The Secretary of State to the Ambassador in Peru ( Norweb )
A–1078. Your confidential despatch no. 7676, August 21, 194343 for the Secretary and the Under Secretary. The Department appreciates the delicacy of the situation and the necessity for extreme caution in any action taken in this matter in order that the source of information may be protected. Nevertheless, the Department views with concern any possibility that attempts may be made to repatriate German funds, particularly if such funds are in the form of gold or other readily marketable values belonging to a Proclaimed List firm and which would be exported through diplomatic channels. It is presumed that every effort is being made to verify the reports in the Embassy’s despatch. The Department requests that it be promptly and fully advised of all information and developments in this matter.[Page 734]
The Department submits for the Embassy’s consideration certain courses of action which may prove efficacious. First, if the existence of such gold is verified and it can be traced to be the property of the Agencia Martima Kosmos, a German enterprise on the Proclaimed List, the Peruvian authorities might be approached and discreetly advised that the Department has informed the Embassy that this company was believed to have had certain gold which it had placed in the custody of the German mission in Lima and which on the departure of that mission may have been turned over to the Spanish Embassy.44 Therefore, this gold should in reality be considered as an asset of an Axis enterprise and subject to local controls. Accordingly the Peruvian authorities might wish to conduct an investigation and take appropriate action. If in this approach the Embassy would receive the cooperation of the Peruvian authorities and the Spanish Ambassador were questioned about the matter, it is possible that even if he claimed ignorance he would probably be sufficiently apprehensive as not to attempt to export the gold.
A second course of action might be undertaken under Resolution VI of the Washington Conference. In the event the position were taken that whatever property was turned over to the Spanish Ambassador by the departing German diplomats is regarded as official property, efforts could be made to refute this position by an indication as to the origin of these funds and reference could be made to Resolution VI of the Washington Conference which specifies that all Axis assets, including cash, should be effectively blocked. Diplomatic and official cash assets are not exempt (see Department’s airgram 388 of January 27, 1943 and circular airgram of February 2, 1943).45
The Department requests the Embassy’s comments on the foregoing possible courses of action and information as to other courses which the Embassy may be considering. Obviously, the course of action to be followed would be predicated on the type of information which was uncovered. However, if attempts are made to export the reported gold and immediate action is necessary, the Embassy is authorized to take such action as it deems appropriate in the circumstances to prevent its exportation, which would be inimical to the interests of the United Nations.
In connection with Axis assets, the Department has no record of having received information concerning the steps which have been taken by the Peruvian Government in regard to the blocking of Axis funds delivered to the Spanish Embassy. The last available reference is the penultimate paragraph of despatch 6305 of March 13, 1943. Please advise Department of subsequent developments on this topic.[Page 735]
It is requested that your report on the foregoing subjects contain information as to the source of funds used by the Spanish Embassy to defray the costs of representing German and other Axis interests in Peru.