Czech and Slovak refugees. After the war, 1.5 million Lstg remained on it, which the British government refused to hand over to Czechoslovakia and instead used to it pay support to the Czechoslovak post-February non-communist emigration. The second loan was the so-called war loan, which the British government provided to the Czechoslovak government in exile on 10 December 1940, and which was divided into civilian and military parts. The civilian part of the loan covered the expenses of the Czechoslovak exile administration in London and donations to Czechoslovak embassies as well as support for emigration. At the end of the war, a total of 5.854 million Lstg had been used for these purposes. The military part of this loan covered expenses for members of the Czechoslovak army in the UK.14 By the end of the war, 13.932 million Lstg had been spent on military expenses from the war loan, and in 1946, 6.447 million Lstg were deducted from this amount for the armaments that the UK had received from the US in the scope of a lend-and-lease programme. According to the Czechoslovak Ministry of Foreign Affairs, the Czechoslovak side had used 6.585 million Lstg for military purposes from the war loan. Another “package” of British demands, alongside both the mentioned loans, consisted of so-called private claims. From 1960 to the summer of 1981, the British sent to Czechoslovakia in 13 stages several hundred claims for compensation for British property that had been affected in some way by Czechoslovak measures. Their total value was calculated at 6.025 million Lstg, though according to Czechoslovak data, compensation was only possible in a small number of cases totalling 750,000 Lstg.

14 There were 14,003 members of the Czechoslovak Armed Forces, 5623 of whom were in the Czechoslovak Armoured Brigade in the Middle East and 3563 in the British Royal Air Force in the UK. Czechoslovak soldiers were subject to British military command, and the Czechoslovak side undertook to cover all expenses associated with the armament and maintenance of Czechoslovak soldiers from the loan. By another agreement of 31 January 1943, both sides agreed that from this date the Czechoslovak side will not pay anything for the armaments and material expenses of Czechoslovak soldiers and will continue to pay only personal expenses, i.e. main salaries. At the same time, the Czechoslovak side undertook to return the armaments after the war.

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According to the British side, the sum of 6,025 million Lstg consisted of six items: 1. Compensation claims for real estate in the amount of Lstg 3.977 million (a total of 315 properties). According to the Federal ˇ Ministry of Finance of the CSSR, compensation was only possible in 48 cases with a total value of 750,000 Lstg, and according to the Legal Department at the Ministry of Foreign Affairs, the right to compensation in other cases was not in line with the applicable Czechoslovak legal norms nor with current international practice. These were free properties that the owners could dispose of, properties put into national administration and which would be revoked at the owner’s request, property that had been declared forfeited by the owners (by emigration) and property that had been settled by the 1949 agreement. 2. Compensation claims for movables in the amount of 266,000 Lstg. These were furnishings, jewellery, paintings left in Czechoslovakia by people who had fled the Nazis for racial reasons. These were items seized by the Gestapo as Jewish property; therefore, the Czechoslovak side refused to take responsibility for this category of losses. 3. Compensation claims for losses caused by the 1953 monetary reform totalling 453,000 Lstg. The Czechoslovaks also refused to accept this and did not compensate anyone for losses caused by the monetary reform. 4. Compensation claims for losses to British owners of forfeited Czechoslovak bonds in the amount of 555,000 Lstg. These were values cancelled by the monetary reform; therefore, Prague also refused to accept them. 5. Compensation for blocked British receivables from Czechoslovak subjects totalling 292,000 Lstg. These were various outstanding receivables for the supply of goods to Czechoslovak companies just before the outbreak of Second World War. The Czechoslovak side considered it appropriate to resolve these claims. 6. Claims from various other titles in the amount of 561,000 Lstg. These were pension insurance, mortgages and private loans. In Prague’s view, these had been resolved by the 1949 agreement or

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ˇ had expired for other reasons, so the CSSR did not want to recognize compensation for them, though in individual cases, according to the Czechoslovak side, it would be possible to accept them.15 And what were the Czechoslovak claims against Great Britain? These were concentrated in three main areas: 1. By an act of the British Parliament of 27 March 1939, all Czechoslovak property in the UK and the receivables of Czechoslovak entities were blocked. London refused to provide a list of these assets and receivables, so Prague did not even know their value, though it was estimated to be 1 million Lstg. In the last negotiations, the British government has expressed a willingness to lift the blocking restriction. The Czechoslovak side wanted to get the British government to transfer the managed assets to the Czechoslovak government, which would itself compensate its subjects (the American side had proposed a similar scenario to Prague with compensation for American property). 2. A compensation claim caused by the issuing of the so-called Basel gold. The genesis of this gold in the BIS account at the BOE and the BIS’s order to transfer 23.1 tonnes to the Reichsbank was recalled here. After consulting the British government, the BOE complied with this order. The balance of 5.2 tonnes of gold in the BOE account, transferred to the National Bank in Amsterdam, was ˇ after the war. The Tripartite Commission returned to the NBCS acknowledged to the Czechoslovak Republic nearly 44 tonnes, of which the UK, by permitting the unlawful release of 23.1 tonnes to the Germans, caused an irreversible loss of 10.2 tonnes. Namely, the Tripartite Commission acknowledged compensation for only 12.9 tonnes, i.e. 55.7% of the gold issued by the British BOE. The British government had never accepted responsibility for this loss. Although it was difficult to defend the legal claim against the UK for compensation for the loss of 10.2 tonnes of gold, according to the Czechoslovak side, it was possible to use moral and political responsibility in negotiations. 15 AMZV CR, ˇ f. MPO, Rokovania o… 1980–1982, vol. III., part A, The United Kingdom, On the issue of Czechoslovak-British financial and property law negotiations, pp. 5–6.

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3. In the past, in negotiations with the British the responsibility of the UK for damage caused to Czechoslovakia by the Munich Agreement, estimated at 40 billion crowns after the war, had been pointed out. The Czechoslovak side proposed using this argument in the present, too,16 though it had no hope of success, because there was no compensation for losses of this nature in relation to the main culprit of the war—Germany. The next rounds of negotiations nevertheless indicated where the agreement would get to, or who held the better trump cards in their hands. This was clearly the British. As it turned out, an agreement with the UK could only be signed in the amount of 25 million Lstg in compensation for its claims. This was not very advantageous for the Czechoslovaks, but if they wanted back their gold, which had emotional, political and financial value, they had to adjust. Further, there was a real danger that the US would sell gold in order to meet the demands of its claimants and the emigration. Therefore, the Czechoslovak side accepted the British proposals, which it confirmed during meetings of experts on ˇ 11–13 November 1981 in London. The government of the CSSR was willing to provide the UK with 24,971,427 Lstg to compensate for all the claims. Thus, it was willing to increase the intergovernmental debt payment by one per cent interest for the period from 15 January 1954 to 31 July 1981 in the amount of 3.75 million Lstg and to increase the compensation for private claims by 1.153 million Lstg. At the same time, it refused to pay anything for the so-called Munich loan and expressed reservations about paying the loan for the Czechoslovak military units. The Czechoslovak side called this the final Czechoslovak offer and said it will pay the stated amounts if the British side satisfactorily resolves the Czechoslovak claims. The British delegation of experts agreed with the Czechoslovak offer. Then, the Czechoslovak side put forth its demands: payment for blocked assets and receivables (after a sharp exchange of views, the British side accepted the full value of these blocked assets in the amount of 495,813 Lstg and the full value of Czechoslovak blocked receivables in the amount of 90,600 Lstg). Then, the Czechoslovak side brought forth its demand for interest on these receivables, and the 16 AMZV CR, ˇ f. MPO, Rokovania o… 1980–1982, vol. III., part A, The United Kingdom, On the issue of Czechoslovak-British financial and property law negotiations, pp. 7–8.

