Foreign Relations of the United States: Diplomatic Papers, 1942, The American Republics, Volume V

810.74/332

Memorandum by the Assistant Secretary of State (Long) to the Under Secretary of State (Welles)¹⁰

[Washington,] April 21, 1942.

Mr. Welles:

Radio Communications with Axis Powers from Argentina and Chile

For some months we have been engaged in efforts to discontinue radio communication from South American countries to the Axis capitals—Berlin, Rome and Tokyo. We have been successful in some measure. However, communication still continues from stations in Buenos Aires and Santiago, and information is received that service is to be improved by instituting a new telephoto service from Japan to the Argentine.

I

The situation in Argentina and Chile is complicated. In each of those capitals a station is operated by a local company which is a subsidiary of the AEFG¹¹ trust. This AEFG trust is a British organization with headquarters in London (its address is c/o Cables & Wireless Inc.). The business of the trust is transacted by a committee composed of two representatives each of British, American, French and German interests. The trust was formed in 1921. Under its terms the American member, RCA, may appoint a chairman who shall have no vote except in case of tie but who shall have a veto over any resolution of the Board. There was for a long time a vacancy in the chairmanship formerly filled by General Dawes who resigned. For several years and up to about the first of 1942, there was no chairman. About the first of this year, Retired General Robert C. Davis (Chairman of the New York Red Cross) was named chairman but no meeting of the Board has been held since.

The component companies are RCA, Marconi Wireless of England, the French wireless, and the German wireless. The trust is a pooling of resources. Each member transferred (a) all of its concessions, (b) all of its licenses to use apparatus devices and systems for communication, and agreed (c) to abstain from communicating through competitors, and (d) to use its best endeavors to obtain assignments and transfers to the trustees from the South American companies of any patent rights or licenses which might be held by any of the subsidiary companies. The trust further witnesses an agreement for an exclusive traffic control within the membership and between them and its subsidiary companies. This trust and its combined control over its subsidiary organizations in South America expires in 1945, at which time there will be a distribution of the trust property among the parties.

Another contemporaneous trust between the same parties sets up an Argentine national company, a Brazilian national company and other companies. The Chilean national company has grown out of the original arrangement and is a later development.

(a)

The Argentine subsidiary company is called Transradio International Argentina. The voting control of stock in the hands of the trust over the Argentine company is as follows:

A. E. F. G. Trust—(under British laws)	60%
R. C. A. Communications—U. S. A.	6%
Cables & Wireless Ltd.—British	5%
Telefunken Co.—German	5%
Italoradio—Italian	4%
Compagnie Generale—French	4%
Scattered public holdings, Argentina	16%

In addition, Transradio Internacional Argentina has an outstanding issue of Debenture Bonds which are held as follows:

Public holdings in Argentina	65%
Radio Corp. of America (R. C. A. C.)	18%
Marconi’s W. T. Co. (C. & W.)—British	12%
Italoradio—Italian	5%

(b)

The Chilean subsidiary of the trust is Transradio Chilena of which the voting control of stock is as follows:

A. E. F. G. Trust—(under British law)	60%
Telefunken Co.—German	11%
Compagnie Generale—French	10%
Cables & Wireless—British	9%
R. C. A. Communications—U. S. A.	9%
Scattered public holdings, Chile	1%

Transradio Chilena has no outstanding funded indebtedness.

(c)

Since the beginning of the war in 1939, and perhaps for a time before, the German interest on the board of trustees has been represented by Swedish members but since the war England has refused visas for the Swedish trustees to visit England to attend the meetings. The British interests under the protection of their Government have exercised control of the German interest and of a small Italian minority interest and have eliminated the Swedish trustees of the German interest so that the British presently dominate and control the situation—through Cables and Wireless Ltd. Consequently, Cables & Wireless Ltd. now really dominates the South American field. It is the same company which has assumed control of all communication between England and its dominions and which the Department has found obstructive in its efforts to establish communications with various parts of the British Empire.

II

It is worthwhile to consider briefly the situation of the Argentine company and of the Chilean company.

