Office of the Historian

740.35112A/7–644: Telegram

The Chargé in Argentina (Reed) to the Secretary of State

Buenos Aires, July 6, 1944—noon.
[Received 3:16 p.m.]

1729. Reference point 3, Department’s 1079, July 3, 7 p.m. In brief, there are no effective controls covering operations of Axis business and financial concerns with Argentina.

Such measures as have been taken have resulted primarily from extraneous influences and not from any spontaneous desire to implement the Rio and Washington resolutions.27 At no time has the [Page 281] Argentine Government considered Axis and other totalitarian firms in Argentina as enemy.

1.
The only “procedure of supervision” known to Embassy is that, provided for by Decree 122712, June 15, 1942, transmitted by despatch 5481, June 17, 1942.28 This subject thoroughly discussed in memorandum of Banco Central (pages 35 through 40) attached to despatch 8565, February 5, 1943.28 Embassy believes Department concurs that system described merely an inspection and observation procedure. So-called “interventors” have no real powers. So far as known, only 13 firms subjected to procedure, namely, those originally selected in July, 1942. Actually, to judge by externals German construction industry and such large German firms as Siemens and Thyssen are closer today to Government than at any time in past.
2.
Ambassador last month instructed economic unit investigate statements made him by high officials that “complementary measures of intervention and control” were contemplated. In course of investigation, a long informal conference was held with high official Ministry Foreign Affairs. First 10 of 11 charges contained in despatch 15045, June 10,28 were translated and given official in question who had no particular comment to make. He did mention rationing council and stated that council was working on implementation of third “considerando” of decree creating that council (see enclosure 3 to despatch 14950, June 328). Embassy today learned that council addressed a communication on June 17 to Argentine Chamber of Commerce stating that council was referring to Ministry of Agriculture, Chamber’s request that in carrying out plan for controlling secondary distribution drugs and chemicals described despatch 15045, June 10, firms adhering to plan would not be subjected to provisions of Article IX, Law 12591 regarding refusal to sell to determined entities. The above-mentioned communication transmitted copy of letter from council to Ministry of Agriculture dated June 4, in which council expresses itself favorably regarding Chamber’s request, but only specific recommendation was that Ministry of Agriculture make its decision on general basis rather than specifically with regard to drugs and chemicals. The Chamber has received no advice of decision of Ministry of Agriculture. However, even this “complementary measure” cannot be ascribed to any desire to implement Rio resolutions. Rather, the entire matter resulted from stand taken by Embassy with respect to distribution drug and chemical products and the rationing committee, in its letter to Chamber, is careful to point out that it is not passing judgment on interpretation given by Chamber [Page 282] to reservation made by Argentina to Rio resolution V.32 Likewise, proposed purchase of SEMA,33 which may have been consummated, was considered by military authorities only because of necessity secure copper from Chile. See Embassy’s 1448 of June 7, 1 p.m.34 Compare treatment SEMA with that of American utility interests described despatch 15214, June 28.34
3.
The following indicates that there is no substantial change in the local situation from that described in previous reports covering Government aid to Axis firms:
(a).
Documentary evidence available that as late as June 16, Ministry Public Works requiring friendly firms permit German PL35 firms to bid on sub-contracts requiring imported materials for compliance. (Three cases available in June in addition to those described despatch 15248, July 1).34
(b).
Latest information from Argentine Construction Chamber dated June 16 shows that contracts continue to be given German PL firms. In May, Geope36 declared two contracts obtained from Ministry of War totalling 1,038,584 pesos and Siemens BA Union two school building contracts for 98,821. In April, Geope declared Ministry of War contract for 263,919; from state railways two contracts totalling 662,240; and road contract for 2,310,928. In same month Weiss and Freytag declared state railway contract for 500,000 pesos. It is to be noted that these are all public works contracts and do not include many rearmament orders rumored as having been received by German interests.
(c).
As late as July 4 Ministry of Finance inserted display of advertising in Deutsche La Plata Zeitung, Il Mattino D’Italia, El Federal, and Fronda. These advertisements covered bond conversions and were reportedly refused to Argentinisches Tageblatt and Italia Libre. In June issue of Clarinada, there is full page advertisement Ministry of Interior.
(d).
El Federal appeared on Swedish newsprint on May 22, June 4, June 19, June 23 and July 6. El Cabildo appeared on Swedish newsprint on June 4 and with four pages on such newsprint on July 6 (suspension of Cabildo reported my 1727, July 5, 7 p.m.,34 terminated this morning). Investigations indicate there is no question but that this paper was supplied by National Penitentiary which publishes Diario Oficial and is dependency of Ministry Interior. Unfortunately, documentary evidence covering this case unavailable other than that given in despatches 14896 and 15038 of May 27 and June 10.37
(e).
Embassy understands that 1,230,000 pesos have been deposited in court by Government in connection with expropriation 23 subway cars belonging to Siemens (see report 264, June 2138) as German firm contends that cars are worth 3 million pesos. In February a similar question was taken up with Central Bank by British Embassy and official of Central Bank stated that under existing decrees such funds could not be blocked. Embassy has no knowledge of any decree providing for blocking in connection with this expropriation.
(f).
As far as Embassy knows Banco de la Nación is still attempting to supplant German bank in Asunción as described in Asunción’s despatch 2010, April 25, 1940.38
4.
President rationing committee called Presidents of Argentine Chamber and American and British Chambers to meeting late on evening July 5. Contemplated measures to be taken by rationing committee now being analyzed and will be telegraphed today.

Comment on other points enumerated in your 1079, July 3, 7 p.m., is being prepared and will be telegraphed shortly.

Reed
  1. Approved at the Third Meeting of the Foreign Ministers in Rio de Janeiro, January 15–28, 1942 and the Conference on Systems of Economic and Financial Control in Washington, June 30–July 10, 1942; for correspondence, see Foreign Relations, 1942, vol. v, pp. 6 ff., and pp. 58 ff., respectively.↩
  2. Not printed.↩
  3. Not printed.↩
  4. Not printed.↩
  5. Not printed.↩
  6. For text of Resolution V, which concerned the severance of commercial and financial ties with the Axis, see Department of State Bulletin, February 7, 1942, p. 124.↩
  7. Sociedad Electro Metalúrgico Argentina, a Proclaimed List firm.↩
  8. Not printed.↩
  9. Not printed.↩
  10. Proclaimed List.↩
  11. Not printed.↩
  12. Presumably the Proclaimed List firm Compañía General de Obras Públicas S. A.↩
  13. Not printed.↩
  14. Neither printed.↩
  15. Not printed.↩
  16. Not printed.↩