DEPARTMENT OF STATE Memorandum of Conversation
DATE: September 17, 1952
SUBJECT: Nationalization of IBM Property in Czechoslovakia
PARTICIPANTS: The Secretary Mr. Thomas J. Watson, President of International Business Machines Company Mr. Harold Christiansen, Secretary, IBM World Trade Corporation Mr. Harold C. Vedeler - EE
COPIES TO: EUR EE E DS American Embassy, Prague
Mr. Watson called in the company of Mr. Christensen to explain that the IBM organization in Czechoslovakia (145 employees) had just been nationalized and to raise the question of recovering IBM property. He said that he felt a responsibility to the shareholders to make this a matter of record in the Department with a view to any appropriate actions in behalf of the company.
The IBM representative mentioned that they had been informed about September 1 of the nationalization of the IBM in Czechoslovakia and about August 1 that remittances from it were being stopped. The IBM investment in Czechoslovakia, consisting chiefly of machines sent into Czechoslovakia from Germany and the US since January 1946, amounted to $1,581,000 and in addition the crown equivalent of $1,400,000 in earnings, half of which was transferable in dollars, was blocked. Mr. Watson said that the IBM was prepared to forego the German machines so that the problem was how to get the American machines out of Czechoslovakia and asked what I thought would happen.
After learning that the IBM had a contract with the Czechs whereby after January 1, 1953 the machines might, upon three months notice, be removed from Czechoslovakia, I suggested that in characteristically communist fashion the Czechoslovak authorities would doubtless invent some excuse for evading the contract and attempt to keep the machines.
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In response to Mr. Watson's question whether we had diplomatic relations with Czechoslovakia, I explained that each country maintained a Mission in the other's capital and that while Ambassador Briggs had just returned for a new assignment in Korea both Governments were taking steps to exchange new Ambassadors. I commented that our relations with Czechoslovakia were bad, particularly as a consequence of the outrageous piracy of the Czechoslovak communists in imprisoning Oatis. Since that time measures taken by both Governments had further aggravated relations and the culmination was a case in the New York courts in which funds of the Czechoslovak State Bank were attached. While circumstances were thus not favorable to a settlement of a specific problem with the Czechs, we would do whatever we could to help in the present case. The IBM must also have various means of its own to utilize in the effort to recover the property.
Mr. Watson concluded that the IBM would write a letter to the Department outlining the facts and the action desired. I agreed that notice should be served on the Czechs as to what IBM wanted done and that we would take up the matter with the Czechoslovak Government.
Dean G. Acheson
Note: Further information on this subject is given in Praha's telegram No. 174 of September 17.
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