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British side agreed to pay interest in the amount of 118,995 Lstg. In total, London was to provide Prague with blocked assets and receivables, including interest, totalling 704,808 Lstg, by which the compensation that Czechoslovakia had to pay to the UK was reduced to 24,266,619 Lstg.17 After finding a consensus, both delegations prepared the basic articles of the text of the agreement, which was to address all open financial issues. Additional technical discussions related to the mechanism for the transfer of the gold and the British pounds, insurance issues, which ˇ were simultaneously addressed at the level of the CSSR—US and the ˇ CSSR—TGC. An agreement on the settlement of certain open claims ˇ and financial issues between the UK and the CSSR was signed, as was the “American” agreement, on 29 January 1982. The transfer of the Czechoslovak monetary gold deposited in the UK to Switzerland took place, together with the transfer of gold from the US on 20 February 1982. The return of Czechoslovak monetary gold was a political matter practically from the very start. After the Prague communist coup, the Western powers refused to release the Czechoslovak gold as a show of disagreement with the Czechoslovak political direction and saw in it, the US in particular (and the UK, more or less), a tool that would permit them to settle the open economic and financial problems with Czechoslovakia, in the case of the US, particularly for adequate and effective compensation for nationalized and confiscated property in Czechoslovakia, and in the case of the UK particularly for the repayment of loans. Understandably, the communist government in Prague also tried to use the issue of returning gold for the purposes of propaganda. The Communist Party devoted considerable attention to gold at home, because its loss was related to the most tragic period in the recent history of the ˇ people of Czechoslovakia. Therefore, the communist leaders in the CSSR set the task of elaborating a concept of media propaganda, which had as its main aim the effort to use political aspects, the historical justification ˇ of the foreign policy orientation of the CSSR, to show in a sharp negative the essence of government policy in the West. The propaganda of the ˇ CSSR, according to the prepared concept, was to focus on support for

17 AMZV CR, ˇ f. MPO, Rokovania o… 1980–1982, vol. III., part A, The United Kingdom, Information on the course and results of the fourth round of property negotiations with the UK from 11 to 13 November 1981.

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lifting a domestic emotional wave. Informational media and Czechoslovak representatives were to follow six basic theses: 1. In 1938, the Western powers sacrificed Czechoslovakia to Hitler with a policy of appeasement, which resulted in the break-up of the state in the spring of 1939. The Western powers helped Hitler acquire a significant portion of the Czechoslovak gold stored abroad. This was 44 tonnes, with the help of which Germany bought strategic raw materials in neutral states, which allowed it to wage a long war that killed millions of people. 2. At the end of the war, the Western Allies found part of the hidden monetary gold in Germany; they signed a reparations agreement in Paris, which included the return of monetary gold within the Tripartite Commission, with 24.5 tonnes falling to Czechoslovakia. 3. Most countries received their share of the gold in the years 1947– 1978; Czechoslovakia got only 6.1 tonnes, and the balance was deposited in the US and the UK, and under various pretexts, they refused to return it. 4. For 30 years, the Czechoslovak government sought to have the gold returned, showing a willingness to combine gold with compensation for nationalized American property and the repayment of British loans. Twice the US, in 1964 and 1974, refused to recognize an agreement reached. 5. Negotiations were difficult in 1981, and an agreement was finally reached. 6. The return of the looted Czechoslovak monetary gold resolved one of the last problems that arose in connection with the Second World War. Prague subsequently proposed specific steps for guiding Czechoslovak journalism, as follows: • on 16 February 1982 to carry out a briefing for the Czechoslovak media, with details of the historical background and current policy, • to prepare factual material and distribute it by means of the ˇ Czechoslovak News Agency (CTK), • to make a documentary film on the return of gold using archival materials relating to Munich, to 1939 and to February 1948; to

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use footage from the signing of compensation agreements, the act of taking over gold in Switzerland, its transport to Prague and its storage, on the day the gold is delivered to Prague, to publish a report on TV and to use an interview with the Minister of Foreign Affairs on TV, who will explain the aspects of gold’s return, some 2–3 days after the return of the gold, to put a discussion on TV among Czechoslovak gold experts, including information on the amount of gold and the historical background of its theft, in the following 2–3 days, put on TV an interview with the chairman ˇ Ing. Jan Stejskal, on the role and importance of gold, of ŠBCS, to enable commentators, on the basis of materials and data, to produce their own articles and comments and to publish them in the press.18

It is possible to describe the proposed steps of Czechoslovak communist propaganda in this matter as balanced and well-prepared. They were intended to provoke a wave of emotions in the population that an injustice committed in Czechoslovakia had finally been removed. The propaganda was, of course, supposed to identify the imperialist West, led by the US, as a one-sided culprit. On the other hand, however, the act of returning gold represented an act of international calibre. If the Czechoslovak side no longer wanted to use this event publicly or in the media, it can be assumed that it did so intentionally, fearing that the campaign against the West would be “over-salted” and that it would provoke an unexpected adverse response. The flow of the events around the return of the gold took a rapid turn in mid-February 1982. The operation named “Return 82” took place on 20 February 1982 at Zurich Airport. It was commanded by Major General Ján Pješˇcak from the Federal Ministry of the Interior (FMV) on behalf of the Czechoslovak side. The gold unloaded from planes arriving from New York and London appeared on the airport runway. First, the containers with bars, then those with the bags of coins. After their transfer

18 AMZV CR, ˇ f. MPO, Rokovania o …., vol. II, part A, preparation of journalism in connection with the return of Czechoslovak gold on 8 February 1982.

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to the Czechoslovak aircraft, they were flown to Prague.19 Together they comprised 639 gold bars, as well as 749 bags of gold coins from London and 67 bags of gold coins from New York, and the total current market value of gold was around 250 million USD. In addition to the already mentioned international dimension (Czechoslovakia—US, the UK, the Tripartite Commission), the final preparations for resolving the issues related to the return of gold also had an internal or domestic Czechoslovak dimension. This was mainly associated with the physical transport of gold from Switzerland and its safe ˇ in Prague. The task of carrying out these storage in the safes of the ŠBCS steps was entrusted to the Federal Ministry of the Interior on the basis of ˇ the Government Resolution of the CSSR No. 22 of 14 January 1982. The scenario itself for the preparation of the transport of the gold to Czechoslovakia (with the code name “Return 82”) began to materialize at a meeting with the 1st Deputy Minister of the Interior, Major General. JUDr. Ján Kováˇc on 1 February 1982.20 In the introduction to the meeting, a government agent informed about the state of affairs. He summarized the known facts on the agreed date of transport of the gold from the US and the UK to Switzerland, about its storage in the customs area of Zurich Airport, on the planned act of taking over, checking the weight and seals of containers holding the gold, on demonstrating the financial transfer to the US and the UK with the power of disposal and on the subsequent loading of the gold onto Czechoslovak aircraft and their departure to Prague. In an effort to avoid complications, those present ˇ negotiate in Zurich on miniproposed that representatives of the ŠBCS mizing the possibility of a court seizure of the gold by Swiss courts. The dimensions and weight of the individual parts of the cargo were also to be specified, lists made of persons taking part in the event, and plans written

19 Tibitanzl, Jiˇrí. Zlato zpátky doma [The Gold Is Back Home]. In Signál no. 13, 1982, 10 March 1982. 20 The FMV was represented at the meeting by 1st Deputy Minister Major General Ján Kováˇc, Deputy Minister Maj. Gen. Ján Pješˇcak, Chief of the XI National Security ˇ Corps (ZNB) Maj. Gen. Bohumil Molnár. On behalf of the Government of the CSSR, ˇ its General Director Government Plenipotentiary Richard Král was present; from the ŠBCS Josef Macháˇcek, Director of Foreign Economic Administration Ing. Jaroslav Kroh and Ing. Jiˇrí Šulc. Archive of the Security Forces (ABS), Prague, f. A 33, a.j. 127. Minutes of the Return 82 meeting of 1 February 1982.

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up with an exact time sequence of acts and measures, including responses to possible unforeseen events. Three TU 154 B-2 aircraft were designated for the transport of cargo, one of which also had to be used for the return flight of the entire Czechoslovak delegation. A new interdepartmental meeting at the FMV in Prague took place with an identical composition on 11 February 1982. Ján Kováˇc informed that in terms of its own transport the event is prepared in detail. Richard Král gave a detailed report on the talks that had taken place in Zurich on the previous two days, acquainting those present with the prepared final variant for taking over the gold in Switzerland until it was loaded onto the Ministry of the Interior aircraft. He pointed out that a change had been made, which was related to the refusal of the Swiss Bank SBC to deposit the Czechoslovak money intended as compensation for the US. They therefore had agreed that this financial transaction would take place in London through the Bank of England. During the handover ceremony, a BOE employee will be present in Zurich, through whom an order to London will be issued to the US on the day of the transaction. This would mean an additional intermediary involved in the whole operation, but according to Král, there was no other alternative. Jaroslav Kroh from ˇ explained the method of packing and securing the gold for its the ŠBCS loading onto the Czechoslovak aircraft. The gold from the US was to be transported on standardized wooden pallets measuring 80 × 120 cm and weighing 25 kg. The gold bars will be fixed on these pallets in two layers, and the total height, including the pallet, should not exceed 40 cm, with the weight of one pallet around one tonne. There should also be a separate pallet with 60 bags of gold, which will be stored in sealed boxes. The total weight of this pallet was to be about 200 kg. Thus, in total, there would be eight single-tonne and one two-hundred-kilogram pallets. The gold from the UK was to be stored on the same types of pallets. Since these were coins, they were to be stored in bags and put into sealed boxes. In total, this was to be 18 pallets of 600 kg each.21 The loading of gold on the Czechoslovak airplanes was to be done by their crews using forklifts.