(a)

Argentina. 16% of the stock of the company is held by the public in Argentina. 65% of the bonds are held in Argentina. There is a small (4%) Italian and (5%) German interest in the Argentine company. Furthermore, there is an Italian as well as a German representative on the committee which operates the Argentine station. There are also on the committee representatives of the French, British and American ownership.

The composition of the committee operating the company and the considerable local financial interest in the company are questions which have to be considered for they present possibilities of internal difficulty for the Argentine Government even if it desired to close the station to Axis communications. It could probably not do so without incurring the enmity of some of its important financial groups. Furthermore, the Italian and German membership on the operating committee lead immediately to the idea of pressure being brought to bear from the German and Italian Governments through their embassies in Argentina.

In Argentina there are three companies operating radio stations:

(1) The Consortium has beams to 21 different cities of which five have been closed. Amongst those still open are Berlin, Rome, Santiago, (Chile), Bern, Tokyo, Barcelona, and two recently opened, one to Stockholm and one to Moscow, each of which was opened on January 2, 1942.

Incidentally, these two last named stations to Moscow and Stockholm have been opened as a direct result of the imposition of censorship in the United States, and through them there is an increasing traffic which up to the time of their opening had been routed through the United States.

(2) The International Radio Company (I. T. & T.—Mackay) of Argentina has only one circuit and operates from B. A. to New York.

(3) The Sociedad Anónima Radio Argentina, (also I. T. & T.), has only one beam to Europe which is to Madrid, its only other European beam to Prague having been closed.

Of the three companies operating in B. A., the Consortium station is the most important for it connects Rome, Berlin, and Tokyo directly, and it has a supplementary route through Santiago for its line to Tokyo and it can collect from Rio, Asuncion, La Paz, and Lima messages for relay to Rome, Tokyo, or Berlin.

Under the circumstances which exist in Buenos Aires, it would be more difficult for the Argentine Government to close the station than if there was no public Argentine ownership of either stocks or bonds or if the committee were simply an American or a British or a joint American and British effort.

(b)

Chile. The situation in Santiago is quite different from that in Buenos Aires. There are small German, French, British, American and only 1% Chilean ownership under a 60% Consortium (Trust) stock control. There are no outstanding bonds. Consequently, the selfish interest of gain does not appear in Santiago. There is no financial investment of Chilean money in the enterprise. There is no Italian ownership and no Italian membership on the local operating committee. There is French membership and German membership on that committee. Opposition in Chile would come from the small German stock ownership amounting to 11% and the presence of a German on the operating committee, but opposition would immediately be manifested by Japan also, for Chile sends to and receives from Tokyo. B. A. is the only other radiotelegraph circuit Japan has in South America and the importance of each station to Japan is obvious.

In Chile there are only two stations:

(1) The I. T. & T. subsidiary communicates between New York and Santiago only.

(2) The Consortium station has beams to Berlin, Tokyo, Lima, Rio, and B. A., as well as London and New York. We are now advised a new telephoto service is to be inaugurated between Santiago and Tokyo.

It is quite possible that if the Consortium station at B. A. were shut down that the beams now used by it might be transferred to the Consortium company at Santiago and its less important circuits would thereby be built up into a communicating system which would rival or even surpass that of B. A. The equipment is there and could easily be used, so that in spite of the present comparative unimportance of the Santiago Consortium station, it is just as important that it be closed as that the B. A. Consortium station be closed.

Consequently, threats and pressure from Japan may be expected in Santiago if the closing of the circuit is to be debated. It would be called “an unfriendly act” and various other statements would be made to frighten Chile into maintaining communication.

(c)

So it would appear there will be need for intelligent pressure by the United States on the governments at each of these capitals to persuade them to discontinue communication with the Axis. Failure to achieve closure after the exertion of pressure would be unfortunate.

Furthermore, it would seem very important to secure the closing of stations in both countries for the reason that if one were left open there would be (1) constant effort on the part of the other to reopen, and (2) an importance of increasing magnitude in the one remaining open as it would be developed into a single line of communication between the Axis powers and their South American agents and would be treated by the Axis powers as a major matter. The government of the particular country concerned would be the object of Axis attentions to whatever point the Axis powers felt it advisable to go in order to retain the circuit in operation.

