840.51 Frozen Credits 35/133

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

No. 3403

Sir: I have the honor to refer to the Department’s instruction no. 1587 of August 31, 194340 (file no. 840.51 Frozen Credits/11301) in reply to the Embassy’s despatch no. 3019 of August 2, 1943, transmitting a report on the Uruguayan financial and economic controls.

As the Department is aware, questions pertaining to controls have had the special attention of Mr. Thomas C. Mann, an Auxiliary Officer, who is about to leave Montevideo to take up his new duties in Washington. Before departing, Mr. Mann has prepared a memorandum in which he reviews the existing situation and indicates in the light of his experience the minimum control measures which we should like to see Uruguay adopt. A copy of this memorandum is enclosed.40

It will be observed that Mr. Mann concludes that the minimum measures desired would require legislative action in the form of an adequate freezing law. As the Department knows, in spite of the consistent efforts of the Embassy over a long period, it has proved extremely difficult to interest the Uruguayan authorities in more effective implementation of the Washington Resolutions. There is no present likelihood that the Government will on its own initiative propose legislation to Congress. It might perhaps do so under pressure from the Embassy but I am convinced that to induce the Government even to draft a bill would prove a long and tedious process. The present legislative session will end on December 15. As the Embassy has reported, Congress is functioning in a very unsatisfactory manner and the Government is experiencing difficulty in obtaining the enactment even of urgent measures in which it is interested. The situation has been fully set forth in the Embassy’s despatch no. 3338 of October 9, 1943, enclosing a detailed study41 prepared by Dr. Eugene A. Gilmore.42 As pointed out therein, it is unlikely that [Page 781] Congress will find time to consider any new legislation during the present session.

For the reasons indicated, I consider that there is no possibility of the enactment during the present session of a freezing law such as would be required to make Uruguayan controls more effective. I believe that the earliest date at which such legislation could be obtained, if at all, would be May of next year. In the circumstances, the Embassy questions the advisability of pressing the matter with the Uruguayan Government for the present. Since there is no hope of obtaining action before the next session, I should be disposed to defer any further representations until January. If it then appears desirable, appropriate efforts could be made to induce the Government to draft a suitable bill for presentation to Congress when it reconvenes in March.

In the meantime, I should be glad to have the benefit of an expression of the Department’s views and wishes with respect to just how far the Embassy should go in urging the Government to take the action desired. It is believed that, in considering the matter, the officers of the Department will wish to take advantage of the approaching opportunity to discuss the whole situation with Mr. Mann who is thoroughly familiar with all aspects of the question.

As I have repeatedly pointed out, while the Uruguayan Government has from the outset given courageous and effective support to our policies and has cooperated magnificently in what may be broadly termed the political field, its cooperation has been considerably less enthusiastic and less effective in what may be termed the economic field. In fact, in the light of our experience thus far, I am inclined to doubt whether, whatever representations the Embassy may make and however persistently it may pursue the matter, Uruguay can ever be induced to adopt the measures called for by the Washington Resolutions or to carry them out efficiently if they were to be adopted. Recent Allied victories make the attainment of this goal even more difficult than formerly because of the over-optimism which they have engendered and the widespread tendency to believe that the war in Europe is practically won and may end almost any day.

Fortunately, certain favorable factors make the absence of more effective controls of less practical importance than may be the case in some other countries. In the first place, Uruguay is a small country and German interests are not extensive. More important, the Proclaimed List has functioned and continues to function in a very satisfactory manner and its effectiveness and the effectiveness also of such controls as exist have been materially enhanced by the excellent cooperation of the Bank of the Republic and other institutions. From a practical standpoint, I doubt if Uruguay’s failure to implement more adequately the Washington Resolutions has prejudiced our war effort [Page 782] to any appreciable degree; and, since the attainment of more effective implementation is to say the least problematical, the question may well be raised as to whether we should press for additional measures or content ourselves with taking the fullest day-to-day advantage of the cooperation which we are already enjoying.

Respectfully yours,

William Dawson
  1. Not printed.
  2. Not printed.
  3. Neither printed.
  4. Senior Economic Analyst of the Embassy.