881.77/151a: Telegram

The Secretary of State to the Chargé in Venezuela (Flack)

338. Further discussions between Ambassador Corrigan and officers of the Department have developed the following considerations with respect to the German Railroad: (1) Because of the strategic location [Page 836] of the German Railroad, whose lines run along the seacoast at an average distance of 20 miles inland, the Axis may be using the Railroad to obtain information regarding ship movements. (2) More important, subversive elements may be using the special communication facilities of the Railroad to transmit information relating to ship movements in order to guide U-boat attacks against our shipping. (3) In connection with its purchase of the German Railroad, the Venezuelan Government would probably remove the undesirable personnel, thereby eliminating the Railroad’s espionage activities.

In view of the foregoing, it has been suggested that the purchase of the Railroad by the Venezuelan Government, even though against free currency in Europe, would promote the war effort. The Embassy is well aware of the compelling considerations which have militated against our approving such a sale. In order to permit the balancing of the espionage aspects against the other aspects of the proposed transactions, it is requested that the Legal Attaché, the Naval Attaché and the Military Attaché prepare promptly a joint report on the following points: (1) Evidence relating to the actual use of the Railroad for espionage purposes, including the means used to transmit information relating to ship movements. (2) Evidence indicating the particular personnel within the Railroad responsible for espionage. (3) Whether Axis intelligence within Venezuela would be able effectively to obtain and transmit the information regarding ship movements through facilities other than the German Railroad (e.g. through port observers, et cetera) if the Venezuelan Government removed undesirable personnel. (4) The specific Railroad personnel whom the Venezuelan Government should be requested to dismiss in connection with any possible approval of the purchase in question. (5) Any other conditions which should be suggested to preclude the use of the Railroad for subversive purposes. (6) Any other pertinent information.

In connection with this report, it should be observed that the Department’s files contain no information regarding actual espionage activities by the Railroad. Accordingly, full documentation is requested.