740.00112A European War, 1939/1700a

The Secretary of State to Diplomatic and Consular Officers in the American Republics

Application of Proclaimed List of Certain Blocked Nationals

Sirs: Reference is made to the President’s Proclamation of July 17, 1941, authorizing the issuance of the Proclaimed List of Certain Blocked Nationals, the objectives of which have been explained in the enclosure to circular instruction of the Department dated September 9, 1941.16

With a view to accomplishing these objectives, it is hoped that the effect of the program herein outlined will be to cut off, as completely as possible, all relationships between persons subject to the jurisdiction of the United States of America and Proclaimed List nationals.

Certain types of cases have already been brought to the attention of the Department, and they are presented below, in general categories, with comments for your guidance. Wherever reference is made to “Proclaimed List nationals”, the term should be understood to include others to the extent that they are known to be acting for the benefit of such Proclaimed List nationals.

It should be noted that this instruction is limited in scope primarily to relations of persons subject to the jurisdiction of the United States with Proclaimed List nationals. The Governments of several of the American Republics have already inquired of this Government as to the measures which they may take further to implement the Proclamation and to attain its objectives. You will, from time to time, receive separate instructions as to suggestions to be made in such instances. (See Circular Instruction dated September 9, 1941). It is hoped that, with the cooperation of the Governments of the American Republics, plans may be worked out which will be sufficiently comprehensive to embrace transactions between local concerns and Proclaimed List nationals.

These instructions set forth the standard of conduct which this Government expects United States concerns to follow in their dealings with persons on the Proclaimed List. The categories enumerated are not, of course, all-inclusive. With respect to situations not covered herein, you may be guided by the principles set forth with respect to the situations herein dealt with. If any other important categories come to your attention which you feel require specific instructions, please advise this Department immediately.

If a United States concern refuses to follow the standard of conduct [Page 287] set forth herein, any one of the following sanctions might be employed in connection with such concern:

The name of such concern might be placed on the Proclaimed List of Certain Blocked Nationals in so far as its local operations are concerned. This will also subject to control any relationships between this country and branches of such concern in the American Republics.
Such concern or merely its Latin American branches, without being placed on the Proclaimed List might be treated as a blocked national under the freezing order and its assets in the United States blocked. The business activities of the concern in the United States or all financial and trade relationships with its branches in the American Republics may thereby be subjected to licensing control.
Such concern might be prosecuted criminally for violations of the provisions of the freezing control order and the Proclamation of July 17.
Other appropriate sanctions might be employed.

It is essential that United States concerns follow the standard of conduct set forth herein, not only because the cessation of all relationships between such concerns and the Proclaimed List nationals is in itself important in accomplishing the objectives of the Proclaimed List, but also because refusal to adopt such standard of conduct by United States concerns would have a harmful effect on the attitude of the local governments of those American Republics who are attempting to cooperate with this Government and with whom we are attempting to work out plans for restricting the dealings of local non-United States concerns with Proclaimed List nationals.

1. As used in these instructions, the terms “person subject to the jurisdiction of the United States” and “United States concerns” shall include:

any citizens of the United States whether within the United States or within any foreign country;
any person within the United States;
any partnership, association, corporation, or other organization
which is organized under the laws of the United States; or
which has its principal place of business within the United States; or
which is owned or controlled by, directly or indirectly, one or more persons subject to the jurisdiction of the United States as herein defined; and
any agent, subsidiary, affiliate or other person owned or controlled, directly or indirectly, by any person subject to the jurisdiction of the United States as herein defined.

2. Banking Activities by branches of United States banks.

The United States banks which have branches in the American Republics are being advised by the Treasury Department that such branches may not extend credit or render service of any other kind to Proclaimed List nationals except under license. Such branches are [Page 288] required to make every reasonable effort to force the immediate liquidation of all outstanding loans to such persons with respect to loans repayable on demand; when loans are payable at some fixed maturity, repayment must be required as of the earliest maturity date. With respect to deposit account relationships with Proclaimed List nationals, branches of United States banks may not receive new deposits of local currency from such persons except under license and must close out all such accounts and complete the liquidation of all such transactions. Thereafter no transactions may be engaged in except those incidental to the clearing of checks deposited to the credit of depositors not on the Proclaimed List, but with respect to which checks Proclaimed List nationals may have had some interest.

. . . . . . .

It is realized that adequate banking facilities may nevertheless be made available to Proclaimed List nationals by local banks. It is hoped, however, that with the cooperation of the governments concerned local banks may eventually be required to take parallel action.

