Wartime American Plans for a New Hungary

Document 7

Secret T Minutes 39

February 12, 1943

Not to be removed from the State Department building

Present:

Mr. Isaiah Bowman, presiding

	Mr. Adolf A. Berle			Mr. Harley Notter

	Mr. John V. A. MacMurray		Mr. Leroy D. Stinebower

	Mr. Leo Pasvolsky			Mr. Philip Mose1y

	Mr. Cavendish W. Cannon			Mr. Easton Rothwell

	Mr. Otto E. Guthe			Mr. William Koren, Jr.

	Mr. C. E. Black

	Mr. John Campbell

	Mr. Richard Eldridge

	Mr. David Harris

	Mr. Harry N. Howard

	Mr. Melvin M. Knight

	Mr. Thomas F. Power, Jr.

	Mr. H. Julian Wadleigh

EAST EUROPEAN BOUNDARY PROBLEMS, PART I

Transylvania

The chairman proposed that the subcommittee take up first the problem of Transylvania, which had been left in the air last week. He understood that Mr. Mosely and Mr. Campbell were prepared to discuss this area. He wondered whether the first question to be answered might not be whether there was any differentiation in the distribution of Magyars in the area given to Hungary by the Vienna Award, Was there any block of Magyar population in this territory? Mr. Mosely referred this question to Mr. Campbell, who had made a particular study of Transylvania. Mr. Campbell explained that the whole southeast of the ceded territory, the district of the Székely, had an overwhelming Magyar population. There was also a Magyar majority in a strip along the western frontier set up by the Treaty of Trianon. There was no way of drawing an ethnic line to connect the Székely district with other Frontiers of Hungary 127

Magyar areas since, in spite of the fact that some of the cities had Magyar majorities, northern Transylvania was largely Rumanian.

The chairman asked what the Vienna Award had actually provided. Mr. Campbell explained that by that Treaty Hungary and Rumania had accepted the arbitration of Italy and Germany concerning an adjustment in their common frontier. The Treaty provided also for the exchange of population and property. The chairman concluded that since Rumania and Hungary had already agreed to promote population transfers the way was for the United Nations to propose similar action. Mr. Campbell pointed out that such transfers might depend on the character of the frontier line drawn. Rumania had always favored the transfer of population when it had a majority of the disputed territory. At the time of the Vienna Award it had had to accede to such transfers although it objected to them since they would tend to perpetuate a frontier which Rumania regarded as unfavorable to its ethnic claims. Conversely, Rumania had accepted the exchange of populations after the loss of Southern Dobruja to Bulgaria.

Mr. Mosely pointed out that an exchange was difficult as the present boundary left 400,000 Magyars in Rumanian territory and 1,200,000 Rumanians in Hungary. An exchange was further complicated by the fact that the Magyars left in Rumania were markedly urban in character, while the Rumanians in Hungary were almost entirely peasants. In answer to a question by the chairman, Mr. Mosely explained that there were some 400,000 Magyars constituting 90 percent of the population in the eastern tongue of the territory which Hungary had acquired in 1940 (the Székely region). The chairman remarked that this concentration of Magyars was "damned inconve- nient." Mr. Mosely added that the Székely district was in the geograph- ical center of pre-war Rumania and that the Székely did not want to leave a land which had been their home for at least eight hundred years.

The chairman noted that numbers of the subcommittee would have to face the attitude of those who claimed that one would not get anywhere in these areas of mixed population by boundary shifts or population transfers, that the only possible way out was to have these people "learn to live together." He asked whether any members of the subcommittee could explain exactly what that phrase meant. Mr. MacMurray admitted that he had no clear understanding of its meaning. Mr. Knight remarked that Bulgars and Rumanians seemed to live happily together in southern Rumania, but the chairman pointed out that these were peasant populations. The peasants could always get along; trouble arose when there was a mixed industrial and agricultural opulation and when politicians entered the area. To move out the Székely would be a large-scale, violent operation and would still not solve the problem of the Magyars along the pre-war western frontier.

Mr. Mosely pointed out that an added difficulty in transferring the population in this instance arose from the fact that the region of Székely was relatively flat, whereas the areas inhabited by Rumanians were largely hilly. This resulted in a different standard of living and different type of farming for the two groups. Mr. Knight remarked that there was a considerable flat belt along the pre-war western frontier but Mr. Mosely pointed out that that also had a Magyar population. He explained to Mr. Knight that there had not been much Rumanian colonization in that region after 1920. Mr. Campbell explained that the Magyar majority was substantial because of Magyar concentration in the cities of Arad, Oradea Mare and Satu Mare. It had been suggested at Paris that this Magyar territory be included in Hungary but it had finally been decided that Rumania should acquire this region because an ethnic frontier would have deprived Rumania of the important north- south railway.

The chairman explained to Mr. Berle and Mr. Pasvolsky, who had just arrived, that the subcommittee was being bothered by the problem of what to do with the Magyars in the Székely district. There were 400,000 of these Magyars, who thus constituted the chief trouble in drawing a frontier in Transylvania. Mr. Berle noted that the Székely had been in their present home longer than the other Magyars had been in the Hungarian plain; moreover, their country was more hilly than Hungary proper. The chairman repeated the frequently given advice that we should teach these people "to learn to live together." Mr. Pasvolsky offered to enlighten him on that phrase. He had just come from a conference with a certain individual who had explained at some length that if we could get all of the religious and educational leaders of the world together and have them draw up universal plans of education, all would be well with the world. His thought had not reached the stage of providing machinery to carry out this universal plan. Mr. Berle remarked that after the second Epistle to the Galatians we would all be happy.

