840.51 Frozen Credits/8454: Telegram
The Ambassador in Argentina (Armour) to the Secretary of State
[Received November 25—1:50 a.m.]
2367. Department’s 1708, November 11, midnight [11 p. m.].28 The Embassy after a full consideration of all factors definitely recommends that the Banco de la Provincia and the Banco de la Nación not be subject to ad hoc freezing at this time.
While the intercept and other material dealing with the operations of the banks may justify freezing, the action, directed against the two largest banks in this country, one a governmental institution and the other a semi-governmental one, would unquestionably alienate the Central Bank, gravely imperil the negotiations now under way looking towards the over-all control of subversive activities in Argentina and the cutting off of all code communications with Europe, and possibly precipitate serious reprisals against American interests in Argentina.
The Embassy has the same objective in mind as the Treasury Department, namely, cutting off all financial transactions with enemy territory and enemy nationals, as well as all transactions either direct or indirect, of benefit to the Axis. It admits that in attempting to attain this objective it can probably count but little in the line of active cooperation of the Government but it feels that any hope of accomplishment would be destroyed by the proposed action of the [Treasury?].
The Economic Counselor this afternoon discussed without gloves the entire subject of financial controls with Prebisch who definitely stated that he had sufficient powers to limit remittances in accordance with the provisions of Resolution I of Washington Conference. He is willing to examine with us possibility of tightening these controls [Page 507] to the point where they will be satisfactory to Treasury Department. He further offered to carry out an inspection of all foreign dollar holdings, including securities, of Argentine banks and to block any found to be the property of the Axis; he is also willing unofficially to recognize the Proclaimed List outside of Argentina in connection with approval or disapproval of remittances and to give every facility to carry out a study of Argentine controls in relation to Rio and Washington Resolutions. As concerns credits and loans to Proclaimed List nationals within Argentina by Argentine banks Prebisch stated that so far he had no power to discriminate although he has already used his influence to the end that loans not be provided for expansion and he is willing to discuss the extension of the interventor system and other measures of control.
The Embassy does not wish to prophesy success for its proposed program of action. It feels, however, that a joint study of the control system here, to which Messrs. Mann and Skelton29 would be assigned, holds more possibilities for constructive attainment than the freezing of the two banks.
I therefore recommend most strongly that the proposed action should not be taken.
- Not printed; this instruction transmitted a proposal of the Treasury Department to apply freezing action or revoke licenses of certain firms (840.51 Frozen Credits/8222).↩
- James Harold Mann and Byron George Skelton, Special Assistants in the Department of State assigned to the Embassy in Argentina.↩