The Treasury Department is also advising these United States banks that transactions by their branches in the American Republics in United States dollars are subject to the provisions of the Proclamation and Executive Order No. 8389; that no such transaction may be consummated and even liquidating transactions may not be carried forward, except pursuant to license. The United States banks also are being advised that their branches must immediately set aside that portion of the United States dollar deposits carried with their own head offices or other banks within the United States which represents their equivalent liabilities in terms of United States dollars to Proclaimed List nationals. Thereafter such branches may not engage in any transactions in United States dollars with, for the account of, or for the benefit of any Proclaimed List national except under license.

If any prohibited transactions carried on by branches of United States banks for the benefit of Proclaimed List nationals without a license come to your attention, you should immediately report the matter in detail to the Department.

3. Sales by United States concerns to Proclaimed List nationals.

Sales by United States concerns to Proclaimed List nationals of goods whether of domestic origin or whether imported from the United States or other countries are prohibited except under licenses whether such sales are made for cash or on credit. However, minor retail transactions may be consummated without license and you are authorized to inform interested parties accordingly. The determination of what constitutes a “minor retail transaction” depend upon the particular facts involved. It is felt, however, that there would be [Page 289] included within this classification cash over-the-counter sales of goods for personal consumption or use amounting to less than $100.

4. Purchases by United States concerns from Proclaimed List nationals.

Purchases by United States concerns from Proclaimed List nationals are prohibited except under license whether the goods are purchased for export to the United States, for export to other countries, or for resale or consumption within the country where the purchase is consummated. Minor retail purchases may be consummated without license and you are authorized to inform interested parties accordingly. Since in the ordinary case, however, it is easy to determine whether the name of the seller appears on the Proclaimed List, you should discourage United States concerns from making even minor retail purchases from such persons.

5. United States concerns in the American Republics furnishing services to Proclaimed List nationals such as railroad, water, light, power, gas, telephone, telegraph, mechanical services, and other services (except those otherwise specifically covered herein).

In view of the probability that franchises held by some of the aforementioned concerns or local law may require equality of treatment for all customers, this Government for the time being will raise no objection to United States concerns furnishing such services to Proclaimed List nationals without licenses.

Please discuss this matter with the managers of the branches of such United States concerns and ascertain what Proclaimed List nationals are obtaining important commercial services of these kinds and advise the Department.

6. Shipping Companies and airlines transporting goods, wares and merchandise with respect to which a Proclaimed List national is known to have a property interest.

The carrying of freight in which Proclaimed List nationals have an interest, even though the vessel or airplane does not touch at any point within the United States, if the carrier is a United States concern, is prohibited except under license.

Licenses will generally be granted where the carriers are required by the terms of their franchises, or provisions of local law, to render equal service to all customers. In such cases you should promptly communicate the facts to the Department, together with your recommendations.

7. Sales of materials by United States concerns pursuant to contracts between such concerns and Proclaimed List nationals, when the Proclaimed List national is, in turn, under contract to execute projects for local governmental authorities, when the execution of such projects depends upon performance of contract by the United States concern.

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Even though local governmental interests may be involved, such sales are prohibited except under license. Licenses will generally be issued where it is established that refusal to grant such licenses would subject the United States concern to damages for breach of contract. In the event, moreover, that failure by the United States concern to perform its contract may result in serious dislocation of the local economy or undue inconvenience or hardship to the local governmental authority, you should promptly advise the Department of the proposed transaction, together with your findings with respect to any possible liability and other facts. Your comments should also indicate whether it is possible to arrange for the United States concern to deal directly with the local governmental authority, or through some person not on the Proclaimed List. You should, of course, endeavor to work out such arrangements whenever possible.

8. Customs brokers and owners of lighters, docks and other shipping facilities.

When the customs broker or the owner of lighters, docks or other shipping facilities is, himself, on the Proclaimed List, no article exported to, or imported from, the United States or any other goods, wares and merchandise in which a United States concern has any interest, may be shipped to, through, or otherwise handled by him except under license and such license will not ordinarily be granted except in cases of real hardships such as the lack of other adequate facilities.

Customs brokers or owners of lighters, docks or other shipping facilities who are United States concerns may not handle any goods, wares or merchandise in which a Proclaimed List national has any interest, except under licenses. It is hoped that, with the cooperation of the Governments of the American Republics, like concerns not subject to the jurisdiction of the United States may eventually be persuaded to follow similar policies.

9. Newspapers, Magazines, Radio Stations, Theaters, etc.

United States concerns may not advertise in, or otherwise deal with or patronize, newspapers, magazines or radio stations, when such concerns are Proclaimed List nationals, except under license.

