File No. 763.72112/7885a
The Secretary of State to the Ambassador in Great Britain ( Page )
6429. For Crosby [from Leffingwell, Treasury]:
Treasury 69. On January 26, the President signed an Executive order placing in the hands of Federal Reserve Board the executive administration of section 5 of Trading with the Enemy Act and section 7 of the Espionage Act. Order requires all dealers in foreign exchange to take out registration certificates so that Government may know who such dealers are; also requires from them complete reports weekly of all exchange transactions. This will give valuable insight into what is taking place in United States exchange markets. Also requires parties buying or selling exchange to file with bankers a statement of nature of transaction and declaration of no enemy interest. These statements are to be retained by banks except where Federal Reserve Board thinks necessary to investigate particular transactions. Order also requires in connection with all sales of securities or collection of coupons or dividends for foreign account a statement of no enemy interest; also requires all foreign correspondents of American banks to file statement that account of [Page 955] such American bank with foreign correspondent and also foreign correspondents’ account with American bank will not be used for benefit of enemy or ally of enemy. This last declaration can be tightened into financial blockade by making terms more stringent and circumscribing more narrowly the transactions which foreign bank shall be allowed to undertake with German banks as a condition for being allowed to do business with United States banks. Advisability and necessity of this will appear more clearly when reports of transactions have been received and studied for a few weeks. Are mailing you copies of order and shall deliver copies to all foreign embassies here as well as sending them to our ambassadors in foreign countries. Shall do nothing about tightening present regulations into financial blockade until we hear from you as per your telegram No. 21. Leffingwell.