840.51 Frozen Credits/6809

The Ambassador in Argentina (Armour) to the Secretary of State

No. 5278

Sir: With reference to the Department’s circular telegram of April 7, 9 p.m.,64 requesting monthly reviews of developments in Argentina [Page 475]concerning the freezing of Axis assets and other control measures, and referring also to the Embassy’s despatch No. 4926 of May 1, 1942,65 I have the honor to report the following:


Another month has elapsed since the Río de Janeiro Conference without the Argentine Government evidencing any appreciable disposition to adopt measures in accordance with Resolution V of that conference. Virtually the only development of this nature during May was a circular (No. 283) of the Central Bank, dated May 7, 1942, providing restrictions on remittances abroad by drafts, travellers’ checks, etc., presumably in order to provide the Bank with a better check on the destination of funds sent abroad (the Embassy’s despatch No. 5085 of May 14, 194265), but it remains to be seen whether this measure will be used effectively against the Axis countries.

Some encouragement may be found in the fact that Dr. Irigoyen, the Under Secretary of Finance, took occasion to mention to me briefly at the opening of Congress on May 28 that the outlook for greater foreign-funds control here was now more promising. Similarly, Dr. Irigoyen in a conversation with an officer of the Embassy on May 19 intimated that there might be developments here with respect to Resolution V of the Rio de Janeiro Conference in about two weeks thence (the time of the opening of Congress had not yet been announced), and it seems not unlikely that he had in mind legislation to be introduced in Congress shortly after its opening, especially as he had indicated in a conversation with Messrs. Meltzer and Towson66 during their visit here some weeks ago that the Government felt that it did not have authority to go further in the control of financial transactions with or for the benefit of the Axis countries without Congressional legislation. While Dr. Irigoyen’s recent remarks have offered some encouragement, there is, of course, the possibility that the position that the Government must await authorization from Congress before taking additional steps or enforcing more strictly existing measures has been adopted as a convenient means of avoiding responsibility and with a belief that the Conservative-controlled Senate might obstruct the enactment of such legislation.

The attitude of the Argentine Government in the whole matter of Axis-funds control was evidenced in its memorandum of May 8, 1942, sent to the Embassy in reply to representations concerning transfers of funds to occupied France and the release of blocked funds here for [Page 476]the benefit of a German bank and an Argentine subsidiary of the Siemens Company (the Embassy’s despatch No. 5031 of May 11, 194269). The Argentine memorandum appeared to justify the operation of releasing blocked German funds on the grounds of benefits that Argentina would derive, and while stating that “therefore, in the operation itself there is nothing which can benefit foreign countries,” the memorandum did not even attempt to give reasons why Axis interests would not profit by the transaction to the detriment of continental defense.

[Here follows a lengthy discussion of Argentine market for looted United States currency.]

Argentine Market for Looted United States Securities

With respect to looted United States securities, the Embassy has been endeavoring through a competent investigator to find a “black market” for these here, but it appears that any such market is not large, and there is no available evidence that considerable amounts of such securities are being offered for sale in Buenos Aires. In fact, the only securities selling at large discounts that it has been possible to locate have been two relatively small blocks of Imperial Oil (quoted on the New York Curb Exchange) and International Petroleum (quoted on the New York Stock Exchange). In this connection, it is reported here that a large proportion of the United States securities purchased in Europe in recent years have been held for safekeeping in the United States. Argentine securities imported into this country from Europe must, as has been previously reported, be declared and placed under the control of the Central Bank.

Respectfully yours,

Norman Armour
  1. Not printed.
  2. Not printed.
  3. Not printed.
  4. Bernard D. Meltzer, Assistant to Assistant Secretary of State Acheson, and Norman E. Towson, Assistant Director of Foreign Funds Control, Department of the Treasury, on special mission to certain of the American Republics.
  5. Not printed.