840.51 Frozen Credits/9808

The Ambassador in Peru (Norweb) to the Secretary of State

No. 6305

Sir: I have the honor to refer to the Department’s Airgram No. A–388 of January 27, 1943, 5:40 P.M.,28 with reference to the manner in which remittances from Peru to Axis or Axis-occupied territory were being effected.

The above airgram was received February 3, 1943 and the following day the Superintendent of Banks issued Circular No. 319 directed to the banks in Peru, tightening the controls relating to remittances to Axis and Axis-occupied territory. The subsistence remittances which under the former regulations could be made to relatives (irrespective of nationality) in Axis countries of any person in Peru are, under the new regulations, permissible only to Peruvian citizens. The former provisions permitting remittances to Italy up to 200,000 lire per month are completely abrogated. The permissible subsistence remittances to Peruvians are only to be made in the future through the diplomatic [Page 725] representative of the power representing the interests of Peru in the place where the payment is to be made. The text in translation of the article dealing with this latter feature is as follows:

“(d) Upon the issuance of the ministerial authorization, the bank shall place the money at the disposition of the diplomatic representative who represents the interests of Peru in the place where the payment is to be made in order that said diplomatic agent may proceed to make the payment to the beneficiary.”

The manner in which this provision would operate was discussed with the Superintendent of Banks and with an officer of the Banco de Credito del Peru, which latter institution in the past has been the channel through which substantially all subsistence remittances to Europe were effected. It was suggested that it would be desirable for the remitting bank to place the funds at the disposition of the Swiss government and have this government notify its representative to make the payment. However, inquiry at the Banco de Credito on March 11 disclosed that two remittances under the new regulations have been made to Italy—one to Rome and one to Genoa. The bank stated that in the case of the Rome remittance it had instructed its correspondent in Switzerland to pay a certain quantity of Swiss francs to the Peruvian diplomatic representative in Vatican City for the benefit of the Peruvian beneficiary. In the case of the Genoa remittance, the instructions given the Swiss correspondent were similar with the exception that the funds were to be placed at the disposition of the Swiss diplomatic representative in Genoa, Italy.

On February 9, 1943, a memorandum was delivered to the Ministry of Finance, pointing out the serious concern of the government of the United States over the fact that official Axis funds in Peru, and particularly the cash funds reportedly turned over to the Spanish Embassy, have not been blocked, and also pointing out that the Government of the United States has requested the representing power to deposit the funds of the Axis nations in their hands in appropriate banks. The memorandum also suggested the desirability of effecting an arrangement whereby the Axis powers would pay for their representation expenses in Peru by depositing Swiss francs to the credit of the Peruvian Government in Switzerland, which francs could be used for Peruvian expenditures. No reply has been received to this memorandum, nor is any information in the possession of the Embassy as to any steps having been taken by the Peruvian Government along either of the above suggested lines.

With reference to the Department’s suggestion that the United States might be interested in purchasing Swiss francs, an investigation has revealed that no substantial quantity is available in Peru. The commercial banks on December 31, 1942 held Swiss francs in the [Page 726] sum of 484,834 and the Central Reserve Bank 202,061. Those of the Central Reserve Bank belong to the Peruvian Government and are used by it to meet its representational expenditures. Those held by the commercial banks actually belong to individuals in Peru, since the banks themselves are prohibited by law from owning foreign currencies. Should the increasing stringency of remitting francs or of otherwise using them result in substantial sums becoming available, the Department will be promptly advised.

Respectfully yours,

For the Ambassador
Julian Greenup

Counselor for Economic Affairs
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