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Department of State bulletin (Volume v. 22, Apr- Jun 1950) online

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of short-term obligations. Of these elements, our
recession is long since over, the British financial
situation is greatly improved, and the backlogs are
now being paid off. The devaluation remains,
however, as an important element in affecting the
1950 record.

The determining factor in the volimie of trade
anywhere is the ability of the customers to buy.
Our export trade clearly depends upon the ability
of other countries to buy from us. The demands
by foreign purchasers for our goods are so gi'eat
that, even when substitute sources can be found
for certain goods, they merely shift the use of
their hard-currency purchasing power to other
items. From a national point of view, there is no
real discrimination against the dollar today al-
though restrictions are placed against some Ameri-
can goods in order to make possible the purchase
of other American goods. The only competing
use for dollars is the strengthening of financial
reserves and few countries can afford this use,
as yet.

Obtaining Supply of Dollars

If the supply of dollars in customers' hands is
so important, let us look at the way they are ob-
tained. The largest source of dollars in the hands
of foreign countries in 1949 was payments by
American purchasers for foreign products. Im-
ports have been slowly increasing year-by-year
since the end of the war. Although there was a
decline in mid-1949, the figures for the last 3
months, November through January, were about
equal to those in the same period 12 months be-
fore, a decline in imports from Asia being offset
by an increase from our southern neighbors. Since
prices are lower, this means that the quantity of
imports is actually higher than a year ago.


Three fairly new factors are at work to increase
our imports. First is the devaluation of curren-
cies, which tended to cut foreign prices in terms
of dollars. Second is the new and vigorous efforts
which are now being made by foreign countries
and foreign business men to understand and to sell
in the American market. Third is the increasing
recognition within the United States that we are
now a great creditor nation and that that fact

has an important bearing on our trade policies.
We cannot continue to sell our goods abroad, or
receive a return on our investments and the credit
obligations due us, unless foreign countries in
some way or other can obtain the necessary hard
currency to make these isayments.


But merchandise trade is not the only export
we have, nor is it the only way in which dollars
are earned. The preliminary figures for 1949 show
that our creditor position required payments to us
of over 1 billion dollars on foreign investments,
a return on capital previously exported. This,
then, was a burden upon the dollar supply abroad.
On the other hand, with respect to the various
invisible service items such as shipping, insurance,
and tourism we bought more than we sold, giving
foreign countries a net of slightly over 200 million
dollars. Over 400 million dollars went abroad as
gifts and inunigrant remittances and over 1 billion
dollars as net long-term capital investment.


Looking ahead, it is possible that foreign-pur-
chasing power can be increased by developments
among these nonmerchandise items. Certainly,
there is room for a great expansion in foreign
travel, and there are tremendous possibilities for
American investment abroad. But travel is de-
pendent upon facilities, ships, planes, and hotels.
And investment abroad faces special difficulties
and hazards. The flow of private capital to other
coimtries will not increase unless investors feel
assured of a reasonable business opportunity and
of fair treatment.


Finally, we have been making the equivalent
of dollars available to foreign countries through
extraordinary governmental assistance — that is,
by making goods available without requiring dol-
lar payment from abroad. Recognizing tlie needs
of the potswar situation, we have been financing a
substantial part of our exports through federal
appropriation. This element in our balance of
payments has been at a level of 5 to (i billion dol-
lars a year but is clearly sclieduled to decline. The
EGA authorization which was proposed to Con-
gress by the President was more than 1 billion
dollars less than the appropriation of last year.

Balancing Exports With Imports

I Iiave now outlined the eleuionts in the problem.
Disregarding the lesser items, our exports of goods
and services stand on one side of the ledger. On
the other side, are our imports of goods and serv-
ices, our foreign investment, and our foreign
assistance. The two sides of the ledger will always


Department of State Bulletin

balance. In the final analysis, if any one of these
items ciianges, some other items nuist chanpe as
well. Our foreign international relationships are
subject to double-entry bookkeeping^.