21 ABS, Prague, f. A 33, a.j. 127. Minutes of the meeting of the interdepartmental commission for the operation Return 82 of 11 February 1982.

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The mentioned inter-ministerial meeting also touched on other issues, including e.g. the issue of doubling the radio connection from Switzerˇ land to the CSSR during the transaction and transport. Further, the question of the Swiss Bank’s responsibility for the Czechoslovak gold at the time of its own transaction, i.e. whether this liability lasts until the loading of the Czechoslovak aircraft. In this case, the Swiss side was liable for the gold until it was loaded and the consignment note was signed by the captains of the Czechoslovak aircraft. This was a common international practice on the transporter’s liability even at the time of loading. The FMV already bore responsibility for transporting the gold on the Zurich—Prague route. At the time of gold’s unloading in Prague and its transport from the airport to the bank’s vaults, the responsibility also lay on the shoulders of FMV, specifically on the Head of the National Security Corps (ZNB, also as State Security Office, ŠtB) Administration of the Capital City of Prague and the Central Bohemian Region.22 The entire operation was classified “PT-ZD” (top secret—of special importance). In line with the authorization of the Minister of Interior, Jaromír Obzina, his 1st Deputy Major General Ján Kováˇc and Deputy Major General Ján Pješˇcak were responsible for overseeing the safe transport of ˇ gold from abroad to the place determined in the CSSR. On the day of the gold’s transport, these two generals were the only ones authorized to issue instructions to the lower security forces. Following both of these interdepartmental meetings at the FMV, instructions continued for the lower security forces that were to be directly involved in the “Return 82” operation. These were mainly ZNB regional administrations within the Ministry of Interior. Therefore, on 12 February 1982, the 1st Deputy Minister of Interior Major General Kováˇc, summoned the heads of the security forces and23 informed them of the imminent return of the Czechoslovak monetary gold, originally looted by the Nazis during the war and then held in the US and the UK, that it would need to be transported and protected and that the ZNB regional administration departments are also going to take part. According to the 22 Maj. Gen. Josef Ripl. 23 The meetings of the 1st Deputy Minister of Interior in Prague on 12 February 1982

were attended by the Heads of Regional Offices of the ZNB: Major General Josef Ripl, Col. Josef Kaštánek, Lt. Col. František Kincl, Col. Karel Kupec, Col. Otto Sedlák, Col. ˇ Gabriel Benedek, Col. Ludovít Koval, Col. Alojz Lorenc, Col. Miroslav Blazek and Col. Stanislav Nezval.

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issued Order of the Minister of Interior, the selected regional administrations were to create special emergency units, whose task would be to guard gold-loaded airplanes in the event of a stopover at one of the designated Czechoslovak airports. During the mentioned meeting of 12 February 1982, the heads of the regional administrations received several basic general and specific instructions: 1. To ensure the selection of physically fit and responsible members of the ZNB for the intervention groups and to carefully select their commanders. 2. According to the situation in the territory, consider supplementing the armaments or strengthening the intervention unit in regard to readiness and action. 3. The entire operation is of a “top secret—special importance” nature and to treat the information accordingly. To familiarize only a limited group of ZNB officials with the operation, and only to the extent necessary to fulfil the assigned task. 4. The intervention units will be put on standby after the announcement of the slogan “carry out Return 82” issued by the Minister of Interior or his 1st Deputy. 5. Beginning on this date (12 February 1982), the Heads of Regional Offices of the ZNB will issue instructions for the gathering and reporting of knowledge related to the transportation of gold. To report findings that could endanger transport safety. 6. To pay special attention to the activities of “criminally harmful persons” and ensure the control of the most active on the day of transport. 7. All Heads shall put operational groups on alert for the case of pursuing a culprit or the release of hostages. These groups should be equipped with special weapons and equipment (dog handler, sniper and pyrotechnician). 8. The Prague Regional Head will coordinate the procedure with other units in the city; the other heads must immediately report the stopover of the airplanes with the cargo and inform about the measures taken. 9. The Operation Coordination Centre, the so-called main controlling staff under the leadership of the 1st Deputy J. Kováˇc, will be

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deployed on the day of transport in the FMV building (Letná) and further instructions will be issued from there.24 The FMV issued special instructions to the heads of the ZNB’s regional administrations for the activities of intervention units in the form of a separate document, according to which the heads of regional administrations (including the head of the ZNB Administration for Bratislava and the West Slovakian Region) should within 240 minutes of receiving the password “carry out Return 82” put a 40-member group of ZNB members on standby at the location of the ZNB administration. Their task was, in the event of landing of aircraft transporting gold at the reserve airport, to move to the place of landing and, in cooperation with the transport commander, to ensure external security protection and guarding of the aircraft until departure. The following were designated ˇ ˇ as backup airports: Plzen—Línˇ ˇ e, Ceské Budˇejovice—Ceské Budˇejovice, Ústí nad Labem—Žatec, Hradec Králové—Hradec Králové and Pardubice, Brno—Brno, Ostrava—Ostrava and Pˇrerov, Bratislava—Bratislava, Košice—Košice and Poprad. In the case of a landing at a military airport, the protection and guarding of the aircraft was to be provided in cooperation with the military counterintelligence (VKR).25 As part of the special instructions form, the FMV, the heads of the ZNB regional administrations were further required to have 25-member group of ZNBs ready at the district levels on site within the set time limit of 240 minutes after receiving the slogan “carry out Return 82”. In the case of the Administration of Bratislava and the West Slovakian

24 ABS, Prague, f. A 33, a. j. 127. Minutes of the meeting of the 1st Deputy Minister ˇ of Interior of the CSSR with the Heads of Regional Offices of the ZNB on 12 February 1982, no. j. N / Z-0096/82. 25 When determining the technical transport plans the FMV took into account, in the event of bad weather or other unforeseen circumstances, the landing of gold-loaded ˇ aircraft at the military airports in Dobˇrany, Ceské Budˇejovice, Hradec Králové, Bechynˇe, ˇ Žatec, Cáslav, Pardubice, Pˇrerov and Kbely. The Minister of Interior Jaromír Obzina informed Minister of National Defence, General Martin Dzúr, of this in an undated letter in mid-February 1982. At the same time, he asked him to issue an order according to which the commanders of designated airports would be notified of the possibility of FMV aircraft landing between 17 February until further notice. At the same time, he demanded that these airport commanders allow armed members of the ZNB to enter the airport to guard the aircraft in cooperation with the relevant Military Counter Intelligence Corpse (VKR) staff. ABS, Prague, f. A 33, arch. j. 127.

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Region, these were the district administrations of the ZNB Bratislavavidiek, Trnava and Senica, and in the case of the Administration of Prague and the Central Bohemian Region these were the district administrations of ZNB Benešov and Prague-East. For the regional administration of ZNB Brno, the readiness concerned the ZNB district administrations of Brno-venkov, Hodonín, Tˇrebíˇc and Jihlava, and for the regional administration of ZNB Hradec Králové this was the ZNB district administration in Havlíˇckuv ˚ Brod.26 These groups of ZNB members were to be deployed on the basis of a special order of the 1st Deputy Minister of Interior, according to the situation. Other open issues that had to be resolved for the successful conducting of the whole event involved providing transport in Prague, the issue of radio communication (a dual connection by radio stations and portable radios) and the registration and control of the movement of the loaded vehicles. At the same time, it was necessary to differentiate the passwords for the preparedness and the deployment of the security groups, and their complete coordination. All associated orders and instructions on the day of the transport were to be issued by the 1st Deputy Minister of the Interior, J. Kováˇc. If the plane had to land outside of Prague, the operation was to be managed by Deputy Minister J. Pješˇcak. Also related to this was the question of whether, in the event of a breakdown or other reasons for the landing of one airplane outside Prague, should all the airplanes land together, or was their separation being planned. The archive material does not mention alternative solutions at all. Prague, of course, had a special position in the operation “Return 82”. This followed from the fact that the main gold transport scenario was to take place in its streets, and the elaboration of a plan to secure the entire operation by the FMV authorities corresponded to this. On the basis of the above-mentioned Order of the Minister of Interior, the Head of the ZNB Administration of the Capital City of Prague and the Central Bohemian Region, Major General Josef Ripl, issued order no. 4 on 16 February 1982 to ensure the tasks related to the security measures of the operation. In it, he announced the entry of ZNB members into the ZNB (StB) building in Bartolomˇejská Street on 20 February and their subsequent move to the designated locations. He established a headquarters 26 ABS, Prague, f. A 33, arch. j. 127. Special instructions for the Heads of the ZNB for Prague and the Central Bohemian Region and the S ZNB for Bratislava and the West Slovakian Region and for the Heads of the KS ZNB from 12 February 1982.

