740.00112A European War 1939/27680

The Ambassador in Venezuela ( Corrigan ) to the Secretary of State

No. 4160

Sir: I have the honor to report that reliable information obtained by the Embassy indicates that commercial banking institutions in Venezuela, although probably extending no new credits to Proclaimed List Nationals, do continue to maintain the lines of commercial credit which were available to such Proclaimed List Nationals at the time of their inclusion in the List. It would seem therefore that, with the exception of obtaining new credits, persons and firms included in the Proclaimed List have available to them normal banking facilities much as they had prior to their inclusion in the List; furthermore, this procedure is foreseen and approved by the Venezuelan Authorities under Articles 3 and 4 of the Executive Decree of December 11, 1941, as evidenced by the monthly issuance of licenses by the Banco Central de Venezuela to the Commercial Banks authorizing the continuance of such credits.

It is understood and believed that the various commercial bankers in Venezuela are pro-Allied in political sympathy, and most of them have indicated to members of the Embassy staff a personal desire to terminate such credits made available to Proclaimed List Nationals and to call in outstanding obligations from them; but they indicate hesitancy to take this step in view of the fact that these transactions are not prohibited by the Venezuelan Controls and, as indicated, are specifically approved by the licensing operations of the Banco Central. Several of them have said they would welcome some concrete evidence of concern regarding this situation on the part of the Embassy on which they could base a step in this direction.

For this purpose, Mr. Groves, Counselor of Embassy for Economic Affairs, addressed a letter dated March 16 (transmitted as Enclosure No. 1 to this Despatch78) to the Superintendent of Banks, calling attention to this situation and pointing out that the practice would seem to contravene the spirit, if not the letter, of resolutions at the Rio de Janeiro meeting of Foreign Ministers in January 1942, as well as the recommendations adopted at the Inter-American Conference on Systems of Economic and Financial Control, in Washington last July. Furthermore, it has been pointed out verbally to the Superintendent of Banks that utilizing American credit via the local Banks to support business operations of Proclaimed List firms contravenes our Trading with the Enemy Act just as much as would the sale of American steel to a Proclaimed List firm by a local importer.

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The Superintendent of Banks has called a meeting of the commercial bank managers for March 23, at which the question of extending credit facilities to Proclaimed List firms will be discussed, and presumably the banks’ policy in this regard determined. The Embassy has verbally suggested to the Superintendent of Banks that the commercial credits outstanding in favor of Proclaimed List firms or individuals may be liquidated gradually over a period of perhaps six months at the outside, in order that problem of unemployment and other disturbance to the national economy be minimized as far as possible.79 And the hope was expressed that this process might result in the entire elimination from Venezuelan economy of the major enemy interests and the acquisition of those interests by sympathetic Venezuelan Nationals.

The Department will be kept advised of subsequent developments in this matter.

Respectfully yours,

Frank P. Corrigan
  1. Not printed.
  2. The Ambassador reported in his despatch No. 4444, May 27, 1943, that 14 banks concluded on May 12, 1943, an agreement to eliminate, in a period of nine months, all credit facilities extended to firms on the Venezuelan Control List (740.00112A European War 1939/31736).