It is of great importance to us and to otlier
countries as to the pattern which the new balance
will eventually take. Neither we nor they are
eager to maintain a substantial foreign assistance
program in tlie form of unilateral grants. Most
nations, like most individuals, prefer economic
independence. But the decline in this element in
the balance inevitably must be matched by an ad-
justment elsewhere — in lower exports, larger im-
ports, or greater foreign investment, or some of all
three. Each of these items, in turn, has many
other intluences playing upon it. One important
influence is the level of domestic business in the
United States — a decline, for example, would not
only reduce our purchases of foreign raw materials
but, if history repeats itself, would stimulate the
cry for pi-otection against the import of manufac-
tured products. Another influence from outside
the trade field is the extent to which other countries
will assure decent treatment of foreign investors
through the medium of commercial and investment

A drastic curtailment of exports by several bil-
lion dollars a year could hui't many American
industries and agricultural groups severely. It
would slacken the rate of progress which other
countries are making with raw materials and ma-
chinery from the United States. Economic expan-
sion is always better than contraction.

Adjustments To Be Made

But if we wish to avoid contraction, we must
work hard at the problem. There clearly is some
adjustment which will be made. This is not an
imaginary problem. Xo one has invented it, and
no one can make it disappear. It is part of the
tremendous postwar adjustment required by a
new set of basic economic conditions.

In an economic system such as ours, we could not
bring about any particular and exact adjustment,
even if there were no foreign elements in the prob-
lem. But we can greatly influence the form the
adjustment will take. Our policies must be such
as to help the achievement of the best relationship
from all points of view among the various entries
in the ledger. There is no single formula, nor any
way of predicting what the future holds. But it
seems to me that certain lines of approach should
be evident — that we should endeavor as a nation
to find ways and means of facilitating increased
imports of both goods and services into this coun-
try and to seek ways and means of facilitating
increased foreign investment.

There can be no doubt but that the problem
would be further eased if trade about the world
were not so limited by controls. But as long as
trade is out of balance, the controls appear to be

necessary. This is a form of vicious circle. The
goal toward which all nations must work is very
clear — one where international transactions take
place with as little arbitrary interference as possi-
ble. This is the objective which underlies our
foreign economic policy and is the heart of the
principles in the charter of the International
Trade Organization, now before Congress for rati-
fication. Already, in recent montiis, our trade bal-
ance in this hemisphere has reached a point wliere
imports are slightly more than exjjorts; while for
Eurojie, Asia, and Africa, in each case our mer-
chandise exports have exceeded our imports. The
possibilities of multilateral trade are becoming
increasingly apparent.

These possibilities are, as yet, far from realiza-
tion. Controls and restrictions have a tendency
to perpetuate themselves. To win freedom for the
trading world from this maze of restriction and
red tape requires vigorous and sustained effort by
the United States. If we, the foremost exponent
of multilateral trade and private investment, fail
to ratify the charter of the International Trade
Organization and if we are unwilling to adjust our
policies to the facts of our new position as a credi-
tor nation, the chances of reestablishing a multi-
lateral trading world will be dim indeed.

The economic progress made since the end of
the war has been tremendous. The period of acute
shortages has come to an end. Today's interna-
tional economic problems lie in the field of trade.
That is why this problem of balance of payments
is of crucial importance. We nnist not think of
these problems in a narrow frame. The policies
which will shape the future of our foreign trade
must be considered not only in domestic out also
in international terms. It is important that the
essentials of the problem be understood by every-
one. The way in which the problem is solved may
work to tear down all we have accomplished, or it
can add constructively to strengthening the free
nations of the world.

Japanese Officials To Study
UNESCO in United States

The Department of State announced on ilarch
21 that Iwao Nishimura, Chief of Liaison and
UxEsco Section of the Ministry of Education;
Tatsua Fukai, Chief, Uxesco Sub-Section, Liaison
and UNESCO Sub-Section, Minister's Secretariat,
Ministry of Education; and Kenichiro Yoshida,
Chief International Cultural Section, Ministry of
Foreign Affairs are recipients of grants-in-aid
from the Department in cooperation with the De-
partment of the Army and are visiting the United
States for a period of 60 days for the purpose of
studying activities organized in the interests of
UNESCO in this country.