Mr. Berle suggested that it might be a more fruitful approach to the Transylvanian problem to abandon all efforts to disentangle the population and to start from the theory of constructing a state. By that method one would concentrate on what would appear to be the most powerful element in the population, the one most likely to maintain itself as a group, and turn over to that group a territory included within the frontier most likely to lead to its stability. This would mean either enlarging Hungary as far as the Carpathians or the recreation of Versailles' Rumania.

Introducing the problems which would arise during the period of occupation, the chairman suggested that to apply Mr. Berle's principle would require a return to the 1937 frontier. This was implicit in the declaration of the United Nations. Talk of new adjustments would come only after the restoration of the status quo ante. He did not think that after this war there would be much opportunity for self-determination arrived at by a plebiscite, since that had not seemed to solve problems in the past. Mr. Rothwell explained to Mr. Pasvolsky that the purple line on the map1 indicated the boundary proposals made by the United States in 1919. This line had been drawn largely on an ethnic basis, Mr. Campbell explained, but had had the disadvantage of cutting the railway line at several points. Mr. Berle pointed out that the problem of this frontier would be more difficult after this war than in 1919 since both Rumania and Hungary were now on the same side.

The chairman considered that in the future the 1919 solutions would be criticized in the light of any principle of peace making. They had been adopted merely because all the other states surrounding Hungary had appeared first at Paris and presented their claims. Hungary received merely what was left. He added, off the record, that in his opinion Hungarian arguments against the 1919 frontiers were legiti- mate since in fixing them the Allies had contradicted their own principles. Mr. Pasvolsky suggested that this injustice could be redressed at the end of this war. The chairman pointed out that the difficulty arose from the fact that the Atlantic Charter made it necessary to return first of all to the 1939 boundary and that in this case that boundary was an unjustifiable line.* He supposed that the difficulty was somewhat mitigated by the conditions under which Hungary had entered the war and its behavior as a belligerent. He hardly thought that these gave any basis for leniency to Hungary. Mr. Pasvolsky remarked that both countries had behaved badly. While admitting that there was a residual balance of adjustment remaining from the last war he thought that the important thing was to find the line which would give the most chance of peace in the future.

The chairman noted that the sequence of events would entail first the occupation of Transylvania and secondly the restoration of the 1939

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1 Rumanian Series Map 4, Rumania: Eastern Frontier

*The signatories of the Atlantic Charter, which represented Allied war aims, sought "...sovereign rights and self-government restored to those who have been forcibly deprived of them." In Morris, op. cit., 170. line. Mr Pasvolsky suggested that since the United Nations would occupy both Rumania and Hungary they could set the line between the two countries wherever they wished for the purpose of temporary administration. The question would arise whether the local machinery of government was to be used or whether it was to be changed and where the line would be drawn in terms of machinery which the occupying forces would use. In his opinion that was the time to shift the boundary. The change should first be made for administrative purposes only; the change of title and adjustments found necessary through experience would be made later. Mr. Cannon remarked that setting up two sections of occupied territory, a Rumanian and an Hungarian section, seemed a method of pre-indicating the frontier line.

The chairman thought that this was a good case to illustrate the fact that the final decision ought to be adumbrated in the action of the occupying authorities. We can't go into a territory saying that we know nothing about the area, the eventual settlement or even the principles of final settlement. Over and over again we would find that the limit of the militarily occupied zone would be the line which would be likely to have permanence. He thought that this discussions had advanced the position of the subcommittee somewhat since the previous week. Mr. MacMurray did not think there was any other thing which the subcommittee could do. Mr. Cannon asked whether the subcommittee could report that it found no solution possible along ethnic lines. The chairman was reluctant to make any such report since it was possible that later adjustments might be based on ethnic considerations. This was particularly true of the western limit of the area, where we were still faced with the problem left by the peculiar circumstances of the 1919 settlement.

PROCEDURE, PART I

Statement on Recommendations

The chairman suggested that the time had come when a statement ought to be made up on each point that had been agreed upon by the subcommittee. This should be done in the simplest terms and should be followed by a résumé of the argument on which the subcommittee's decision had been based. He thought that it was time that documents of this nature were accumulated. The subcommittee's decisions would not be considered as frozen in this form but as crystallized. Further investigation might cause changes or additions to these recommenda- tions. Obviously such documents were not expected to summarize all the research work which lay behind the decisions of the subcommittee.

EAST EUROPEAN INTERNAL PROBLEMS, PART I

Székely Autonomy

Mr. Mosely suggested that, with regard to the settlement in Transylvania, the Székely might be treated separately since there was no minority problem within the Székely district, no rural-urban clash of nationalities and no conflict between two classes of peasants. Even after 1919 the Székely had enjoyed some cultural autonomy. It might be advisable to give them some autonomy in their local political life. This could be combined with a new frontier in the northwest and certain shifts of population in that region. He thought that such a combination would be better than an outright transfer of Székely or simple re- incorporation in Rumania.