Films produced in the United States may not be furnished to theaters which are Proclaimed List nationals, and the distribution of news by news services, which are United States concerns, to Proclaimed List nationals, is likewise prohibited, except under licenses.

When the newspaper, magazine, radio station or theater is itself a United States concern it may not accept advertising material offered to it by a Proclaimed List national except under license. In this connection you should use your best efforts to persuade all such United States concerns to take whatever action may seem appropriate and [Page 291] suitable under the circumstances to implement the President’s Proclamation and the objectives thereof as herein set forth.

You may, in appropriate instances, recommend to the Department that licenses be issued and you should, in all such recommendations, include your comment in the light of the considerations enumerated above.

10. Apartments, houses, office space and hotels.

Persons subject to the jurisdiction of the United States shall not enter into new agreements (including renewals) for the rental of houses, apartments, rooms or office space with owners who are Proclaimed List nationals except under licenses. Such licenses will generally be denied unless it is established that genuine hardship will result through the denial of such licenses (as for instance, because of lack of adequate housing facilities). In such cases you should report the facts immediately to the Department, together with your recommendation.

With respect to bona fide leases now in existence, persons subject to the jurisdiction of the United States should terminate such leases as soon as legally practicable unless genuine hardship would result (as for instance, because of lack of housing facilities) or unless such termination would result in the lessor thereupon being put in a position to enter into new agreements with other persons at increased rentals. Until such leases are terminated you are authorized to advise interested parties that compliance with their terms, including payments of rent, is permissible.

You should, by all appropriate means, attempt to discourage persons subject to the jurisdiction of the United States from using or otherwise patronizing hotels appearing on the Proclaimed List.

11. In those cases where the issue is raised that the failure to perform a particular transaction will result in the United States concern involved being held liable, for breach of contract or otherwise, wider local law, you should be guided by the following considerations:

You should bear in mind that where a license is required under the Proclamation of July 17, 1941, and Executive Order No. 8389, the refusal to grant such a license by the United States Government means that such transaction can not be performed without violating the laws of the United States. Accordingly, the United States concern may, depending upon all the circumstances, be able to excuse performance under local law by reason of the fact that the performance is impossible under the laws of the United States. Of course, whether this defense of “impossibility of performance” would be recognized by the competent local authorities as a valid defense may depend upon a number of factors. In such cases, you should attempt to ascertain from such sources as you may deem desirable how the local authorities [Page 292] are apt to react in such a situation and you should report your findings on this question to the Department as soon as possible.

12. In those cases where you deem such action to be warranted, you should refer to the Department specific requests for licenses to engage in transactions with Proclaimed List nationals. In such cases you should include a detailed report of the relevant facts together with your considered recommendation, having particularly in mind the questions whether:

denial of such licenses would have the effect of causing the Proclaimed List National to enjoy an undeserved profit;
denial of such licenses would have a substantial adverse effect on our relations with the country involved;
disproportionate hardship would be suffered by American interests.

In emergency cases in which time does not permit the filing of an application for a license and deliberation by the Treasury Department in Washington, you are authorized, if you are prepared to recommend the issuance of a license by the Treasury and if you are satisfied that failure so to do would irrevocably produce the undesired results enumerated in (a), (b), or (c) above, to advise the United States concern that, pending determination by the Treasury as to whether a license will be issued, it may perform such part of the transaction as is absolutely necessary in order to avoid irrevocably producing such results.

13. Where a program such as that proposed by Guatemala (see Circular Instructions dated September 9, 1941), is adopted and is approved by this Government, it is envisaged that United States concerns will be authorized to engage in transactions consistent with such program.

14. Where licenses are referred to in those instructions, the procedure to be followed in obtaining such licenses is the procedure set forth in the United States freezing order (Executive Order No. 8389, as amended) and the Regulations issued pursuant thereto. A supply of these documents is being forwarded to you immediately. In appropriate cases you should suggest that applications for such licenses should be made by the head office, parent or affiliate within the United States. In cases where there is no such connection within the United States, applications for licenses under Executive Order No. 8389, prepared in triplicate on Form TFE–1, should be fled with you. In such cases you should assign to each such application a serial number (beginning with 1) prefixed by the name of the city in which your office is located. Two copies of each such application, together with your relative recommendations, should be forwarded promptly to the Department for appropriate reference to the Treasury Department. [Page 293] Supplies of Form TFE–1 are being forwarded to you immediately.

15. With respect to the export of goods, wares and merchandise from the United States, a license issued pursuant to Executive Order No. 8389 does not relieve the exporter of the necessity of also satisfying the requirements of Section 3 of the Proclamation.

Very truly yours,

For the Secretary of State:
Dean Acheson
  1. Not printed.