The Secretary of State to the Ambassador in Argentina (Armour)
804. Your 983, May 26, 11 p.m.69 While the difficulties of tracing the history of bank notes and preventing smuggling into Argentina are recognized, these difficulties are no greater in the case of Argentina than in the case of other countries. It would seem necessary that a few unfortunates may have to suffer by reason of these difficulties in order that the essential purpose of the Treasury restrictions may be realized; namely to prevent the Axis powers from liquidating [Page 477] looted currency through the facilities of other countries, particularly the American Republics. The same considerations are present with respect to the effect of Central Bank control upon the exchange market. Furthermore, it is believed that the establishment and proper administration of appropriate controls by the Central Bank would considerably minimize the possibility of injury to legitimate interests.
With respect to travelers bringing dollar notes into Argentina, the Department approves of the position taken by the Embassy’s officer in his conversation with Grumbach. Such currency brought into Argentina by European travelers is currency against which the Treasury measure is aimed and there would seem to be no reason why persons leaving Europe could not travel with other forms of money such as dollar drafts, et cetera, which it is not believed would interfere too greatly with the “customary” practice. United States Customs authorities are allowing for the time being a $250 exemption for each person entering the United States, plus a like amount for each accompanying dependent. Such an exemption is necessary in this country since dollar currency is the legal exchange medium and a refusal to permit reasonable amounts to be brought in free of restriction might cause hardship. There would seem to be no reason for a similar exemption in the case of dollar currency brought into Argentina, since other recognized mediums of exchange are readily available.
With respect to the holdings of banks and exchange shops under the control of the Central Bank, it is not believed that any general exemption can be granted but the bona fides of the holdings and the fact that they were acquired prior to the close of business on May 19, together with the adequacy of the controls adopted by Argentina, will be taken into consideration by the Treasury in any application for their release. The same considerations are applicable to dollar notes bought in good faith for non-banking and non-speculative purposes before the news of the Treasury restriction became generally known in Argentina.
That part of the Department’s circular telegram May 27, 10 p.m.70 concerning the regulations adopted by the Brazilian authorities with respect to the use of American bank notes in Brazil sent in code should not be disclosed as being the procedures which are being followed in Brazil since the Department was informed in strict confidence and has not been advised of any public announcement by the Brazilian authorities on this aspect of the matter.