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for security measures and set deadlines for briefing group commanders of individual sections—stations. The main part of J. Ripl’s order was a regulation addressed separately to the head of each of the Prague units concerned to secure the operation: 1. The Head of the ŠtB Administration Prague will organize the monitoring of responses to the signed agreement between Czechoslovakia, the US and the UK on the settlement of open financial issues, or on the return of Czechoslovak monetary gold and responses to possible hostile actions related to the takeover and transport of the gold and will inform daily of important findings and signals immediately. Also, two armoured personnel carriers with crews of five members of the State Security Service, armed with vz. 58 submachine guns will go to the area of the old Prague-Ruzynˇe airport at 3 p.m. on 20 February. 2. On 20 February, the Head of the City ZNB Administration will earmark the vehicles of operational control officers to escort armoured personnel carriers from the ZNB Emergency Regiment to designated stations; further he will select and put on standby 10 members of the City ZNB Administration and 50 members of the ZNB Special Emergency Unit as a reserve on Charles Square. He will also designate the necessary numbers of members of law enforcement, transport and operational services to secure Operation “Return 82” and ensure the placement of signs for diverting traffic ˇ and roadblocks on Štˇepánska, Žitná and Reznická streets. 3. The Head of the ZNB Administration headquarters will coordinate and operationally manage all tasks during the preparation of security measures. 4. On 20 February, the Deputy Head of the ZNB Administration for material and technical supply will ensure the delivery of 25 motor vehicles equipped with radios on frequency 334, their good technical condition and sufficient fuel. He will also provide 50 vz. 58 fully loaded submachine guns and 24 hand grenades, which will be placed at the ŠtB headquarters on Bartolomˇejská Street. He will further ensure the construction of a radio controlling station at the ZNB Administration’s operating centre with a frequency of 334 and additional monitoring via frequency 335, as well as 150 portable radio stations on both frequencies.

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5. The Head of the District Administration of ZNB Prague 1 will ensure from 5 p.m. the clearing of Štˇepánska Street, from V Jámˇe ˇ yard in Štˇepánská Street up to Wenceslaus Square, and the ŠBCS Street of parked vehicles. 6. The Head of the District Administration of ZNB Prague-East, Benešov, will on that same day in the afternoon put on standby a 25-member group armed with vz. 61 submachine guns and 10 portable radios, as well as with a means of transport (bus) and with two passenger cars with radios.27 The security plan for operation “Return 82” on the territory of Prague had two basic variants. The first anticipated the connection of the old ˇ on Štˇepánská Street. This variant for the gold Ruzynˇe airport to the ŠBCS transport was divided into 15 segments, which were secured by members of the operational survey, law enforcement and transport services and the ZNB Administration for Prague and the Central Bohemian Region. It assumed two routes, both of which were fully staffed and technically staffed by 467 members of the ZNB (382 first, 85-second route). There were also backups.28 The second variant assumed the connection between Kbely Airport and ˇ It was divided into 11 segments and 419 ZNB members also the ŠBCS. secured two different routes (the first 367, the second 52 members).29 In summary, nearly 900 members of the ZNB were involved in securing the “Prague” stage of the return of the monetary gold. An integral part of the preparations for the operation was the plan for ˇ the air transport of the gold from Zurich, Switzerland, to the CSSR. The FMN Aviation Administration (the so-called 8th ZNB Administration 27 ABS, Prague, f. A 33, arch. j. 127. Order no. 4 of the Head of the ZNB Administration for Prague and the Central Bohemian Region, Maj. Gen. Josef Ripl, of 16 February 1982, cˇ . j. ŠT-0058/01-82. 28 ABS, Prague, f. A 33, arch. j. 127. Plan of security measures for the operation “Return 82” for the route of the old airport Ruzynˇe to the State Bank of Czechoslovakia, Prague 1, Štˇepánska Street, cˇ . j. ŠT-0044/01-82, approved by the Head of the ZNB for Prague and the Central Bohemian Region. 29 ABS, Prague, f. A 33, arch. j. 127. Plan of security measures for the operation “Return 82” for the route from Kbely airport to the State Bank of Czechoslovakia, Prague 1, Štˇepánska Street, cˇ . j. ŠT-0044/01-82, approved by the Head of the ZNB for Prague and the Central Bohemian Region.

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under the leadership of Col. Gustav Hartman) was responsible for its elaboration and implementation. The ZNB Aviation Administration provided transport with three TU 154 B-2 airplanes, two of which were intended for the actual gold transport and one was a backup in the event of an unforeseen technical failure or circumstances that would force the use of another airplane. This backup airplane was also to transport personnel who were entrusted with the actual work for the entire operation. The cargo planes contained only the crew and the necessary number of security escorts. The aim of the mentioned flight plan was to ensure the necessary tasks related to readying the aircraft (1), the flight and flight documentation (2), the connection with the base and the continuous transmission of flight information (3), the loading and unloading of planes (4), the guarding of cargo planes in the event of a landing at a reserve airport (5), a process for the case of an emergency (6) and the provision of airplanes for the needs of the 14th Administration of the FMV (7). For ensuring this network of operation objectives, Col. Gustav Hartman set the following tasks: 1. To ensure the operability of all TU 154 B-2 airplanes so that no periodic inspections are required between 10 and 28 February 1982. In the event of a breakdown, to immediately fix it, and in the case of a more serious malfunction, to provide an IL-62 M airplane as a backup. To equip all airplanes with spare parts such that each airplane will have a different set to ensure a greater opportunity for possible repair or replacement of the defective part in Zurich. 2. To ensure the necessary flight documentation, including the elaboration of documents for a diplomatic note to permit flights through the GDR, Switzerland and Austria. To prepare documentation on ˇ the reserve airports of the CSSR, including military ones, and to familiarize the crews about the possible landing of the TU 154 B-2 airplanes at these airports. To discuss with the Director General of ˇ Czechoslovak Airlines (CSA) the preparation of documentation for ˇ the flight and transportation as a CSA charter flight. 3. The radio connection of the airplanes will be handled using ˇ Mikron onboard radio stations for long-distance CSA communication (Gonio Prague). The delivery of information to the control

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centre in Prague will be ensured by member 8th administration ˇ FMV, who will be in long-distance communication with CSA (Gonio), from where he will forward all messages by telephone to the responsible officer at the operational staff. To process the agreed passwords for the delivery of special information using the airplane radio stations and to develop a connection plan with an exact and detailed flight schedule. 4. The distribution of the cargo in the airplanes shall be determined by the commander according to the balancing diagram. The cargo will be loaded by authorized technicians with the participation of ˇ employee. The unloading of the cargo will an authorized ŠBCS be performed by the designated technicians of the FMV Aviation Administration with the direct participation of the airplane ˇ employee. To secure the commander and the responsible ŠBCS necessary means and tools for loading and unloading. 5. In the event of landing at a reserve airport, the airplane commander will issue weapons to the crew and escorts and arrange for the aircraft to be guarded until protection is taken over by another designated ZNB unit. Upon landing at a reserve airport, the commander will make contact with the airport management and discuss the necessary measures according to the situation. He will provide technical assistance and replenishment of aviation fuel. 6. In the case of any extraordinary event of a technical, security or other nature, to proceed according to the applicable regulations and directives and to pursue the goal of transporting the cargo to the ˇ CSSR or to some other socialist state. In the case of a hijacking, to secure the safety of the hostages and capture those linked to the blackmail and see to the departure of aircraft with the cargo to the ˇ CSSR. In the event of a landing at an airport outside Czechoslovakia, to report by radio to Gonio Prague, to inform about the procedure and measures and to request contact with the diplomatic representative of the Czechoslovak state, to request guarding of the airplane, stating that it officially carries a valuable consignment. To perform the guarding of the cargo according to the circumstances. 7. On the day of transport, for the needs of the 14th FMV administration, to secure in Prague one JAK-40 airplane and one Mi-8 and

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Mi-2 helicopter each, and in Bratislava one JAK-40 airplane and one Mi-8 helicopter.30 From these points in the plan, the one that spoke of possible hostages, blackmail and departure in the case of a forced landing abroad, or at ˇ backup airports in the CSSR in the event of abduction, were of particular interest. The most experienced FMV pilots—Jiˇrí Voboˇril, Václav Forst and Zdenˇek Fridrich—were selected as captains of aircraft intended for the transport of gold. In addition to the pilot, each aircraft was also to have a 5-member crew and an armed escort. The Ministry of Foreign Affairs submitted an application for the issue of overflight permits through the GDR, Switzerland and Austria, while the transport of valuables weighing 20,000 kg was indicated as the purpose of the flight and the government ˇ of the CSSR as the customer. The documents for the transport of the cargo, for each aircraft separately, had to contain an air waybill, a so-called cargo manifest, a passenger list and a delivery note. Each of the passengers on the Prague—Zurich—Prague route had to sign a declaration of confidentiality.31 In terms of international air corridors, the organization of the flight from Prague was a direct route through the GDR, back through the GDR, Austria and Bratislava. While the direct flight lasted 50 minutes and represented a distance of 595 km, return through Bratislava lasted up to 1.5 hours with a distance of 1020 km. The borders of Switzerland and the GDR were crossed over Lake Constance, and the flight path continued south below Munich. The border between the GDR and Austria was crossed near Salzburg, continuing through Linz, and further north from Vienna via Bratislava, from where the flight continued to Hodonín and Brno to Prague.

