Foreign Relations of the United States: Diplomatic Papers, 1944, The American Republics, Volume VII

740.00113 European War 1939/1216: Airgram

The Secretary of State to the Ambassador in Nicaragua (Stewart)

Washington, March 10, 1944—4 p.m.

A–95. Reference despatch no. 1528 of September 20, 1943⁴⁵ and telegram no. 804 of December 21, 1943. Purchases of property of controlled enemy nationals from the National Bank and at prospective auction sales ordered under Decree no. 276, by persons subject to the jurisdiction of the United States, are subject to Executive Order no. 8389,⁴⁶ as amended. You are, however, authorized to notify interested United States citizens and firms that, notwithstanding General Ruling No. 11,⁴⁷ they are authorized to purchase the type of property under reference. Accordingly, specific Treasury licenses need not be obtained by such persons in Nicaragua at the present time. It is to be emphasized that this action does not represent relinquishment of licensing authority under Executive Order No. 8389, as amended, but is merely an administrative waiver of the specific license requirement. You should make this clear to all interested persons and to the Nicaraguan authorities.

In those cases where the Embassy is of the opinion that the circumstances relating to any particular property which is specifically included in the Proclaimed List and is offered for sale under Decree no. 276 would operate against the deletion of such property from the Proclaimed List after its sale, you should inform prospective purchasers and the Nicaraguan Government, or the appropriate agencies thereof, that unless the objectionable factors are eliminated, the property will not be removed from the Proclaimed List.

With regard to the purchases by persons subject to the jurisdiction of the United States of produce of affected property, such as the coffee shipment referred to in despatch no. 1528, as distinguished from the property itself, the properties involved may be divided into the following categories:

(1) property which is owned by a Proclaimed List national but is not specifically included in the Proclaimed List itself; and

(2) property which is specifically included in the Proclaimed List.

A Treasury license will be necessary for any dealings involving the products of both types of property during the period before the auction sale.

After the auction sale has taken place and title has passed to a satisfactory purchaser, or by virtue of nonsale, to the Nicaraguan Treasury, and the former owner has no further interest in the property and has only a claim for frozen funds or defense bonds in an amount equal to the value of the property transferred, no Treasury license will be required for a future sale of any product of property included in category (1) above. In the case of category (2) a license Would technically be required as long as the property remains on the list. You are, however, authorized to notify interested U.S. citizens and firms that, notwithstanding General Ruling No. 11, they are authorized to purchase produce of this property provided you are satisfied that all objectionable elements have been removed from the property and that the property will be recommended for deletion from the Proclaimed List in the near future. It will be recognized that ah undesirable situation exists when persons are authorized to deal freely with property which is included in the Proclaimed List and the Embassy should therefore not give such authorization unless it intends to recommend the property involved for deletion.

In discussions with U. S. citizens concerning the purchase of Proclaimed List business enterprises, the Embassy should keep in mind the Department’s policy, as set out in the circular instructions of December 7, 1943, June 18, 1943 (Section II, paragraph G of enclosed memorandum) and December 17, 1942,⁴⁹ that in the absence of special circumstances American participation in the reorganization of Axis firms should be limited to a minority financial participation or management fee contract. Article 22 of Decree no. 276 apparently expresses the intention of the Nicaraguan Government that purchasers at auction sales shall be native Nicaraguans or Nicaraguan companies.

The Department has discussed with the Treasury the possibility of releasing to the National Bank of Nicaragua funds blocked in the United States in the name of affected persons or firms in Nicaragua. This problem is but one of many generally referred to as “conflicting custodial claims”, which this Government considers with the British Canadian, and other authorities from time to time. The Treasury is not presently prepared to release generally to the National Bank of Nicaragua funds blocked in the United States in the name of affected persons or firms in Nicaragua. However, you may refer any such case to the Treasury on an ad hoc basis, but you are requested not to encourage in any way the local authorities to expect that such funds will be released.…

Hull

45. Not printed.
46. Executive Order dated April 10, 1940; for text, see United States Treasury Department, Documents Relating to Wartime Financial and Property Controls of the United States Government (Washington, June 30, 1942).
47. For text, see “General Ruling No. 11 under Executive Order 8389, as Amended, and Regulations Issued Pursuant Thereto, Relating to Foreign Funds Control,” ibid.
49. None printed.