840.51 Frozen Credits/3650
Memorandum of Conversation, by the Assistant Secretary of State (Acheson)
In accordance with the instruction of the Secretary, given at a meeting which Dr. Hornbeck, Mr. Yost and myself were present with him, I telephoned to Mr. Towson of the Treasury Department, Foreign Funds Control Division, to inquire exactly what had been said between him and Mr. Nishiyama yesterday regarding the provision of free funds by the Japanese for the purchase of oil. Mr. Towson said that Mr. Nishiyama had called to state that he was endeavoring to have funds transferred from South America to the United States to pay for oil for the two tankers now in San Francisco and requested the Treasury not to do anything on the matter until Mr. Nishiyama had proceeded further. Mr. Towson said that he did not know what Mr. Nishiyama thought that the Treasury might do.
Mr. Nishiyama also stated that it might take two or three weeks to arrange the transfer and he wished to know whether if the funds could be made available the Treasury would grant the necessary licenses to permit their transfer to this country and their use in payment for the oil. Mr. Towson had replied to Mr. Nishiyama that each application would have to be considered upon the relevant facts of the particular case. Mr. Nishiyama said that he would continue to work on the matter and would discuss it further with the Treasury.
[Page 869]Mr. Nishiyama then raised the question of the funds for the New York Branch of the Yokohama Specie Bank. It developed that shortly before the freezing order went into effect the bank cancelled instructions which had been outstanding requiring its branches in South American to collect for imports from Japan to South America and to deposit the proceeds in New York. The result was that there was a possibility that the obligations of the New York Branch exceeded its assets. The Treasury stated that this was a matter that would have to be investigated carefully and that it might affect the granting of licenses to transfer [funds] from South America to be used in payment for oil. In other words, if the funds in South America properly belonged to the New York Branch, it was doubtful whether the Treasury would permit them to be transferred to the United States for other purposes.
After learning of this conversation I told Mr. Towson that the Secretary wished us to refer Mr. Iguchi and Mr. Nishiyama to him so that they might continue the discussion as to the propriety of granting a license to transfer South American funds to the United States. He said that he would be glad to continue the discussions and that it appeared from the complexity of the situation that no decision would be reached for some time.