823.032/42: Telegram

The Chargé in Peru (Smith) to the Secretary of State

33. Department’s 22, February 11, 2 p.m. In conference this morning the President explained that:

Modifications quoted in my number 9, January 8, would supersede and take the place of law as passed by National Assembly December 26;
In order to prevent misunderstanding he was willing to eliminate article 2 altogether. He called my attention to the fact that the Peruvian law provided that where a contract was made for the purpose of defrauding, such contract might be declared null and void and this law would apply in cases where contract was made to avoid the consequences of acts of rebellion or conspiracy;
If law is passed, it is proposed to seize property during rebellion, but if conspirators are discovered after the rebellion is quelled their property is still subject to seizure;
Not only have American companies been alarmed at the prospect of this law being passed but all banks of Lima have sent a signed memorandum to the President pointing out the danger of any law that is of a retroactive nature. They claim that the banks cannot do business with any Peruvian as banks cannot know who has charge of [is charged with?] or who is not mixed up in political plots.

Legation’s January 15, 3 p.m.12 The President reiterated that if Mr. Lansing should find objection to such a law as affecting American capital coming to Peru he would see to it that no such law be passed.

  1. Not printed.