The chairman considered that the subcommittee should examine very closely the word autonomy. It raised the question of invasion of national sovereignty and the whole minority problem. He pointed out that such autonomy would be comparable to an international guarantees for the minority rights of French Canadians in New England. Any such international political action would be highly resented in the American melting-pot. He wondered how this difficulty could be circumvented. Mr. Mosely pointed out that the French Canadians had their own church schools and could elect local officials from their number, as in some towns of New England. The Székely would be content with comparable advantages and with the absence of discrimination against them in the national fiscal policy. The Székely had actually had autonomy for a very long period, unlike the inhabitants of the Banat and Macedonia. He did not think, he explained to the chairman, that it would be necessary to extend autonomous rights to other Magyar groups in Rumania.

Mr. Pasvolsky noted that this suggestion raised the question of the part to be played by the state in the maintenance of schools. In the United States schools were financed locally, but in Europe nationally. The question therefore arose whether public funds could be used for minority schools. Mr. Mosely explained that in Transylvania much of the support for the schools came through the church. Mr. Cannon pointed out that education in Europe was not a mere matter of teaching people to be literature but also a question of political activity. Schools were designed to instill nationalism. He knew of many cases where a dozen or so families had been planted in certain localities in order that they might claim after a few years that a school for them should be established in that town. In Transylvania the church had been used to promote nationalism. Mr. Pasvolsky pointed out that another question concerned the language which should be used in the courts of law.

The chairman suggested that in the interest of speed Mr. Mosely and Mr. Cannon should consult and bring in a recommendation next week for a solution of the Székely problem. Mr. Mosely and Mr. Cannon agreed to this suggestion. Mr. Knight declared that he would like to support Mr. Mosely's suggestion. He did not think that there was a complete parallel between the situations in Massachusetts and in Transylvania. In Massachusetts the French Canadians had come of their own will to a country whose laws they could learn before they arrived. In Transylvania, on the other hand, the Székely had been there before the formation of a Rumanian state and the latter had been imposed over their heads. This seemed to him to justify some degree of autonomy for the Székely. The chairman declared that Mr. Knight should be added to the Transylvania sub-subcommittee. He asked whether anyone else wished to speak on this subject.

EAST EUROPEAN BOUNDARY PROBLEMS, PART II

Yugoslav-Hungary Boundary

The chairman asked Mr. Black to enlighten the subcommittee on the situation in territory disputed between Yugoslavia and Hungary and on possible solutions with respect to that area. Mr. Black explained that there were five districts involved in this dispute, two in the northwest and three in the northeast. The American proposal in 1919 had given some of this territory, all of which was eventually included in Yugosla- via, to Hungary. The proposed American line had been drawn largely on ethnic grounds.

The two northwestern districts were Prekomurje and Medjumurje. The former of these had a population of slightly over 90,000 and had been occupied by Hungary in 1941. The population of Prekomurje was very largely Slovene. There were, however, twelve thousand Magyars in twenty-five communes along the Hungarian border. In these communes there were also approximately one thousand Slovenes. In three communes along the Austrian frontier there was a majority of German-speaking inhabitants. The total of Magyar and German minorities equaled approximately 15 percent of the population of Prekomurje. These two sets of communes could be detached from Yugoslavia without doing any injury to the area in general. The railway lines through Prekomurje ran from southwest to northeast and were not in any case out by the Hungarian boundary. Medjumurje was almost entirely Croat in population. There was no commune with a majority of Magyars, who totalled only 6,000 or less than 7 percent of the total. There was no strategic, economic or ethnic argument for ceding any part of Medjumurje to Hungary. The Hungarian forces had occupied the district in 1941 for the "historical" reason that it had formed a part of Hungary proper before l9l4.

Mr. Pasvolsky asked whether there were any Croats or Slovenes across the border in Hungary. Mr. Black explained that there were some 56,000 Yugoslavians of all groups in Hungary. These were in general scattered throughout the country and were not concentrated opposite the districts of Prekomurje and Medjumurje. The greatest concentration was in a north-south corridor leading to Czechoslovakia which had been the original excuse for a proposal which would link the two Slav states by a corridor between Austria and Hungary. Mr. Black added that almost all of the inhabitants of these two districts were Roman Catholic. The few Protestants in Prekomurje were mostly Magyars living along the eastern frontier.

Mr. Black then pointed out on the map2 the location of the three northeastern districts, the Baranja, the Baka and the Banat. The total population of this area in 1921, which was the date of the last census which showed language statistics, was 1,346,000. Various types of Slavs --Serbs, Croats, Slovenes and two minor groups, Sokci and Bunjevci-- totalled 506,000 or some 38 percent of the entire population. The two minor Slav groups, Mr. Black explained, were concentrated in the northern part of the area and were Roman Catholic. Some 380,000 Magyars were scattered throughout the three districts. Hungarian revisionist maps which showed solid blocks of Magyar territory were deceptive. The largest city was Subotica, with a population of 100,000, most of whom were Yugoslavs. The Hungarians were concentrated in the southern parts of the three districts where the land was better than in the north. The Germans, of whom there were some 300,000, were most numerous in the Banat, where they constituted the largest single linguistic group. Hungary had occupied the Baranja and the Baka. The Germans were said to have occupied the Banat and to have turned over the administration to the local German population. This, however, was uncertain.

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2 Yugoslav Series Map 1, Yugoslavia--Political Divisions. This area had an extenslve transportation system. The Danube and Tisza Rivers and the Francis and Francis-Joseph Canals were all internationalized. Communication could therefore remain free no matter which country had sovereignty over the area. The extensive railway system, which had been built largely when the area was under Hungarian rule, included four or five lines leading south from Subotica and two transverse lines. One of these was the Szeged-Temesvár- Bucharest line.