April 17, 1950


Anniversary of Signing of North Atlantic Treaty

Statement Ijy Secretary Acheson

[Released to the pi'ess April 4]

It is api^ropriate today for Americans to con-
sider seriously the responsibilities which rest on
the United States as a member of the international
commnnity. It is appropriate because exactly 1
year ago, on April 4, 1949, we joined with 11
other Jsorth Atlantic nations in signing the North
Atlantic Treaty.

The objective of the North Atlantic Treaty is
the promotion of peace in accord with the purpose
and principles of the Charter of the United Na-
tions. The Treaty seeks to prevent war by stop-
ping it before it starts, by making it clear to any
potential aggressor that war would not pay, and
that the North Atlantic nations will not be divided
and then swallowed piecemeal. This Treaty is not
directed against any nation; it is directed solel}^
against aggression. If any nation alleges that the
Treaty is directed against it, then we must conclude
that that nation harbors aggressive designs. . . .
for the treaty provides for no military action
except in the case of an attack against one of its

Under the Treaty, we are helping and shall con-
tinue to help the other North Atlantic nations in
building our collective defensive strength. The
Mutual Defense Assistance Act of 1949 was a first
step in implementing the concept of common de-
fense under the jirinciple of self-help and mutual
aid embodied in the North Atlantic Treaty. Mili-
tary assistance under this legislation already is
going to North Atlantic Treaty nations. It is
anticipated that, shortly, the Congress will be
asked for additional authorization to extend fur-
ther military assistance.

We nuist realize that onr European friends in
the Treaty are similarly contributing to tlie com-
mon defense. They have made encouraging prog-
ress toward economic recovery, but they still have
a diHicult task ahead and can build defensive
strength only as fast as their economic and finan-

cial condition will allow. They must have our
continued help.

Much progi-ess has been made under the North
Atlantic Treaty since it was signed a year ago and
ratified by all signatories a few months thereafter.
The initial task was that of establishing an organ-
ization. The major part of this organization was
established and functioning by November of last
year. The next step was to get on with the job of
preparing plans for the common defense. Repre-
sentatives of all the Treaty nations have ener-
getically pursued this task, and much progress
has been made in the very short time which has
elapsed. A spirit of real cooperation has mani-
fested itself, and common defense plans are becom-
ing a reality.

But the Treaty nations must work toward even
closer association in the North Atlantic connnu-
nity in oi'der to help maintain international secu-
rity and achieve a higher state of well-being. We
must develop the Treaty to its full effectiveness
as a positive influence for peace. These efforts,
combined with our efforts in other areas, are a
necessary supplement to our fundamental policy
of full support of the United Nations in its efforts
to achieve international peace and security.

The fact that we signed tlie Treaty and that
subsequently the Senate gave overwhehning con-
sent to its ratification is evidence of the determina-
tion of the American people to work for peace.
We must realize the fortunate position whicli the
United States enjoys today. We must realize that
the continuation of our prosperity and well-being
depends on like-minded nations being able to main-
tain their freedom and democratic institutions.
We must do our utmost to support their freedom
and democratic institutions and to ensure that
international peace and security are maintained.
Tliat is our responsibility to ourselves and our
responsibility as a member of the international


Department of State Bulletin

Answers to Czechoslovak Protests Against Treatment
of Citizens Landing in U.S. Zone of Germany

[Rclcuscd to the press April 6]

The American Einhaasy in Praha received from
the Czechoslovak Ministry of Foreign Affairs two
notes dated March JO, 1950, with reference to the
recent landing at Erding Field near Munich in
the United States zone of Germany of three Czech-
oslovak Airlines planes ivith 85 persons aboard
from Czechoslovakia. In one of these notes, eight
persons who allegedly planned the flight to Ger-
many were charged with having committed on
hoard the three planes the crimes of endangering
the lives of memJbers of the crew and passengers,
unjustified limitation of personal freedom, dan-
gerous threatening, and violently kidnapping
Czechoslovak citizens and carrying them over the
frontier. The note requested the extradition to
the Czechoslovak authorities of the eight indi-
viduals named '''as common criminals for penal


