840.51 Frozen Credits/7907

The Chargé in Argentina (Reed) to the Secretary of State

No. 6720

Sir: Referring to the Embassy’s despatches nos. 5790 of July 21, 1942, and 5979 of August 59 (page 2), in regard to the placing of “interventors” in thirteen Axis-controlled firms here by authority of Decree no. 122,712 of June 15, 1942, I have the honor to report that occasion was taken in a conversation at the Central Bank this morning to ask Dr. Alfredo Louro of that institution what the results of these investigations had thus far been. Dr. Louro, who appeared to speak with much frankness, stated that the first phase of the investigations, consisting of efforts to ascertain to what extent contributions were being made by these German organizations for political purposes, was now virtually completed and that the interventors had reported almost no irregularities. Dr. Louro mentioned as perhaps the principal disclosure the fact that the Merck Company had made a payment to the Nazi newspaper El Pampero but said that this was connected [Page 498]with advertizing which had been contracted for previous to Decree No. 110,790 of January 8, 1942 (see the Embassy’s despatch no. 3865 of January 13, 194211). According to Dr. Louro, there have been contributions to various German organizations, such as athletic clubs, but he said that these were considered to have bona fide commercial or good-will value and were not of a political character. He stated that one of the thirteen firms had asked for permission to make a lump contribution to the German “Winterhilfe” fund (the Embassy’s despatch no. 6722 of August [September] 23, 194211 but that the bank had denied this request, taking the view that the contributions should be made directly by individuals within the firm.

Dr. Louro said that the next phase of the investigation would have as its purpose the ascertaining of the extent to which political activities are being financed through misleading commercial guises, such as over-payments for merchandise and services, portions of which might be used for financing German activities. He remarked that this would naturally be a more difficult task than the investigation concerning contributions.

As to the personnel being used in the investigations, Dr. Louro stated that the interventors were well-qualified income-tax inspectors, that at least one such inspector was assigned to each concern, and that it was intended to have these same persons continue with the next phase of the investigations.

The Embassy will continue to keep in close contact with the Central Bank in regard to the investigations and will not fail to make available to the appropriate officers of that institution such data in the Embassy’s files concerning the experiences of the United States in analogous cases as might seem helpful.

According to Dr. Louro, a list of additional German firms to be intervened is now being prepared by the Central Bank.

Respectfully yours,

Edward L. Reed
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