840.51 Frozen Credits/7907: Telegram

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

247. Your despatch no. 6720, September 23, 1942. All contributions by business enterprises to pro-Axis organizations can, of course, theoretically be attributed to commercial motives and the desire for business goodwill. However, it is believed that in a large majority of the cases an examination of the activities of the organizations involved and of the commercial advantage which could reasonably be expected to flow from contributions would indicate that the primary motive behind contributions is political, rather than economic. In this connection it would be helpful if the Central Bank would furnish the Embassy with a list of the contributions involved and if the Embassy would examine those contributions with a view to determining their commercial justification, if any. For example, contributions by a producer of raw materials, as distinguished from a retailer, would be difficult to attribute to commercial motives.

With respect to Dr. Louro’s statement that the Bank would deny firms authorization to make contributions to the German “Winterhilfe” fund, but that the bank took the view that such contributions should be made directly by individuals within the firm, it should be observed that Resolution VII passed by the Inter-American Conference on Systems of Economic and Financial Control reaches transactions by natural persons, as well as those by business enterprises, if those transactions prejudice the political and economic independence or security of the hemisphere. It would seem, therefore, that [Page 500]under that Resolution, if contributions by firms or enterprises are banned on political grounds, individuals should also be prohibited from making those contributions. It is, of course, immaterial, from the standpoint of hemispheric security, whether a contribution to an undesirable organization is made by a business firm as a firm, or by individuals within that firm. It is suggested that you call this fact to the attention of the appropriate officers of the Central Bank.

Please keep the Department informed.

Welles