840.51 Frozen Credits/10811
The Secretary of State to the Ambassador in Venezuela ( Corrigan )
The Secretary of State refers to the Embassy’s despatch no. 4502, June 19, 1943, with regard to the investment of blocked accounts in Venezuela in Venezuelan government bonds, and to the enclosed memorandum of conversation3 between officers of the Department and Senor Lares4 of the Venezuelan Embassy. It will be noted from the memorandum of conversation that various questions were raised with Sr. Lares as to the nature of the proposed transaction. It was pointed out to Sr. Lares that the Department would be able to express a more useful opinion on the matter if it knew the purposes the Venezuelan Government had in mind in wishing to effect a conversion of blocked accounts into government bonds, and the exact nature of the proposal.
The Venezuelan Embassy has not approached the Department again with reference to this proposal. However, since officials of the Venezuelan Government have brought the matter to the attention of officers of the Embassy in Caracas, it is believed that it may be appropriately pointed out that the Treasury Department practice here permits the investment of blocked accounts in Government securities. For the Embassy’s information, it also permits investment in private securities listed on the national stock exchanges.
In view of the fact that Venezuelan controls are by no means as adequate as those adopted in this country, the Department does not feel that the cases are parallel. However, in view of the Treasury practice noted above, there seems to be no basis on which this Government can object to the proposal, provided that the principal and any interest accruing thereon will remain effectively blocked for the duration of the war.
[Page 847]In as much as there would seem to be a definite advantage to the owners of specially blocked accounts in investing these accounts in government securities which carry a higher rate of interest, it is suggested that comment be withheld until the Venezuelan Government renews its inquiry, if in the Embassy’s judgment, this is possible.