30 ABS, Prague, f. A 33, arch. j. 127. Plan for the ensuring air transport in the operation “Return 82” of 10 February 1982, cˇ . j. LS-0011/01-82. The following were responsible for fulfilment of the individual parts of the plan for air transport of the gold: Head of the FMV Air Administration Gustav Hartman, as well as its departments heads Jaroslav Opat, Jiˇrí Voboˇril, Václav Anˇciˇcka, Jiˇrí Stuj, Štefan Pelec and the pilots of the airplanes. 31 “Declaration. I declare that I will keep in strict confidence all the facts that I will be acquainted with in operation Return. I will only discuss issues that I will be entrusted with to a specified extent. I am aware of the criminal consequences of violating this regulation. Date, signature”. ABS, ibid.

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A part of the flight plan for the whole operation was also mentioned the radio connection of the aircraft with the headquarters in Prague via the Mikron radio station on the specified frequencies. In addition, a duplicate connection through Gonio Prague was in operation. The FMV Aviation Administration developed a coding table to be used only through Gonio. The table contained the text of the report and its encrypted codes in 10 points: 1. Loading is delayed versus the plan. Loading started—We will have a delay of about…. We will start in…. 2. Error-free loading process —We are having no problems. 3. Finished loading without errors —We are preparing for departure. 4. Departure probably in…—given without a problem in open language. 5. Aircraft take-off in….—ditto. 6. A member of the delegation abducted as a hostage (name)—A member of the delegation (crew), comrade (name), has become ill. 7. An armed attack against a person (name) at the airport —A member of the delegation (crew), comrade (name), is having serious difficulties. 8. An armed attack at the airport against the aircraft —We will not refuel in Bratislava. 9. Pyrotechnic findings on the consignment —The packaging was damaged on one consignment. 10. Anonymous report on the destructive provocation on the plane—We received the weather report in Bratislava.32 The mentioned coding document does not have a high informative value; it should rather be understood as of informational interest to fill in the details of the operation. In the case of an emergency, it could have played an important role in the operation. Operation “Return 82” itself was initiated after the preparatory stage by the departure of the delegation and aircraft to Zurich on 17 February

32 Numeric codes were also established for this table. Items 1 to 5 could also be presented in open language. Items 7 and 8 had to be submitted to the air traffic controllers for documentation in accordance with international flight regulations. ABS, Prague, ibid.

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1982.33 The very next day, the heads of the delegation—Government ˇ expert group—submitted Plenipotentiary Richard Král and the ŠBCS power-of-attorney to the Swiss Bank Corporation (SBC). Richard Král subsequently held talks with US Government Plenipotentiary Ridgway and with the UK delegation. This involved a mutual check of the readiness for the transaction and also a check of the necessary documents. Král was still negotiating with the representatives of the TGC on that day, and together they confirmed the completeness of the needed documents to be signed during the transaction, i.e. decisions on the allocation of Czechoslovak gold, etc. According to Král’s telegram to Prague, which was also immediately distributed with the documents in copies to Gustav Husák, Vasil Biˇlak and Lubomír Štrougal, the negotiations with all interested parties had come to an agreement on the details of Saturday’s planned transaction.34 After a long discussion, the Czechoslovak request—that the entire transaction be completed only after the bank has instructed by telephone its representative at the airport to hand over the order to issue gold in the duty-free warehouse—was accepted. The ˇ reprereceiving of this order will be confirmed by telephone to the ŠBCS sentative who will be at the airport. The acceptance of this Czechoslovak request ran into disagreement from the SBC, which was based on the idea that its responsibility ends with the handing over of gold to the account of the Czechoslovak government and the role of the SBC must ˇ In the end, a procedure was be additionally agreed upon with the ŠBCS. agreed with the SBC that enabled the gold to be loaded of as soon as it was transferred to the Czechoslovak account and the relevant documents were exchanged. The entire operation was thus conducted in an immediate time sequence. On the following day, discussions with the airport’s 33 The delegation from Prague to Zurich was led by Deputy Minister of the Interior Major General Ján Pješˇcak. It had 55 members, 21 of whom were aviation personnel (plus G. Hartman), 12 were the security group (four in each aircraft), 4 pyrotechnicians, ˇ staff, as well as a doctor and a nurse. Of the total number of delegation members, 3 ŠBCS more than a third (21) were members of the ZNB, who were to perform e.g. intelligence tasks (Bedˇrich Souˇcek, Ludvík Novák, Vladimír Šilha) or tasks linked to securing the crew and cargo of aircraft (Alois Dvoˇrák, Pavel Bˇreský, Jaroslav Soukup, Miroslav Sedláˇcek, Karel Bouda, Jiˇrí Kuˇcera, Miloš Tinák, Milan Urban, Jaroslav Weinfurtner, Josef Kohout, Josef Kubaˇcák, Václav Vacek) or other tasks. ABS, Prague, f. A 33, arch. j. 135. List of ZNB members travelling abroad for the “Return 82” operation. 34 ABS, Prague, f. A 33, arch. j. 138. Telegram no. 02 R. Král from Zurich to Prague 18 February 1982, cˇ . j. 042754.

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duty-free warehouse and with the SwissAir led to the contractual assurance that the gold would be loaded quickly. The Czechoslovak and Swiss sides also agreed on the final version of the document with the SBC. The Swiss Air plane carrying the Czechoslovak gold from London arrived in Zurich in the evening hours of Friday, 19 February. The company’s second plane, flying the cargo of gold from New York, arrived on the morning of Saturday, 20 February. Then a quantitative control of the gold by SBC experts followed with the participation of representaˇ The time needed to load the gold into the tives of TGC and the ŠBCS. two Czechoslovak aircraft was kept to a minimum. The loaded planes departed Zurich on the same day, 20 February 1982, shortly after seven p.m. The flight to Prague ran without complications, as did the transport ˇ vaults. Operation “Return 82” was successful. from Prague to the ŠBCS ˇ The first qualitative inspection of the returned gold took place in ŠBCS on 2–4 March 1982, with the participation of Felix Kesl and Petr R. Hiltbrunner, two SBC experts from Zurich. This was followed by a more detailed examination of the gold on 8–19 March, then 22–25 March and 2 April 1982. This phase of qualitative control of the gold quality aimed not only to verify the quality or weight of minted and unminted gold, but include the sorting of coins according to individual types, values, number of pieces, quality grades and commercial valuation. The Czechoslovak banking experts first checked the minted gold. From the originally delivered 749 boxes of minted gold from the BOE and 67 sealed bags from the Federal Reserve Bank, 1669 bags were created ˇ regulations. Out of the 1,395,808 after processing in line with ŠBCS gold coins received, 7 were counterfeits (two 5-ruble, three 20-mark coins and two 20-dollar coins). The actual weight of the gold coins received was 10,397.219765 kg. From the overall number and structure of the coins (subtracting the seven counterfeits) a current sales value of 210,842,760.00 USD was determined, which corresponded to the amount of cast gold (bars) weighing 18,046.9 kg. The difference of 7,649.7 kg of pure gold represented an agio of 73.57%, which was mostly due to the high value of Gdansk ´ guilders (agio up to 11,520.14%) and Czechoslovak ducats (agio 155.91%). The selling price of the Gdansk ´ guilders, mainly those from 1930, was high, at 10,399 USD per coin of a pure weight of 7.32 g. The entire issue of these guilders remained in the Reichsbank and only a few pieces were released into circulation. The ˇ CSSR received 3848 pieces of Gdansk ´ guilders in the year of mintage

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1930 and 177 pieces with the year of mintage 1923 from the TGC, and ˇ in order to preserve the rarity and high price of these coins, the ŠBCS proposed only gradual and limited sales. All the returned gold coins were packed into boxes and stored in the bank’s vaults. The numismatically rare coins (Gdansk ´ guilders, Kremnica ducats, Czech ducats) were divided in terms of the need to sell, others according to the years of minting. The gold bars were stored in boxes and transported to the appropriate storage areas.35 The final inspection of the minted gold returned from abroad for transport to the vaults was completed on 30 September 1982. The coins were put into 1658 bags, which were stored in 256 boxes, each weighing around 55 kg and marked with numbers and the letter “R”. The gold bars were likewise ready for shipment to the vaults by the given date. They were stored in 128 boxes, each weighing about 68 kg. Upon weighing the bars again, some were found to be less pure than originally reported. However, with a total weight of unminted gold of around 10 tonnes, these were slight differences of just 0.1295 kg.36 At that time, or as of 31 March 1983, Czechoslovakia had in its monetary reserves of gold, operational gold and government foreign exchange reserves a total of 106,811.781 kg37 ; four and three-quarters of a year later, this was less 856.555 kg.38 The estimated value of the gold actually returned and received from the US and the UK after inspection in March 1982, with an average market value of 363 USD per troy ounce39 was 304,337,850 USD. Compared to the Czechoslovak costs that followed from the agreements carried out in the amount of over 130 million dollars, the end result was very financially advantageous for Czechoslovakia.