On April 6, the Ainerican Embassy transmitted
to the Ministry of Foreign Affairs a note in re-
sponse, the text of which is given below :

In reply the Embassy has the honor, under in-
structions of its Government, to communicate the
following :

The Ministry will doubtless realize that no basis
in law exists for making or complying with its
request for extradition of the individuals named
"as common criminals for penal prosecution."
The treaties now in force between the United
States and Czechoslovak Governments cannot be
considered applicable to the question of returning
from the United States Zone of Germany any of
those accused by the Czechoslovak Government.
Tlie principles of international law recognize no
right to extradition in tlie absence of treaty. The
United States authorities are, accordingly, under
no obligation to surrender the persons requested.

It is clear that these individuals fled Czechoslo-
vakia for political reasons by whatever means they
could find to escape. It has never been the practice
of the United States Government to take action
which would have the effect of subjecting political
offenders to criminal jurisdiction. The position of
the United States Government on the extradition
of political offenders was stated by Secretary of
State Marcy in the Koszta case on September 26,
1853 as follows :

"To surrender political offenders ... is not a
duty; but, on the contrary, compliance with such
a demand would be considered a dishonorable sub-
serviency to a foreign power, and an act meriting
the reprobation of mankind." The United States
Government, therefore, sees no reason to assist in
the enforcement of Czechoslovak internal law by
returning the accused in this case.

As a matter of comitj', the United States au-
thorities endeavored, of course, to return to Czech-
oslovakia, as promptly as all necessary arrange-
ments could be completed, persons from the planes
who expressed a desire to return. Tlie United
States Government will continue strictly to ob-
serve such standards of international conduct.
Comity, on the other hand, could not reasonably
be construed to require the United States authori-
ties to arrange for the return of those persons who
were resolved to remain. In accordance with hu-
manitarian principles, the latter have been given
the right of political asylum.

Following is the text of a note dated Apnl 6
frojn the American Embassy at Praha to the Min-
istry of Foreign Affairs in response to a note dated
March 30 protesting against the interrogation and
general treatment of certain Czechoslovak citizens
who landed in the United States zone of Germany
on March 34 :

The American Embassy presents its compli-
ments to the Czechoslovak Ministry of Foreign

April 17, 1950


Affairs and has the honor to acknowledge receipt
of the Ministry's note dated March 30, 1950, pro-
testing against the interrogation and general
treatment of certain Czechoslovak citizens who
landed in three Czechoslovak aircraft at the
United States military airport in Germany on
March 24 and demanding the punisliment of the
American officials concerned. The Ministry's note
has been forwarded to the appropriate United
States military authorities in Germany for in-
vestigation and comment, but, in the meantime,
the Embassy has been instructed to transmit the
following observations on the statements con-
tained in the Ministry's note in question.

The Ministry complains that the Czechoslovak
Consul General at ilunich was advised of the
arrival of three Czechoslovak planes only 36 hours
after their illegal and unauthorized landing at
Erding Military Airport and that a further 8
hours elapsed before the Consul General was able
to see the Czechoslovak citizens. The Embassy is
pleased to receive this information and exjDress
the hope that this action will be used as a precedent
by the Czechoslovak authorities in the future. To
cite only three random but typical instances of the
difficulties encountered by Embassy consular offi-
cers in their attempts to see American citizens un-
der detention in Czechoslovakia, reference is made
to the Embassy's note of October 7, 1949,' and the
Ministry's reply of October 18, 1949,' in regard
to the American citizen Savel Kliachko, who was
detained by the Czechoslovak security organs for
5 days during which time he was not allowed to
communicate with the Embassy nor was the Em-
bassy informed of his detention ; to the Embassy's
constant efforts to interview two American sol-
diers. Privates Hill and Jones, who entered
Czechslovakia illegally on December 9, 1948, which
efforts were not successful until April 5, 1949 ; and
to the Embassy's recent requests to be permitted
to see two young Mormon missionaries who were
seized and imprisoned by the Czechoslovak au-
thorities on January 28 and held for over 4 weeks
during which, prior to the moment of their ex-
pulsion, all consular access was denied them.

