Office of the Historian

File No. No. 763.72112C26/51

The Permian Legation to the Department of State

Washington, January 25, 1918.

Memorandum

The Legation has been instructed to place before the Department of State, as it hereby has the honor to do, the following facts, with the purpose of seeking a practical understanding whereby the Casa Grande Sugar Plant, established in the valley of Chicama, Peru, may not be forced to close its works, with great detriment to the region in which it operates.

The Casa Grande Sugar Plant, owned and worked by German capital, has been placed on the trading with the enemy list; and in consequence thereof finds it impossible to discount the drafts received in payment of sugar shipped to Chile. Owing to this situation, it will be obliged to close its works, thereby dismissing about 10,000 laborers and employees at present engaged in its service. The sudden and enforced inactivity of such a large number of men would cause unrest and disturbances, social and economic; the general production of sugar in Peru would be curtailed; and, incidentally, the Peruvian Treasury would be deprived of a not negligible source of revenue, through nonpayment of export duties for sugar shipped by the Casa Grande Plant.

In view of these facts, it would seem advisable that an agreement be reached by the Government of Peru and the Government of the United States, whereby the purposes of the Trading with the Enemy Act be not defeated, and unnecessary suffering be not imposed upon the Government and people of Peru.

It should not be impossible to find a means enabling the Casa Grande Plant to continue its operations, without aiding the enemy.

Were the Government of Peru to exact that the net earnings of the Casa Grande Plant be deposited in Peru until after the war, with all necessary guaranties, the object desired apparently would be attained.

The Government of Peru proposes this plan, as one which seems feasible and fair; but it is willing to accept any suggestion from the Government of the United States which might answer the purposes of the Trading with the Enemy Act, and at the same time permit the Casa Grande Plant to discount the drafts received in payment of its sugar, and thereby to continue operating its works.