840.51 Frozen Credits 35/207a: Circular telegram
The Secretary of State to the Diplomatic Representatives in Brazil, Mexico, Colombia, Peru, and Chile
The Department and the Treasury are considering subjecting Argentine financial transactions to control. As you are aware, this Government has for almost 2 years been calling the attention of the Argentine authorities to the lack of effective implementation by Argentina of Resolution No. V of the Rio Conference and the resolutions of the Washington Conference on Systems of Economic and Financial Control. Despite these representations, operations continue which benefit the Axis. These operations include some direct and indirect remittances; very substantial credits and overdrafts to persons and firms within Argentina whose activities are inimical to the security and defense of the hemisphere; and government purchases and other forms of aid given to such persons and firms. Recent measures taken by the Argentine Government have led this Government to believe that the implementation in the future may be even less effective and that the Argentine Government may increase its positive assistance to undesirable elements.
As a result of an unusual movement of funds which began at the end of October the Treasury, with the concurrence of the Department subjected the Banco de la Nación Argentina and the Banco de la Provincia de Buenos Aires to special ad hoc blocking. The Argentine Government has since admitted that many transactions have taken place in the past which were contrary to the Rio and Washington Resolutions and has orally stated that it is willing to take corrective measures once the two banks are unblocked. The Department, in view of Argentina’s failure to comply with the commitments which it entered into at Rio and Washington, is not optimistic regarding the possibility of Argentina taking at this late date any effective measures to implement the resolutions.
This Government is consequently considering extending control to all dollar financial operations of Argentina. Such controls would be so applied as not to interfere with legitimate commercial transactions [Page 510] in this hemisphere. They would not by any means eliminate all of the unsatisfactory operations of Argentina mentioned above, but they would make it possible to control those carried out through United States financial facilities. The Department believes it would be desirable for such action to be taken jointly by the several American republics and not unilaterally by the United States alone. It requests your opinion at once whether the country to which you are accredited would join with this Government by taking parallel action or at least by publicly announcing its belief that the measures taken by the United States Treasury were necessary and justified for the security of the hemisphere. The Department is not requesting you at this time to discuss the matter with the appropriate local authorities but further requests your comments on the probable effect of such discussions if the Department should decide that you should undertake them in the near future.
As a last effort to obtain the collaboration of the Argentine Government in implementing the undertakings of the American republics in the financial control field, and in view of the assurances given orally by the Argentine Ministers of Foreign Affairs and Finance, the Department is instructing Ambassador Armour to attempt to obtain a specific statement by the Argentine Government regarding the manner in which it will proceed at once to implement fully the Rio and Washington resolutions.
Please cable your comments at once.20 You will be kept informed of the reactions of our Embassies in the other countries and developments in Argentina.
By airmail pouch you will be sent additional information regarding the specific ways in which Argentina has failed to implement its inter-American commitments in the financial control field.
- In telegram No. 5633, December 8, 1943, Ambassador Caffery indicated that it was improbable that Brazil would take parallel action because of the existing favorable trade with Argentina; Ambassador Messersmith in telegram 1214, December 6, and Ambassador Lane in telegram 2247, December 7, said that it was probable that Mexico and Colombia would agree. It was doubtful that Peru would collaborate, according to the Chargé (Patterson) in his telegram 1590, December 6, and quite definite that Chile would not, in the opinion of Ambassador Bowers, telegram 2044, December 6. (840.51 Frozen Credits 35/208, 202, 206, 201, 203, respectively.)↩