According to Mr. Black,population distributlon was very complicated in these three districts. In the Baranja there was no districts which had a majority of any one of the three linguistic groups, Yugoslav, Magyar or German. The Baka had a population of some 735,000, and in only two of the dozen districts of the area was there a majority of any language group. This majority was in both cases Serbo-Croat. In the eleven districts of the Banat each of the three ethnic groups had a majority in two districts. All this meant that it was impossible to draw an ethnic line through the area.

Economically, the area was valuable chiefly as wheatland. For this reason it was more important to Yugoslavia than to Hungary. Even within its reduced 1919 frontiers Hungary had had an excess of wheat. None of Hungary's lost forests and mines were located in these three districts.

Mr. Pasvolsky asked what had been the administrative picture in these three districts. Mr. Black explained that in 1920 Prekomurje had formed part of Slovenia, Medjumurje part of Croatia and the other three had formed an autonomous province within Yugoslavia. After King Alexander's reforms of 1929 Prekomurje had been included in the province of the Drava, Medjumurje in the province of the Sava, and the Baranja, the Baka and the Banat had formed part of the Province of the Danube which had included Belgrade and north Serbia. The map showed the 1943 conditions of these areas. The first four had been occupied by Hungary, the Banat was variously reported to be occupied by Germans or to be under the rule of Nedi.*

Mr. Black suggested that there were three possible solutions with regard to the Baranja, Baka, and Banat. The first was to return them all to Yugoslavia. This could be justified by Yugoslavia's part in the war and by its need for wheat. The second possibility was to return

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*The "Yugoslav Banat" was never part of the jurisdiction of the Serbian government of Belgrade forrned under the presidency of General Milan Nedi. Rather, it was governed directly by the occupying German command, with the collaboration of the representatives of the Swabian population. them to Hungary in accordance with the claims of the Hungarian revisionists, who in fact desired all Yugoslavia north of the Danube and Drava. In this opinion there was insufficient ethnic or economic argument for such a shift. The third possibility was to divide these three districts, perhaps in accordance with the American proposal of 1919.* That would roughly equalize the minorities on both sides of the line; one-third of the Baranja and three northern districts in both Baka and the Banat would be transferred to Hungary. This equalled one-fifth the area of these three territories, the least desirable area economically. The chief argument for such a division would be a desire to do justice to Hungary, based on the idea that Hungary had an ethnic claim to this area. It might also be argued that the Germans, who with the Magyars totalled 700,000 in the whole area, might prefer to be under Hungarian rather than Yugoslavian rule after the war.

Division in accordance with the 1919 American proposals would leave a minority of approximately 168,000 Magyars in that part of the district left to Yugoslavia and would transfer approximately 175,000 Yugoslavs to Hungary. This in turn might lead to forcible exchange of populations, to optional exchange of populations or to an optional exchange with a reciprocal minority treaty. The Magyars had argued in the past that a minority agreement with Yugoslavia would have been useless since Hungary's relative lack of a Yugoslav minority had prevented it from having any sanction over Yugoslavia's treatment of its Magyars. Mr. Black remarked further that there were some 75,000 Magyars in the rest of Yugoslavia and 56,000 Yugoslavs in Hungary.

There was one additional territorial problem in this area, Mr. Black explained. In the southern Banat some 80,000 Rumanians constituted an important minority. Through this area ran the railroad from Temesvar to the Danube River. Cession of this area to Rumania would be of economic help to Rumania. In 1919 the American Government had favored Rumanian sovereignty in this area.

The chairman thanked Mr. Black for his very clear presentation. He desired to suggest an amendment in terminology whereby reciprocal agreements concerning minorities might be referred to as "conventions." This would prevent them from being confused with the 1919 treaties. He accepted Mr. Pasvolsky's suggestion that they might be called "civic rights conventions." These would differ from the minority treaties in that their acceptance was not a prior condition insisted upon by the

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* Cf. Map 6. great powers as preceding a territorial cession. He then invited discussion on the problem of the Yugoslav-Hungarian frontier.

Mr. Berle asked whether this was not a typical case for indulging a presumption in favor of the 1919 border. Mr. Cannon declared that he would like to make several comments on the report. He pointed out that since April 1941 there had been a considerable exchange of population in this region. Although there were no statistics available he knew that many Yugoslavs had returned from Hungary. Concerning the economic status of the area, he thought that it should be pointed out that the Yugoslavs argued against the return of the disputed areas to Hungary partly because this would mean the elimination of the land reforms and would return the agricultural holdings to the great estates of Hungary. As a matter of fact, the Yugoslavian land reform had not accomplished very much.

Finally, Mr. Cannon pointed out that there had been in the months immediately prior to the outbreak of the war in 1941 strong indications that a basis had been laid for a Yugoslav-Hungarian understanding whereby the boundary would be shifted to a line which approached Mr. Black's compromise suggestion. Revival of such an agreement seemed, however, very difficult. Teleki, who had represented Hungary in the negotiations, and Prince Paul, who had represented Yugoslavia, were dead and in disgrace respectively. Mr. Berle pointed out that Teleki's suicide had resulted partly from the fact that Hungary had felt obliged to move in by force to settle a question on which he had reached a peaceful agreement. Mr. Cannon believed that the Teleki Treaty had been signed in December 1940.