35 ACNB, ˇ f. State Bank of Czechoslovakia, precious metals, 1982, box no. 1, Jan ˇ on the result of the quality control of gold minted on Stejskal, Chairman of the ŠBCS, 8–19 March 1982, cˇ . j. 0759/82 from 20 April 1982. 36 ACNB, ˇ f. State Bank of Czechoslovakia, precious metals, 1982, box no. 1, Report on the preparation of gold castings for the expedition of 30 September 1982, cˇ . j. 00724/ 82. 37 ACNB, ˇ f. State Bank of Czechoslovakia, State of stores of gold, silver and platinum as of 31 March 1983. 38 ACNB, ˇ f. State Bank of Czechoslovakia, State of stores of gold, silver and platinum as of 31 December 1987. 39 Almost 40 years later (in May 2021), the market value of one troy ounce of pure gold was almost 1900 USD.

9

OPERATION “RETURN 82”

317

The return of the gold to Prague at the beginning of 1982 was the end of its more than 40 years of “wandering”. Its turbulent history still arouses interest today, not least because gold remains gold, undoubtedly lucrative world medium. And its fate is part of modern Czechoslovak history.40

40 In 1989, according to official data, Czechoslovakia had 102,425.192282 kg of mone-

tary gold worth almost 6.5 billion Czechoslovak crowns. After the division of the state, gold was distributed in a ratio of 2:1. Thus, 63,289 kg remained in the Czech Republic and 39,137 kg went to Slovakia. In 1998, the Tripartite Commission ceased to exist. The last instalment for the Czech Republic weighed about 330 kg of gold, which the Czechs sold for 100 million Czech crowns. They then donated 5 million Czech crowns from this to compensate the victims of the Holocaust, and the remaining 95 million Czech crowns were accounted for as extraordinary income from the current management of the state budget. In November 1999, the Czech Republic decided and in February 2000 returned 4.1 tonnes of retained gold to the Slovak National Bank. Slovakia at that time had 35.1 tonnes of gold. In October 2020, Slovakia had 31.7 tonnes within the gold reserve (at the current price of gold at the time it was 1.67 billion euros), of which only 14.7 tonnes were in the domestic vaults of the National Bank of Slovakia. The Czech Republic sold most of its gold reserve at the end of the 1990s, retaining only 13.7 tonnes and bonds. For a comparison, in May 2021 the US owned over 8133 tonnes, Germany 3362 tonnes, Italy 2452 tonnes and France 2436 tonnes. Total gold reserves at central banks around the world were around 35,000 tonnes.

Conclusion

Even today, gold is an important international medium that is willingly accepted but less offered around the world. This is generally the case for all countries, rich or poor, and all players, small or large, in world politics. It has a fixed place in the life of every country. Czechoslovakia lost 45 tonnes of its monetary gold in connection with the Second World War. Of this, Prague was forced to hand over 15 tonnes to Nazi Germany after Munich to cover currency withdrawn in the border areas. Another 23 tonnes from the gold that the Czechoslovak Republic had deposited in the Bank of England were issued by the British government to Hitler through the Basel Bank for International Settlements, after the occupation of the trunk of the republic in March 1939. The rest was looted by Nazis in Czechoslovak banks. The fate of the Czechoslovak monetary gold was not unique, however. The gold of other occupied countries suffered similar fates. All the gold, both owned and stolen, that the Nazis did not consume, was ultimately hidden in the western part of Germany at the end of the war, where it was discovered and secured by advancing American troops. At the post-war peace negotiations, the anti-Hitler coalition states decided that the gold would be returned to the countries from which it had been forcibly confiscated. Since the gold found could not cover all the losses, the Western powers came to an agreement in January 1946 that each country will

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Michálek, Nazi Germany and the Role of the US in the Fate of Czechoslovak Monetary Gold, https://doi.org/10.1007/978-3-031-38758-6

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get a proportion of the amount they had lost. To implement this agreement, the Tripartite Commission for the Restitution of Monetary Gold was established, made up of representatives of the governments of the US, the UK and France. During the years 1947–1948, gold was returned to most of the affected countries. After several promptings, Czechoslovakia received 6.1 tonnes in May 1948. The releasing of the remaining 18,433 tonnes of gold was delayed, however, and refused under various pretexts (notably unresolved compensation for US national assets in the US after the Second World War). Only after a great wave of the Cold War had receded in the mid-1950s was it possible to enter into constructive negotiations on the issue of Czechoslovak gold. France never had any serious problems with this. After several promptings from Prague, the British government announced in October 1955 that it had recommended the issuing of gold in the Tripartite Gold Commission, but that one of the governments of this commission (the US) was not willing to do so. After complex negotiations, London announced in June 1958 that the commission had recognized the Czechoslovak claim for compensation for the loss of almost 44 tonnes of gold, but due to the negative attitude of the US, the return of an aliquot of 18,433 tonnes would not take place. What was the background, or what influenced the negative stance of the US? Washington linked the release of the monetary gold to the addressing of long-standing bilateral property rights issues, in particular compensation for American property nationalized in Czechoslovakia in 1945. The compensation it demanded in the 1950s was considered disproportionately exaggerated by the then-political leadership in Prague. But in the early 1960s, a consensus managed to be found on how to resolve all open economic and financial issues between the two countries, including the return of the gold, and the text of the relevant compensation agreement was even drafted and initialled in 1964. A part of it was the explicit consent of the US to the return of Czechoslovak monetary gold. In that same year, France also agreed to return the gold in a protocol regulating Czechoslovak–French relations, and in the first third of that year, a Czechoslovak–British protocol was signed, which included the express consent of Her Majesty’s Government to issue the gold. The physical release of the gold did not take place, however, because the Czechoslovak–American compensation agreement was not approved by the US Congress.

CONCLUSION

321

The hope of returning the gold again revived in 1974, when the text of a new compensation agreement with the US was agreed. However, this, too, was rejected by the US Congress. Further intensive negotiations with the US did not take place until 1980–1981, when the parties reached a new agreement on mutual financial and property issues, mainly due to the tough stance of Ronald Reagan’s new administration. A similar agreement was reached in negotiations with the UK. In both cases, the respective governments undertook to give their consent, or to do everyˇ thing necessary so that the monetary gold could be issued to the CSSR. At the same time as it was received, the agreed payment for their various outstanding receivables was handed over to the representatives of both states. Of the subject gold, weighing 18.4 tonnes, 10.2 tonnes were stored in London and 8.2 tonnes in New York. The handover and receipt itself took place in February 1982 at Zurich Airport. The deposit of Czechoslovak monetary gold in the vault of the National Bank in Prague, which had been an international political affair since the beginning, became a reality after forty long years. Its 40-year story can be summed up in three words: seized—blocked—returned.

Archive Sources (and Files) Archív bezpeˇcnostních složek (ABS), Praha (Security Service Archive, Prague) • f. A33 (akcia Návrat 82) ˇ ˇ Archiv Ceské národní banky (ACNB), Praha (Archive of Czech National Bank, Prague) ˇ • f. Národná banka cˇ eskoslovenská (NBCS) ˇ • f. Štátna banka cˇ eskoslovenská (ŠBCS), kovy drahé Archiv Kanceláˇre prezidenta republiky (AKPR), Praha (Archive of the Office of Prezident, Prague) • f. Tajné (T)

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ˇ Archiv Ministerstva zahraniˇcních vˇecí Ceskej republiky (AMZV ˇ CR), Praha (Archive of the Ministry of Foreign Affairs of the Czech Republic, Prague) • • • • • • • • • •

f. f. f. f. f. f. f. f. f. f.