The Ministry also complains that the American
authorities, without reason, refused to permit the
travel from Munich to Czechoslovakia of certain
of the Czechoslovak citizens who arrived on the
three planes on a collective passport issued by the
Czechoslovak Consul General. The Embassy is
not aware of any principles or rules of interna-
tional law which would permit a country unilat-
erally to prescribe the type of travel documents
which are acceptable for travel by its citizens in
another country.

The Ministry complains against the fact that
the Czechoslovak citizens in question were interro-
gated upon their arrival, basing this complaint
upon the fact that certain of these Czechoslovak

' Not priiitod.

citizens had no intention of entering territory oc-
cupied by the United States, nor of remaining
there. The Embassy is unaware of any provisions
of international law which would prohibit the
appropriate authorities of a territory from inter-
rogating citizens of another country entering that
territory legally or illegally, voluntarily or invol-
untarily. In the case in question, an illegal entry
was involved, and the Embassy fails to understand
how the motives and circumstances of entry could
have been determined except through interroga-

The Ministry makes certain complaints in re-
gard to the manner and form in which the interro-
gation was carried out :

Exception is taken to the fact that the questions
were asked by members of the CIC rather than
"regular security organs of the American occupa-
tion administration." The Embassy is unaware of
any provisions of international law which permit
a nation to designate the organs of another country
competent to interrogate citizens of the first coun-
try illegally entering territory under the control
of the second country.

The IMinistry complains that Mr. Karel Nejepin-
sky refused to leave the Czechoslovak plane in
which he was a passenger after it had landed at
Erding, that he was forcibly removed from the
plane and that in the course of this removal his
hand was hurt and his coat was torn. The Em-
bassy regrets that this incident occurred but points
out, subject to possible further comment upon
receipt of information from American authorities
in Germany, that the incident apparently resulted
from the refusal of a Czechoslovak citizen to con-
form to the instructions and regulations of the
authorities in control of a United States militarj'
airport which he had illegally penetrated. The
Embassy also notes that Mr. Nejepinsky was "re-
leased from prison at the intervention of the Czech-
oslovak Consul General" and expresses the hope
that the responsive attitude of the United States
authorities in Germany to the representations of
the Consul General will be reciprocated by the
Czechoslovak authorities in connection with sim-
ilar representations which may be made to them
by American consular officers in Czechoslovakia
on behalf of American citizens in ditKculties in this

The Embassy will not fail to communicate with
the Ministry in regard to this matter upon receipt
of further instructions from its government.

With reference to the Ministry's note of March
25, 1950, requesting the return of the three airci-aft
in question and clearance for the flight of an air-
craft of the Czechoslovak airlines to Erding in
order to transport the crews that will take over the
three planes, the Embassy has been authorized to
inform the Ministry that these planes will be re-
leased in due course as soon as an investigation of
all aspects of the case has been completed by the
pertinent authorities. At such time as the planes

Department of State Bulletin

arc released, tlie requested clenrance will be
granted, hut the Kuibussy lias been authorized to
adil that should tlie Czechoslovak (Toverniuent for
any reason not wish to send another aircraft and
crews to (lerniany, the United States Air Force
would be happy as a measure of friendly collabo-
ration to provide, on request, crews and to deliver
the planes to Praha.

In as much as the Ministry's note of March 30
imder acknowledgment was made public by the
Czechoslovak authorities, the Embassy i-equests
that they likewise publisli the text of tliis reply.


The Ministry of Foreign Ailairs has the honor

Online LibraryUnited States. Dept. of State. Office of Public CoDepartment of State bulletin (Volume v. 22, Apr- Jun 1950) → online text (page 18 of 116)