840.51 Frozen Credits/11375

The Ambassador in Uruguay (Dawson) to the Secretary of State

No. 3067

Sir: I have the honor to refer to this Embassy’s despatch no. 2200 of February 17, 194336 entitled “Uruguayan Banks and Proclaimed List Nationals” wherein the Department was informed of the program which the Embassy had initiated with regard to the curtailment of banking facilities to Proclaimed List nationals in Uruguay, and to the Department’s instruction no. 1266 of April 12, 194336 in answer thereto.

The following results have been obtained through this program during the past six months: (1) Proclaimed List nationals have been compelled to liquidate outstanding loans amounting to $U 1,297,857.54; (2) credits requested by said nationals amounting to approximately $U 2,500,000 have been rejected by the banks; (3) approximately seventy real estate properties owned by said nationals, which had been under administration by the banks, have been turned back to their owners; (4) approximately twenty business firms whose names appear on the Proclaimed List have been compelled to vacate business premises owned or administered by said banks; and (5) two important enemy firms have undergone the prestige-lowering embarrassment of being sued in court for non-payment of matured debts.

No legal economic controls have been adopted in Uruguay through which the Embassy could insist upon proceedings of the above type against Proclaimed List nationals. (See memorandum enclosure in despatch no. 1858 of November 24, 1942.)37 While the economic weapon of the Proclaimed List could have been brought to bear on the ground that granting banking facilities to enemy nationals violated the Proclaimed List policy of “no dealing with enemy nationals”, the Embassy felt that an insinuation as to the possibility of their inclusion made to the local banks who were dealing with such nationals would produce (in this instance) an effect contrary to that desired. The success of the program depended upon its adoption by all of the banks which engaged in the business of lending money; the banks would have hesitated to alienate good clients (by requiring a closing of accounts) while another bank was welcoming such customers and refinancing their canceled loans. Furthermore, the Banco Hipotecario, which is a State institution, engages in the business of lending money upon mortgage security, and under the strict letter of the law it cannot discriminate [Page 780] against a person who offers good and sufficient security; it cannot, under present law, discriminate against a business enterprise because it is on the Proclaimed List.

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Respectfully yours,

For the Ambassador:
Robert G. Glover

Commercial Attaché
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