740.23112 RP/8–2844

The Ambassador in Peru ( White ) to the Secretary of State

No. 1236

Sir: I have the honor to refer to the Department’s confidential instruction No. 3353 of June 21, 1944 (File No. 740.23112 RP/35) chiefly concerning the new Superintendent of Economy then recently appointed by the Peruvian Government and Law No. 9952 establishing procedure for the nationalization of Axis properties, as had been reported in the Embassy’s despatches Nos. 11 and 12, both of April 4, 1944.26

The Department is already familiar with the relatively encouraging progress made by the new Superintendent, Sr. Wilfredo Pflücker, in expropriating Axis businesses and putting them up for auction as provided for by Law No. 9952. He has, to be sure, continued to harry the little firms as his predecessors did before him, but he has also managed to bring such spearheads as Ostern & Co., Ferrostaal and Anilinas, to mention only a few, to the point of auction and beyond.

One thing he has not been able to accomplish, however, is to reverse the previous procedure of considering a Peruvian citizen, and to some extent citizens of other non-belligerent countries, as excluded from the effects of the various economic warfare laws including Law No. 9952, and it matters not whether the Peruvian citizenship has been acquired by birth or naturalization. Even a Japanese generally obtains specific immunity from the aforesaid laws upon proof that he has become a Peruvian.

There was some thought when Pflücker first assumed office that he might extend the application of the laws beyond the mere question of nationality by following the Allied Lists or by ad hoc attention to serious cases or by invoking more often the law providing for annulment of naturalizations where subversive persons of Axis nativity were concerned, but such has not been the general result of his otherwise very laudable exertion.

Hence the question raised by the last paragraph of the Department’s instruction No. 3353 under reference can now be safely answered by saying that the cited portions of Law No. 9586 and other regulations dating from April 1942 are not interpreted by the present authorities as either requiring or permitting the freezing of the proceeds [Page 1566] of transfer of the Fábrica Nacional de Levadura “Arriba”, because the recipients of the money were Peruvian citizens and non-listed citizens of neutral countries (Spain in this case).

The “Arriba” case has been a most complicated affair, and the Embassy has not been in the strongest possible position throughout, for several reasons. Arriba’s only rival is the American Fleischmann factory, which Arriba skillfully portrays to the public as an oppressive foreign monopoly protected by the American Embassy. The Banco Industrial (official government institution) has been involved financially and has therefore been so anxious to keep Arriba running that it has harbored Carbonell and winked at sales of yeast to Japanese bakeries. We have refrained from placing all Japanese bakeries on the Proclaimed List, as the Department fully understands, both because of their great number and because it served as a bargaining point in urging the Peruvian authorities to nationalize the baking industry. Despite repeated assurances over the past two years and more, the government has not even yet fully succeeded in bringing about this nationalization. To force Fleischmann under these conditions not to sell to the numerous non-listed Japanese bakers has been to give Arriba a monopoly over a very considerable volume of business. It has been tried twice without much benefit to any but Arriba. Hence a short time ago, when Fleischmann convinced us again that the new owners of “Victory” (as Arriba is now called) were breaking their pledge and were again selling to Japanese, there seemed no choice but to consent to the same for Fleischmann for the time being.

Superintendent Pflücker has now informed the Embassy orally that the Japanese have at last been all but eliminated from the bakeries in his drive against them dating from May 1944 to the present. While we have not yet received detailed formal notice of the same, there is reason to believe that his statement is accurate. It may therefore be possible to close the Arriba case definitively within a month or two.

Respectfully yours,

For the Ambassador:
Julian Greenup

Counselor for Economic Affairs
  1. Neither printed.