740.00112A European War, 1939/36202c
The Acting Secretary of State to the Ambassador in Honduras (Erwin)
The Acting Secretary of State refers to the Department’s circular instruction of March 15, 194364 authorizing the inclusion in the confidential list of persons who are engaged in the exploitation of commodity shortages by the sale at exorbitant prices of products imported from the United States and to the Embassy’s report no. 124 of August 28, 194364 indicating that speculation has caused a steady rise in the prices of imported products.
Since the inauguration of the decentralization program it is now also possible for the Embassy to prevent persons engaged in these activities from obtaining United States merchandise requiring an import recommendation through the denial of recommendations naming these individuals and firms as consignees. This method may be useful in controlling the situation and would indeed appear preferable since it affords an opportunity for the exercise of judgment by the Embassy concerning the specific items involved.
It is recognized that the Embassy may encounter difficulties in supporting such denials if questioned by the Honduran authorities. In this connection the Officer in Charge is authorized in his discretion to inform the appropriate officials of the Honduran Government of this Government’s attitude with respect to the sale at exorbitant prices of American goods. The Officer in Charge may wish to point out that the Government of the United States is not disposed to permit further exportations to persons or firms which have been guilty of such practices since these activities react unfavorably upon the United Nations war effort in the following ways: (1) the sympathies and [Page 234] cooperation of responsible elements in the local business community and of the public generally are adversely affected, since they believe that the exorbitant prices are the result of unusual profits by American exporters, whereas in fact the prices charged on all exports from the United States are strictly controlled by the Office of Price Administration and cannot exceed maximum limits established by that Office; and (2) the charging of exorbitant prices for American goods by foreign importers increases the local price levels, thus increasing the cost of strategic materials.