Mr. Mosely noted that Mr. Cannon had spoken of an exchange of population and wondered whether any Magyars from Yugoslav territory had returned to Hungary. Mr. Cannon believed that any movement in that direction had been very small. The Hungarian Government had not done much to promote immigration from Croatia or to the regions occupied by Hungary. Mr. Mosely supposed that the exodus of Yugo- slavs from Hungary had been more in the nature of expulsion than in

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* The Hungarian-Yugoslav Treaty of Perpetual Friendship was signed in Belgrade on December 12, 1940. It contained no reference to revisionism, although the matter had come up in the course of the preliminary discussions. Hungary wanted to get back the Murje region (Prekomurje and Medjumurje) along with two-thirds of the Baranja triangle and of the Backa (to the Francis Joseph Canal) while the Yugoslav party offered to return only the districts of Senta (Zenta) and Topolje (Topolya). an exchange, and Mr. Cannon admitted that it had been accomplished by some massacres.*

In answer to the chairman's question concerning Hungarian- Yugoslav negotiations of 1940 Mr. Cannon explained that they had apparently been initiated by Hungary but that the full trustworthiness of his information was in question. Mr. Berle added that he had been given to understand that Teleki himself had taken the first steps. Mr. Pasvolsky pointed out that Yugoslavia would have been unlikely to initiate any negotiations which would result in the loss of Yugoslav territory. Mr. Cannon declared that he did not know the technical terms of the agreement nor the size of the population which was involved. The chairman explained that he desired as much information as possible concerning these negotiations since in these matters the subcommittee should be looking for a solution in terms of principle and since such a solution should have regard for the degree of freedom and sincerity of the interested parties when they had come close to a solution by direct negotiation.

Mr. Berle thought that whatever chances this agreement might have had in 1941 had now vanished. Hungary had broken its word and had behaved badly.** Now that Yugoslavia was in the war, could one do any more than return to the status quo ante? Personally he saw no compelling reason to do anything else. The chairman observed that such a solution followed Mr. MacMurray's ideas concerning the Polish- German frontier. Mr. Berle remarked that Yugoslavia might not be in a condition to behave quite as Poland did but asked what else any member of the subcommittee would propose. The chairman declared that if the United Nations made Yugoslavia the base of military operations yet gave part of Yugoslav territory away on the basis of a Yugoslavia-Hungarian agreement which had been made before the Hungarian atrocities in Yugoslavia, he would not know how to answer a Yugoslav who objected to this arrangement. Mr. Berle declared that he would not either. In his mind the real question was whether there was to be a Yugoslavia at all.

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* According to Hungarian historians, about 3,000 Yugoslavs, mostly Serbs, were killed in these massacres. Recent publications based on hitherto secret Yugoslav documents estimate that late in 1944 and early in 1945, Tito's victorious partisans murdered 15,000 to 35,000 Hungarians in the same region. See, Tibor Cseres, Vérbosszú Bácskában (Budapest, 1991).

** The statement pertains to the fact that only four months after the Hungarian-Yugoslav treaty was signed, on April 11, 1941, Hungary joined in the German offensive against Yugoslavia. GENERAL APPROACH TO TERRITORIAL PROBLEMS

Mr. Cannon asked whether all recommendations concerning frontiers reached by the subcommittee, even if agreed to by the po1icy-making officers of the Department, by the American negotiations and by the Peace Conference, were meant to be unalterable. The chairman answered that they were not. In his understanding, these recommenda- tions were not to be imposed upon the smaller states. They were being discussed because the United Nations were ready to facilitate negotia- tions between interested powers. As Mr. Pasvolsky had declared at an earlier meeting, it was important that the subcommittee look at these matters not as possible items on the agenda for the Peace Conference but as agenda primarily for negotiation between two interested states. The important thing was that these negotiations be facilitated by the United Nations, not that the powers impose a settlement in the dispute. In the chairman's opinion, it was important to enunciate the principle of return to the 1937 frontiers, or otherwise the United Nations would have no restraint on a state which had local power at the close of the war. It was important to keep in mind the importance of the 1937 frontiers as a restraint upon both friend and foe. Mr. Pasvolsky noted that this would not prevent considerable flexibility, for example in Transylvania. He and the chairman agreed that the fact that both parties to the dispute were enemy states allowed a certain extra freedom.

Mr. Berle was of the opinion there was some difficulty in seeing the need for a Yugoslav-Hungarian frontier to appear on the agenda for the Peace Conference. Hungary's claim was historical, not ethnic or economic except in so far as recent population movements gave Hungary an ethnic claim. The United Nations should not indulge that sort of claim. Mr. Cannon added that negotiations at the end of the war would be impossible between these states. The chairman explained that according to the principles enunciated by Mr. Pasvolsky it was not a question of putting items on the agenda for the United States to bring up. Mr. Pasvolsky added that all the United States was interested in was an amicable solution of territorial disputes and that if we could use our good offices in furthering such a solution so much the better. The chairman pointed out that we acquired knowledge of situations in order to be able to use our good offices when required. There was no schedule of when any such negotiations should take place or whether they should take place at all. i>Application to the Yugoslav-Hungarian Frontier

Mr. Pasvolsky thought that the five districts in dispute by the Yugoslavs and Hungarians could be relegated to that category of disputes which the United States had no reason to bring up. The chairman asked whether all the members of the subcommittee were agreed on that point. Mr. Cannon asked whether this decision was meant to include the Rumanian claims on the southern part of the Yugoslav Banat. The chairman answered in the affirmative.

