Office of the Historian

840.51 Frozen Credits/7788: Telegram

The Secretary of State to the Ambassador in Brazil (Caffery)

Washington, October 1, 1942—8 p.m.

2908. Your 3786, September 23, 6 p.m. Please inform the Minister of Foreign Affairs that this Government is opposed to the contemplated transfer of gold of the Bank of International Settlements to Buenos Aires and that it would view the issuance of a license authorizing the transfer as inconsistent with the objectives underlying Resolution V of the Rio Conference and the Resolutions of the recent Washington Conference.71 In view of the more adequate freezing controls existing in Brazil, it is believed that a transfer of the gold to Buenos Aires might well result in affording to the Axis powers additional means of acquiring foreign exchange. This possibility appears to be even stronger in view of the interest of the French Financial Attaché in the transaction.

The foregoing view of the transaction is adopted irrespective of [Page 810] whether the Bank of International Settlements is Axis owned or controlled. However, the following factors pertinent to such ownership or control are reported by the Treasury Department:

1.
Although the Bank of England and some banking institutions in the United States have an interest in the Bank, the majority ownership is vested in the enemy countries or countries dominated by them. The ultimate voting control of the Bank is in the Axis.
2.
Germany is the largest creditor of the Bank.
3.
Seventy percent of the total liabilities of the Bank (other than capital and reserves) probably involve German and Italian interests.
4.
Germany has a contingent interest in the profits of the Bank in excess of normal earnings.

The Department trusts that in view of the foregoing considerations which indicate that the proposed transfer would not be desirable from the standpoint of the United Nations, it will not be authorized by the Brazilian Government.

Please keep the Department advised of all developments.

Hull
  1. For the Resolutions of the Washington Conference held June 30–July 10, 1942, see Pan American Union, Congress and Conference Series No. 39: Final Act of the Inter-American Conference on Systems of Economic and Financial Control (Washington, 1942); for correspondence concerning the Conference, see ante, pp. 58 ff.↩