Under the Czecho-Slovakia (Financial Assistance) Act 1939 HM Government repaid to the Bank of England the £10 million they had been asked by the Government to advance to Czecho-Slovakia after the Munich crisis of 1938. The Act also gave statutory authority to agreements reached on 27 January 1939 and published as Cmnd 5933.
Due to the occupation of Czecho-Slovakia by Germany on 15 March 1939 the operation of these agreements was interrupted. Out of the original £10 million, £6 million had already been advanced as a loan "for the general purposes of the reconstruction of Czecho-Slovakia, including the relief and settlement of refugees in Czecho-Slovakia as at present constituted" but only £3½ million was left and held by the National Bank of Czecho-Slovakia at the Bank of England on the Loan Account (there was £3¼ million left and held in the Gift Account out of the original £4 million (of the £10 million) which was to be used to "assist in the emigration of refugees") at that date - the rest had already been used.
All Czecho-Slovak assets were blocked and on 27 May 1939 the Czecho-Slovakia (Restrictions on Banking Accounts, & c. ) Act received Royal Assent. It was hoped by these means to negotiate some satisfactory arrangements by which the service of the Czech loan would continue to be paid to British holders. These arrangements never materialised.
The Czecho-Slovakia (Financial Claims and Refugees) Act 1940 was passed which provided that "the balance on the Loan Account should be paid to a Fund to be entitled 'The Czecho-Slovak Financial Claims Fund' to be used as specified by the Czecho-Slovakia (Settlement of Financial Claims) Order 1940" (provision was also made for the balance on the Gift Account). The Order was introduced before the provisional Czech Government had been formed and was therefore unilateral; it was, however submitted to the Czech Legation in London before being ratified.
The chief purpose of the Czecho-Slovak Financial Claims Fund was to compensate holders of Czechoslovakian government securities and other financial instruments and depositors in Czechoslovakian banks whose funds had been blocked by the German occupation. Claimants included British subjects and refugees from Czechoslovakia.
A Statutory Rule and Order 1940 No 308, which was outlined in Cmnd 6154 ("Scheme for the disposal of the Czecho-Slovak Financial Claims Fund") was published on 7 March 1940. About this time a Czecho-Slovak Financial Claims Office, under Sir Stanley Wyatt, was opened to deal with claims under the Order. The office remained in existence until 1942 and a report by Sir S Wyatt of 5 May 1942 gives an account of the operations of that office from its inception. The remainder of the work connected with the office was transferred to the Treasury in November 1942 - when most of the money in the Fund had already been paid out. After payments due in June 1948 had been made, the money remaining in the Fund was insufficient for any further distribution.
Under the Debts Agreement of September 1949 the Czech Government accepted certain liabilities made under the Order and in October 1949 the whole of the case files and supporting documents of all admitted and paid claims were handed over to the Czecho-Slovak Government.
The Czecho-Slovak Financial Claims Fund was wound up by Section 4 and 5(2) of the Miscellaneous Financial Provisions Act 1950. The last account of the Fund (1949-1950) was presented to Parliament on 25 July 1950.