EAST EUROPEAN INTERNAL PROBLEMS, PART II

Hungarian Land Holding and Land Reform

The chairman asked Mr. Power to introduce the subject of Hungari- an landholding. Mr. Power explained that the Regency had carried out no real land reform in Hungary. More than 98 percent of the holdings were still in units of twenty-nine hectares or less. The average for this group was a holding of only 3.4 hectares. Only 5.5 percent of the agricultural land was in large farm holdings of between 29 and 58 hectares. The medium size estates comprised 85 percent of the holdings and 18 percent of the land. The large estates comprised less than 1 percent of the holdings but 29.5 percent of the land. Even the chart3 did not show a true picture of the concentration of ownership, since in many cases one owner had several holdings.

Over half the arable land, Mr. Power continued, produced cereal crops. The land reform carried out between 1920 and 1925 had distributed only 666,000 hectares or 2 percent of the land. These had been parceled out in very small plots insufficient to provide a living for a peasant family. The landless proletariat on the large estates had been particularly hard hit by the depression. These conditions of landholding made a program of land reform possible. If all medium and large estates, that is, those of 58 hectares and above, were broken up, 3,700,000 hectares of land suitable for redistribution would be available. The first difficulty in such a program arose from the fact that one-half of the land in these estates was entailed. It was held largely by the church and by municipalities, which rented it out in small lots. The

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3 Hungarian Series, No. 1, Hungary - Landholding, 1930.

* The land reforrn in the early 1920s affected not 2, but 8.5 percent of the country's arable land. This, however, was still a much lower proportion than the area of land subdivided in the neighboring countries. redistribution of these 3,700,000 hectares would make it possible to increase 200,000 peasant holdings to a size which would provide an adequate standard of living. Mr. Power believed that the minimum size of the peasant holdings should vary from 8 to 50 hectares depending on the quality of land. A one-horse farm of 8 hectares on good soil would provide adequately for a peasant family. In northern Hungary, however, closer to 50 hectares would be needed. Furthermore the peasants would need financial assistance in order to acquire the necessary livestock and machinery.

At the same time, Mr. Power considered, an attempt would have to be made to diversify Hungarian agriculture. The peasants should change over from production of grain to the production of fruits and vegetables and the raising of livestock. He stated that up to the present time the large estates produced more per hectare than the small holdings, but at the same time they did not provide a decent living for the peasants who worked the land. The chairman asked Mr. Knight whether he cared to add anything to this report. The latter replied that he was not particularly acquainted with this area. The chairman then asked what could be considered the necessary number of acres for subsistence living according to Hungarian standards. Mr. Power replied that the German population in Transdanubia maintained a respectable standard of living on 15 acres. They were able to buy meat, coffee and sugar. It was worthy of note that their land was not exclusively devoted to grain since they raised considerable livestock. The problem following land reform and agricultural diversification would be to find the necessary markets. It might be that this would involve the industrial- ization of Hungary, lower tariffs in neighboring states and other adjustments.

The chairman asked what the interests of the United States were in this internal Hungarian problem. He hoped that some of the economic experts present would reply. Mr. Stinebower commented that this Hungarian problem had implications for commercial policy in the entire European area. Under one system the small countries devoted themselves largely to agricultural production for export and easily gravitated into making special arrangements with Germany which put them economically at the mercy of that industrial country. On the other hand, high tariff restrictions set up by these countries and attempts at increasing self-sufficiency tended to lower the standard of living and so to result by another route in a dangerous political situation. He did not suppose that the immediate social implications of Hungarian landown- ing were of importance to the United States. The chairman commented that the primary interest of the United States was in the stability of societies all over the world. Mr. Stine- bower pointed out the two main choices: first, a free trade economy leading to a higher standard of living but less stability in times of world crises and, second, a balanced self-sufficiency with a lower standard of living but more continuous stability. He wanted to point out that conditions in the surrounding area were relevant to the degree of stability which any state could attain. Mr. Wadleigh suggested that a rising standard of living in foreign countries might be more to the interest of the United States than mere economic stability. From the point of view of peace the choice was between stable, isolated societies and progressive societies linked with the outside world.

PROCEDURE, PART II

Economic Research and Discussion

The chairman observed that in the subcommittee's consideration of economic facts it should avoid the danger of jumping from the difficul- ties of a given country into a solution provided by world organization and the world situation. Any country's salvation would have to start with domestic developments. The world would not, of course, attain peace and a higher standard of living unless the nations agreed on some standard of international economic relations, on the importance of the principle of mutual advantages and rights. Nevertheless, we must not study the difficulties of one country only in world terms also in terms of the conditions within that country. He therefore suggested that PS and ES should present economic reports under two heads: (1) the scope of the economy of the given country and the remedial measures which it could take and (2) the relations of that state to the international economic organizations it is hoped to establish.

Mr. Pasvolsky considered that this statement of the chairman was very worthwhile, and added that Hungary was a good example. In spite of the predominance of agriculture in Hungary, only one-half the population depended on agriculture, if he remembered correctly. Mr. Power pointed out that the actual figure was 55 percent. Mr. Pasvolsky continued that that population produced an agricultural surplus for international trade. The problem had always been what to do with the Hungarian population. Could Hungarian agriculture, if built on a better system of land tenure and land exploitation, absorb more of the Hungarian population? If land reforms led to emigration from the rural districts, the Hungarians would be confronted with the problem of what to do with the rest of its economy. The subcommittee needed to explore the possibilities of Hungarian industry. This industry had been sufficiently advanced to produce goods for export. What had held it back?