Generálny sekretariát—A (GS-A) 1945–1954 Generálny sekretariát—kabinet (GS-K) 1945–1954 Medzinárodno-právny odbor (MPO) Právny odbor-tajné (POT) 1955–1969 Teritoriálny odbor-dokumentace (TOD), USA, 1955–1960 Teritoriálny odbor—obyˇcajné (TOO), USA, 1945–1959 Teritoriálny odbor—tajné (TOT), USA, 1945–1954 Teritoriálny odbor—tajné (TOT), USA, 1960–1964 Teritoriálny odbor—tajné (TOT), USA, 1965–1969 Zastupiteˇlský úrad—Washington (ZÚ-W), politické správy

Archív Národnej banky Slovenska (ANBS), Bratislava (Archive of the National Bank of Slovakia, Bratislava) ˇ • f. Národná banka Ceskoslovenská, Oblastný ústav pre Slovensko v Bratislave Library of Congress, Mannuscript Division (LCMD), Washington, DC • f. Steinhardt Papers ˇ ˇ Národní archiv Ceské republiky (NA CR), Praha (National Archive of the Czech Republic, Prague) • • • • • • •

f. f. f. f. f. f. f.

100/1 ˇ KSC-ÚV 1945–1989, medzinárodné oddelenie (100/3) 100/24 Ministerstvo priemyslu ˇ 1951–1954 (02/5) Politický sekretariát ÚV KSC Úrad predsedníctva vlády—tajné (ÚPV-T) 1945–1959 Antonín Zápotocký

CONCLUSION

• • • •

f. f. f. f.

323

Ministerstvo zahraniˇcných vecí-výstrižkový archív (MZV-VA) Ministerstvo zahraniˇcného obchodu 1945–1989 Ministerstvo financií—tajné ˇ Správy o schôdzach NZ RCS

National Czech and Slovak Museum and Library (NCSML), Cedar Rapids, OH f. Czechoslovak National Council of America (CNCA) National Archives and Records (NAR), College Park, MD • f. Rg 59, US Department of State towards internal affairs of Czechoslovakia • f. Tripartite Commission for the Restitution of Monetary Gold • f. Legal Advisor and the Tripartite Commission for the Restitution of Monetary Gold • f. The Czechoslovakia Crisis, 1968, The State Department' s Crisis Files • f. CIA Records

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Chnˇ oupek, Bohuslav. Memoáre in claris. Bratislava: Belimex, 1998. Judt, Tony. Povojnová Európa. História po roku 1945. Bratislava, 2007. Kissinger, Henry. Umˇení diplomace Od Richelieua k pádu Berlínské zdi. Praha: Prostor, 1996. Krejˇcí, Jan. Nˇekolik poznámek k historii navrácení cˇ eskoslovenského menového zlata. In Právník, Praha, roˇc. 135, 1996/7. Kubu, ˚ Eduard. Czechoslovak Gold Reserves and their Surrender to Nazi Germany. In Nazi Gold. London, 1998. Kuklík, Jan. Do poslední pence… Praha: Karolinum, 2007. Kuncíˇr, Jan. Operace cˇ eskoslovenské zlato, rukopisný cˇ lánok, Chicago, 4. dubna 1990. Listy, roˇc.III., August 1973, cˇ . 4. Lundestad, Geir. East, West, North, South. Major developments in international politics 1945–1990. Oslo: University Press, 1991. Mezinárodní souvislosti cˇeskoslovenské krize 1967–1970. (eds. Vondrová, Jitka– Navrátil, Jaroslav) díl 4 / 1, 2, Brno: Doplnˇek, 1995. Michálek, Slavomír—Štefanský, Michal. Age of Fear. Cold War and its Influence on Czechoslovakia. Stuttgart: Ibidem verlag, 2019. Michálek, Slavomír. Nádeje a vytriezvenia, cˇeskoslovensko-americké hospodárske vztˇahy v rokoch 1945–1951. Bratislava: Veda, 1995. Michálek, Slavomír. Prípad Oatis, cˇeskoslovenský komunistický režim verzus dopisovatelˇ Associated Press. Bratislava: ÚPN, 2005. Pell, Claiborne. Czechoslovakia 1968, Report to the Committee on Foreign Relations United States Senate. Washington DC, July 1968. ˇ Procházka, Zdenˇek. Hospodárska válka USA proti Ceskoslovensku. Praha, 1946. Rood, Karen L. (ed). History in Dispute. Volume 1, The Cold War. Farmington Hills: St. James Press, 2007. Sayer, Ian—Botting, Douglas. Nazi Gold: The Story of the World’s greatest Robbery and it’s Aftermath. London: Congdon & Weed, 1984. Settlement of Claims Against Czechoslovakia. Hearing and Markup before the Subcommittees on Europe and the Middle East and on International Economic Policy and Trade of the Committee on Foreign Affairs House of Representatives Ninety-Sixth Congress, Second Session on H.R. 7338, August 19 and September 30, 1980. Washington, DC: US Government printing Office, 1981. Schmidt, Dana Adams. Annatomy of Satellite. Boston, 1952. ˇ Schvarc, Michal—Hallon, Ludovít. Kauza Karvaš. Bratislava: Historický ústav SAV, 2014. Smetana, Vít. Británie a cˇ eskoslovenské zlato. In Soudobé dˇejiny 4/2001. Taber, George M. Chasing Gold. New York: Pegasus Books, 2014. Thomas, Evan. Ikes Bluff. President Eisenhower’s Secret Battle to Save the World. New York: Little Brown and Co., 2012.

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Tibitanzl, Jiˇrí. Zlato zpátky doma. In: Signál cˇ . 13, 1982, 10. bˇrezna 1982. ˇ Trhlík, Zdenˇek. Spojené státy a Ceskoslovensko. Vztahy v létech 1918–1988. Praha: Ústav mezinárodních vztahu, 1988. Vencovský, František—Jindra, Zdenˇek.—Pulpán, ˚ Karel—Dvoˇrák, Petr a kol. ˇ Dˇejiny bankovnictví v Ceských zemích. Praha: Bankovní institut, 1999. Warner, George. The Study of Cold War Origins. In Diplomacy and Statecraft. Vol. I., No. 3, London, 1990. ij

Index

A Acheson, Dean, 110, 125, 140, 141 Allison, John M., 156, 157, 183 Anˇciˇcka, Václav, 312 Armitage, John, 235, 236 Armstrong, O.K., 140 Auboin, Roger, 17 Augenthaler, Zdenˇek, 108 Augstein, Hanuš (Stephen, John A.), 157, 158, 162, 163, 180 Augstein, Otto, 157–162, 166–168, 183, 185, 190, 218 B Bacílek, Karol, 152 Barák, Rudolf, 88 Barry, Robert L., 254 Beamer, John W., 140 Beam, Jacob D., 90, 91, 202–204, 212 Benedek, Gabriel, 304 Beneš, Edvard, 27, 88, 212, 291 Bernstein, Bernard, 15, 57

Beyen, Johan Willem, 17, 18 Biˇlak, Vasil, 225, 266, 293, 314 Bingham, Jonathan B., 275 Blažek, Miroslav, 304 Bohlen, Charles E., 202, 203, 207, 208 Bonker, Don L., 275 Bouda, Karel, 314 Bˇreský, Pavel, 314 Briggs, Ellis O., 138, 139, 142, 175 Bruins, John L., 172 Byrd, Jr., Harry F., 230, 232–234 Byrne, Thomas R., 241, 242 Bystrický, Rudolf, 118, 119 C Cabe, Thomas B., 123 Carter, Jimmy, 276 ˇ Cerník, Oldˇrich, 203 Chmela, Leopold, 6–8, 10, 118 Chnˇ oupek, Bohuslav, vii, 215, 223, 225, 232, 236, 277, 278, 289 Clay, Lucius D., 17

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Michálek, Nazi Germany and the Role of the US in the Fate of Czechoslovak Monetary Gold, https://doi.org/10.1007/978-3-031-38758-6

327

328

INDEX

Clayton, William, 102 Clementis, Vladimír, 106, 119, 126, 127 Conable, Barber, 249 Cooper, Richard N., 243

D Dalberto, Jean, 272 Daubek, George A., 147 David, Václav, 81, 88, 194 de Gaulle, Charles, 196 Derwinski, Edward J., 275 Devey, James F., 258 Dillon, Douglas C., 94 Dobrynin, Anatoly, 211, 212 Dodd, Thomas J., 205, 206, 209 Dolanský, Jaromír, 46 Dorr, Russell H., 27, 36, 173 Downey, Thomas, 249 Dubˇcek, Alexander, 201, 203 Duda, Karel, 199–202, 209, 211 Dunkel, Peter, 16 ˇ Duriš, Julius, 85, 88 Dvoˇrák, Alois, 314 Dvoˇrák, Richard, 6, 7, 88 Dzúr, Martin, 306

