840.51 FC 22/36: Airgram

The Secretary of State to the Ambassador in Ecuador ( Scotten )

A–307. Reference your airgram no. A–274 of May 2685 requesting any expression of opinion which it may be politic to make at this time concerning the plan to permit or require the investment of blocked funds in Government bonds.

The question of post-war disposition of frozen or controlled funds of enemy nationals is one which has not as yet been settled in the United States. Your airgram under reference indicates that this problem has also not been settled in Ecuador. Without attempting to indicate what may be the eventual disposition of the funds belonging to nationals of enemy countries, it may be observed that a highly desirable attribute of such funds is liquidity. Should such funds be required for special purposes, ability to convert the form in which the funds are held into cash or stable and negotiable securities will be highly important.

It, therefore, seems undesirable that frozen funds should be invested in such property as land or buildings. There does not, however, appear to be any harm in permitting or requiring the investment of such funds in bonds issued by the Government or political subdivisions thereof, provided the securities and all interest accruing thereto are effectively blocked as your airgram indicates would be the case in Ecuador.

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The Embassy is authorized to communicate the foregoing views to appropriate officials of the Ecuadoran Government.

Hull
  1. Not printed.