Mr. Pasvolsky continued that the economic structure of a country was of the utmost importance for internal social and political conditions as well as for its international position. He thought that the United States was interested in the political and social stability of foreign countries and in their economic progress. He hoped that we could get away from the idea of economic stability and think in terms of economic progress [that] would attain political and social stability.

The chairman suggested to the members of PS and ES* that the time had come to develop a set of principles for discussion of economic conditions and economically important areas comparable to those which had been worked out for boundary questions. Only by this method could the subcommittee avoid the rather spasmodic discussion of economic matters which had taken place with regard to Upper Silesia and similarly important areas. He thought that the boundary principles arrived at by the subcommittee had enabled it to organize its thought rationally concerning frontier problems. He hoped that Mr. Mosely would be able to report at the next meeting on some such organization of principles for economic problems. This was a matter of codification rather than of research and should not be an arduous task. Mr. Pasvolsky expressed the hope that at the next meeting the subcommit- tee might spend a little time discussing what it wished to know about a country economically. The subcommittee had already set out a schedule of necessary political and boundary information. In order to complete the picture it would be necessary to figure out how best to enable the subcommittee to visualize the economic life of a country, say of Hungary behind its projected borders. The chairman considered that success in this matter would help the political committee in its discussion of an East European Union.

When Mr. Pasvolsky expressed the hope that Mr. Stinebower would present a statement on this question at the next meeting, the latter asked for further clarification of what was wanted. He asked whether the subcommittee desired an analysis and presentation of what it wanted to know concerning a country as it exists or of that country without pre-conceptions as to its boundaries. He noted that most boundary discussions which had occupied the subcommittee had not

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* PS = Political Subcommittee; ES = Economic Subcommittee. involved areas of great economic importance. On the other hand, in the relations of Germany, Czechoslovakia and Poland or of Germany, France and Belgium the major economic facts paid no respect to political boundaries, present or future.

The chairman replied that he understood Mr. Pasvolsky desired a study of the economics of a country within definite frontiers and that was what he himself had had in view. It was necessary to study the resources actually within the political boundaries of a given country. He was interested, for example, in learning the possibility of improved transportation and water power within Yugoslavia. He admitted that it was necessary to know how the economics of a country fitted into the world situation or regional groups in order to know completely what was economically feasible; nevertheless, he did not wish to have all discussions of a particular country's prospects left hanging on future world conditions and organization.

Mr. Pasvolsky remarked that what Mr. Stinebower had just said illustrated the kind of discussion which the subcommittee needed. It had to determine whether it was to deal with the facts of a nation's economy and with the facts of world economy on the one hand or with the facts of the overlapping of economic considerations across national frontiers. It was impossible to understand the economy of a country inside its frontiers and in relation to the world economy unless the subcommittee explored also the relations of that country to its immedi- ate surrounding area.

Mr. Cannon added that in his opinion it was high time this discussion had taken place. He recalled that a few weeks ago the subcommittee had drawn a frontier in the Istrian Peninsula with the purpose of including the coal mines within Italy on the grounds of economic necessity. He remembered, however, that Italy had managed very well before 1914 when it had not possessed these coal mines. The chairman thought that Mr. Cannon had not given a completely fair picture of this boundary decision. According to him the subcommittee had awarded the local mines to Italy because of the sentimental value of this coal to the Italians. The subcommittee had specifically recog- nized that this coal represented only some 800,000 tons out of an annual consumption of approximately 15,000,000 tons. Mr. Cannon asked whether this sentimental principle was to be applied generally. The chairman declared that it was not. He admitted that it was arguable whether the principle which the subcommittee had applied was good or not. Mr. Pasvolsky pointed out that in making this boundary decision the subcommittee had made no real study of the economics either of Italy or of Yugoslavia. The chairman remarked that the American Government was not expected to take up an unalterable stand on the basis of the subcommit- tee's recommendations. A shift in the major power situation would force an adjustment of the subcommittee's tentative conclusions.

Mr. Knight observed that a study of the 10,000,000 economic enterprises of Italy, even if it could be carried out with the limited staff of ES, would not constitute a description of the Italian economy. In his opinion these 10,000,000 enterprises did not have any organic unity which meant that they constituted an economy. It was in fact question- able whether there was any such thing as a national economy. The chairman replied that the subcommittee employed a loose layman's use of the word economy. He admitted, however, that in this subcommittee, no more than in any other committee of which he had knowledge, the members had faced up to the question of what to do within a country. In Hungary the problem sprang from the landholding situation.

EAST EUROPEAN INTERNAL PROBLEMS, PART III

American Interest in Hungary

The chairman continued that control of land policy in Hungary lay in the hands of the Hungarian government. He would like to know what place this landholding had in American interest and policy. Mr. Power explained that his memorandum on Hungarian Landholding had been begun as part of a study of the possibility of securing a more stable and prosperous Eastern Europe. In the case of Hungary a clear necessity was breaking the economic and thereby the political power of a ruling class which had been a trouble maker in Europe. It was felt that if no reform program with regard to Hungarian landholding was ready at the close of hostilities, the local population and neighboring states would alter the situation by force. He understood that a peaceful method of change was preferable. He also believed that only by the creation of a more democratic state based on a more equitable agrarian economy could Hungary have peaceful relations with its neighbors. Agrarian reform would also aid in the problem of disposing of the world wheat surplus. If the United States desired a stable eastern Europe, it would have to back some group which stood for the four freedoms for which the United States declared it was fighting. The only way that such a group could win power in Hungary would be on a program of land reform. He did not mean that officers of the Department of Agriculture would go to Hungary and supervise the breaking up of large estates and their redistribution among the peasants. It was rather a matter of supporting a group which would carry out such policy. At the same time it was only realistic for the American Government to make a study of what would be practicable in the way of land reform.