III

From our point of view situations differ in each country in that different reasons appear as probable to develop locally as the basis for the objection by each country to closing their respective circuits. In Argentina it is apt to be largely native financial opposition supplemented by German influence. In Chile, international political considerations would seem to be the principal basis upon which opposition to our desires would develop.

However, it ought not be overlooked that, since the closing of the station in Lima, Argentina and Chile remain the only places in this hemisphere in direct communication with Axis powers. The traffic which formerly flowed through other stations is now flowing through those two. Each of them is assuming an importance it did not have before. Largely due to this increasing importance there may develop a hostility nurtured by a sense of growing importance and directed against the movement to close the circuits. It is certain that if only one of the countries remains in communication with the enemy that the combined force of the enemy in the way of propaganda and threats of all kinds will be brought into play against that country and we may have to resort to unusual lengths in giving assurances in order to offset the threats of the Axis.

The gist of our information is that different reasons will appear in each of the two countries for maintaining the circuits open in spite of our desires.

To the same effect apparently is the British judgment for Cables & Wireless Ltd. has recently advised (London’s 1812, April 13, 8 p.m.¹²) that there are difficulties in the way of their arranging a discontinuance of radio communication by the Argentine company and by the Chilean company. The difficulties are stated to be local in each country. They suggest that the only way of accomplishing the object in view is for the Government of the United States to ask the South American republics to conform to Resolution XL of the Rio Conference by issuing suitable orders to the companies operating in their respective jurisdictions.

IV

There is no intimation that they (Cables & Wireless) would cooperate to that end—nor is there any assurance that they would not obstruct the movement for financial reasons as they have in so many instances in recent months.

The stations ought to be closed to Axis powers.

The United States should direct its efforts to that end.

Resolution XL of the Rio Conference affords a definite and reasonable base. It is proposed, with that Resolution as a base, to

1. Submit the matter to the Inter American Committee¹³ for the purpose of making recommendations to Argentina and Chile to stop communication with the Axis.

2. The United States to support the recommendations through its Ambassadors at B. A. and Santiago.

3. Request the American Chairman of the AEFG Trust to call a meeting of his board in either New York or London (preferably New York) to act on the policy.

4. Request the British Government (through Winant) to adopt as a government policy the closing of these Consortium stations to the Axis.

5. Request the British to direct the English citizens in control of AEFG to apply to the Argentine and Chilean Governments for authority to close the beams to the Axis.

6. The United States Government to support the movement in all reasonable ways.

As a supplemental step or as an alternative in case closure is not achieved—

7. Submit to the Inter American Committee the proposal that each of the American Republics prohibit the sending of any land wire, cable or radio messages to B. A. or to Santiago if the address or the text of the message indicates it is intended to be forwarded to enemy destination.

V

These proposals, with reference to all but the alternative (7) which would be held in abeyance, should be qualified to the extent that a confidential inquiry be made to our Ambassadors at B. A. and Santiago to instruct them to ascertain discreetly and report as to the extent to which each of those governments might be induced to go. This step seems advisable in view of the fact that those governments have not responded to the more important Rio Resolution about breaking relations¹⁴ and so might be found cool to the less important provisions of Resolution XL.

On receipt of the information from our Ambassadors, the Department would then be in a better position to plan its course.

If you approve, cables will be drafted to B. A. and Santiago and the rest of the program will be reviewed in the light of that information.

B[reckinridge] L[ong]

10. Notation by Sumner Welles: “I agree—S. W.”
11. Consortium Trust Affiliates; presumably these initials stand for “American, English, French, German” trust.
12. Not printed.
13. Presumably the Emergency Advisory Committee for Political Defense. For correspondence concerning this Committee, see pp. 74 ff.; see also Department of State Bulletin, April 11, 1942, p. 322.
14. Resolution I; for text, see Department of State Bulletin, February 7, 1942, p. 118.