E Eagleburger, Lawrence S., 272 Eisenhower, Dwight D., 143, 144

F Fierlinger, Zdenˇek, 110, 111 Findrik, Ivan, 200 Fisch IV, Hamilton, 275 Fisher, Joseph L., 249 Fletcher, Otto, 71, 80, 176 Ford, Gerald, 232 Forst, Václav, 312

Fox, Homer S., 175, 176 Fox, Richard, 16 Frenzel, William E., 275 Freund, Richard B., 181 Fridrich, Zdenˇek, 312 Fulbright, William, 259

G Gillman, Benjamin A., 275 Gottwald, Klement, 137, 142, 144 Gravel, Maurice R. (“Mike”), 229, 230, 232, 233, 238, 239 Gregor, Antonín, 119, 132, 133

H Haig, Alexander M., 272 Hájek, Jiˇrí, 156, 157, 167, 180, 183, 187, 195, 204, 292 Hájek, Julius, 73, 74 Harris, Colin, 272 Hartman, Arthur A., 231 Hartman, Gustav, 310, 312, 314 Herter, Christian A., 94 Hickerson, John, 126 Hillenbrand, Martin J., 222 Hiltbrunner, Peter R., 315 Hirigoyen, Michael, 36, 40–44, 65, 66 Hitler, Adolf, 6, 82, 104, 300, 319 Hollmann, Jaromír, 65–67 Holton, Linwood, 231 Hopkins, J. Wallace, 231 Humphrey, George M., 134 Hurban, Vladimír S., 23, 103, 123 Husák, Gustáv, 314 Hvasta, Ján (John), 140 Hyde, Henry J., 275

INDEX

I Ingersoll, Robert S., 232–235 J Jablonský, Meˇcislav, 293 Jackson, Henry M., 241 Jacobs, Joseph E., 117–120 Janˇcek, Josef, 16 Jenkins, Kempton, 235 Jenner, William E., 139 Jeˇrábek, František, 147 Johanes, Jaromír, 254 Johnson, Lyndon B., 207–209 Johnson, Ural Alexis, 154, 176, 177 Josíf, František, 181 K Karvaš, Imrich, 48, 50, 51 Kaštánek, Josef, 304 Kekich, Ernest, 116, 118 Kennan, John F., 207, 208 Kesl, Felix, 315 Kincl, František, 304 King, Nathan B., 143 Kissinger, Henry Alfred, 222, 223, 230, 232, 234, 235, 258, 259 Kohout, Josef, 314 Kotora, Miroslav, 272 Kováˇc, Ján, 302–305, 307 ˇ Koval, Ludovít, 304 Král, Richard, 272, 283, 288, 302, 303, 314 Krejˇcí, Jan, vii, 8, 10, 272, 288 Kroc, Rudolf, 16, 57 Kroh, Jaroslav, 302, 303 Kubaˇcák, Josef, 314 Kuˇcera, Jiˇrí, 314 Kulhánek, Oldˇrich, 69, 70 Kuncíˇr, Jan, 277 Kupec, Karel, 304

329

L Lagomarsino, Robert J., 275 Lenárt, Jozef, 95 Lloyd, Selwyn B., 94 Löbl, Eugen, 115, 118–120 Logan, Leslie, 254–256 Long, Russell B., 229–233, 243, 244 Lorenc, Alojz, 304 Lovett, Robert A., 31

M Macháˇcek, Josef, 302 Malík, František, 194 Malík, Josef, 9, 17, 20, 45–47 Martinˇceková, Estera, 200 Masaryk, Jan, 27, 102 Matlock, Jr., Jack F., 277, 278, 289 McGovern, George, 245 McPherson, Harry, 254–256 Meehan, Francis J., 245, 251, 254, 257, 264 Molnár, Bohumil, 302 Mondale, Walter F., 205 Montgomery, Allan, 272 Morton, Desmond, 27 Mourney, Mike, 139 Moynihan, Daniel P., 247, 248, 251 Müller, Friedrich, 8, 9, 39, 59 Mužík, Bohuslav, 201

N Nálevka, Jiˇrí, 272 Nezval, Stanislav, 304 Nitze, Paul H., 120 Nixon, Richard M., 4, 225, 232 Nosek, Jindˇrich, 27 Novák, Ludvík, 314 Novák, Miloš, 67

330

INDEX

O Oatis, Laurabella, 142 Oatis, William N., ix, 84, 101, 130, 131, 134, 137–144, 156, 175 Obhlídal, Jan, 79 Obzina, Jaromír, 304, 306 O’Connor, Herbert, 139 O’Flaherty, Edmond, 38 Opat, Jaroslav, 312 Ottinger, Richard, 249, 275 P Pavlíˇcek, Vladimír, 215 Pelec, Štefan, 312 Pell, Claiborne de Borda, 205, 206, 234, 235 Percy, Charles H., 276 Peroutka, František, 17, 45 Petrželka, Karel, 159 Petschek, Marta, 110 Petschek, Otto, 110 Petschek, Viktor, 104, 110, 112–114 Pješˇcak, Ján, 301, 302, 304, 307, 314 Pleskot, Václav, 205 Pokorný, Václav, 16 Popel, Karel, 73, 74 Procházka, Vladimír, 140, 141 Pudlák, Ján, 143, 148 R Rais, Štefan, 142, 143 Rašín, Alois, 3, 5 Reagan, Ronald, 260, 277, 321 Rich, John R., 278, 293 Ridgway, Rozanne L., 263–268, 271, 272, 314 Ripka, Hubert, 15, 113, 123 Ripl, Josef, 304, 307–309 Rogers, William P., 215, 223 Rueff, Jacques, 27 Rusk, Dean, 207

S Sadílek, Václav, 39, 64 Schoenfeld, Rudolf, 15 Scott, David C., 241–244 Šedivý, Josef, 143 Sedláˇcek, Miroslav, 314 Sedlák, Otto, 304 ˇ Sekaninová-Cakrtová, Gertrúda, 160 Sheets, Harold F., 107, 114 Sherer, Jr., Albert W., 223, 231 Šilha, Vladimír, 314 Simonidesová, Mária, 200 Simon, John, 18–20 Šimr, Celestýn, 31, 35–37, 39–44, 46, 47, 49, 55, 57, 59, 63–66 Široký, Viliam, 75, 76, 86, 88, 134, 138, 139, 142–144, 152 Skála, Hugo, 118, 119 Skidmore, Lemuel, 160, 163, 165–167 Slávik, Juraj, 110, 126 Smith, Howard, 195 Snyder, John W., 134, 179, 185, 197, 200, 201 Souˇcek, Bedˇrich, 314 Soukup, Jaroslav, 314 Stalin, Josif V., 65, 129, 144 Stefan, Karl, 172 Steinhardt, Lawrence A., 104, 106–111, 113, 114, 124, 126, 171–173 Stejskal, Jan, 301, 316 Štrougal, Lubomír, 236, 241, 242, 314 Stuj, Jiˇrí, 312 Šturn, Erich, 45 Šulc, Jiˇrí, 302 T Taylor, Frank D., 118 Thomas, Richard, 283 Tinák, Miloš, 314

INDEX

Tiso, Jozef, 50 Todd, Joseph, 173 Trhlík, Zdenˇek, viii, 204, 211, 212, 233, 257 Truman, Harry S., 130, 140, 141, 248, 255 U Ulbrich, Walter, 207 Urban, Milan, 314 V Vacek, František (Frank), 258, 259 Vacek, Václav, 314 Vance, Cyrus, 243, 244 Vanˇek, Václav, 47 Vanik, Charles, 241, 243–245 Vedeler, Harold, 80 Voboˇril, Jiˇrí, 312 Vogl, Richard, 157 Vogl, Zdenˇek, 158 von Neurath, Konstantin, 39 Vyšinský, Andrej, 125, 128

331

W Wadsworth, George, 134, 143, 144 Wailes, Edward T., 167, 187 Walley, David, 78 Watson, James, 89, 90 Watson, John A., 63–67, 69–71, 79, 82, 84 Weinfurtner, Jaroslav, 314 Wenick, Martin, 283, 284 Williams, Albert L., 147 Wingate, Ronald, 69, 73, 74, 76, 78, 181 Winkler, Dr., 59 Wolff, Lester, 247–251, 254, 256–259, 261, 276 Wortzel, Robert, 223, 224

Z Zablocki, Clement J., 275 Žantovský, Jaroslav, 205, 223, 224, 237, 263–268, 272 Zápotocký, Antonín, 132, 143, 144