William Koren, Jr.

x x x

PROCEDURE

Statement on Recommendations

The subcommittee agreed that a summary statement should be prepared of its recommendations and of the arguments supporting them.

Economic Research and Discussion

It was suggested that studies of a country's economy should consider first, the remedial measures which that country was capable of undertaking and second, its relations with projected international economic organizations. The question was raised whether there was any such thing as a "national economy" or whether the business enterprises did not have to be considered as part of a functional structure which transcended political boundaries. It was agreed that a country's economy must also be considered in terms of the surrounding economic region.

It was hoped that at the next meeting there could be presented for criticism a set of principles for the discussion of economic problems comparable to those which had been successfully elaborated for the discussion of boundary problems.

GENERAL APPROACH TO TERRITORIAL PROBLEMS

It was understood that the subcommittee should discuss all territori- al problems likely to arise after the war. In many cases, however, the subcommittee undertook its study merely in order that, should two disputants choose to negotiate a settlement and call upon the good offices of the United States, this government would possess the necessary data. EAST EUROPEAN BOUNDARY PROBLEMS

Transylvania

The subcommittee resumed discussion of the population distribution in Transylvania. It took note of the concentration of Magyars in the Székely districts and along the Trianon frontier, where the railway was of considerable importance to areas inhabited by Rumanians. It recognized that any exchange of populations would involve a revision of the economic life of the people concerned and that the Vienna award left three times as many Rumanians as Magyars outside the territory of their respective states.*

It was suggested that the subcommittee abandon the ethnic approach and decide either to give all the land up to the Carpathians to Hungary or to restore the pre-war frontier. Such a solution rested on the principle that the more stable element should be given optimum frontiers and entrusted with the construction of the state. Assuming that the United Nations would occupy both Rumania and Hungary, the subcommittee recognized that the view of the United Nations concerning the proper frontier between them might well be embodied in a tempo- rary administrative boundary within the area of occupation.

Yugoslav-Hungarian Frontier

It was explained that five areas in northern Yugoslavia were claimed by Hungary. In, Prekomurje 25 border communes had a population over 90 percent Magyar, and three on the Austrian border had a German-speaking population. These could be detached without economic damage to Yugoslavia. There was no adequate strategic, ethnic or economic argument for Hungary's claim to Medjumurje. The Baranja, Baka and Banat had a mixed Yugoslav, Magyar and German population; the Yugoslavs were the largest group but only 38 percent of the total. Local subdivisions showed an equally indecisive ethnic distribution. In the southern Banat was a concentration of Rumanians in an area important to Rumania by reason of its railway. Economical-

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* The statement is inaccurate. According to the Romanian (!) census of 1930, 1,149,000 Romanians got annexed to Hungary, and 444,000 remained in Romania. Counting the few thousand Romanians living in Hungary after Trianon, too, the ratio is 2.5:1. However, taking into consideration the migrations of the 1940s, as well as the distortions of the Romanian statistics, it is evident that Romanian "predominance" was exaggerated. ly, these three wheat-growing areas were more essentsal to Yugoslavia than to Hungary. The navigable rivers and canals were all internation- alized. It was pointed out that since April 1941 there had been a considerable withdrawal of Yugoslavs from these territories under Hungarian rule.

The subcommittee took note of the fact that the American represen- tatives of 1919 had proposed to leave some of the Baranja, Baka and Banat in Hungary and to award a portion of the Banat to Rumania, and that Yugoslavia and Hungary had reached agreement in December 1940 for adjustment of the frontier. It recommended a restoration of the 1920 boundary.

EAST EUROPEAN INTERNAL PROBLEMS

Székely Autonomy

The subcommittee discussed briefly the possibility of granting autonomy to the Székely in the event that Rumania obtained the major portion of Transylvania. The chairman referred this question to a sub- subcommittee composed of Mr. Mosely, Mr. Cannon and Mr. Knight, which should report at the next meeting.

Hungarian Landholding and Land Reform

It was explained that 98 percent of agricultural landholdings in Hungary were in holdings of less than 29 hectares. The peasants farming them or working on the large estates were impoverished. If estates of over 58 hectares were broken up, 3,700,000 hectares of agricultural land would be available for distribution, or enough land to provide farms of between 8 and 50 hectares for 200,000 peasant families. The technical difficulties of such a program included the fast that much of the land was held by the church and municipalities, the cost of supplying the necessary livestock and machinery, the necessity of persuading the peasants to take up a more diversified agriculture, and the need to prepare for repercussions on Hungarian industry and trade.

It was suggested that the landholding system of Hungary was of interest to the United States since, by retarding economic progress in

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* The Hungarian-Yugoslav Treaty of Perpetual Friendship signed on December 12, 1940, did not contain any reference to boundaries. that country, it promoted a condition leading to social and political instability and thereby constituted a danger to peace. Since support of an Hungarian political group dedicated to land reform seemed the most that this country could conceivably do to alter this situation, it was important to study the practical possibilities of land reform.

Box 59

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Wartime American Plans for a New Hungary