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

740.25112 RP/10: Telegram

The Secretary of State to the Ambassador in Chile (Bowers)

Washington, April 22, 1944—9 p.m.

472. The Department is inclined to believe that the problem of local controls in Chile should be approached on the following basis:

The Embassy would first suggest orally & informally to the appropriate officials the need:

(a) for a law providing for the effective blocking of such persons and firms as may be found to be undesirable by the designated Chilean authorities; the blocking to be applied immediately to spearhead firms in accordance with the standards set forth in Washington Resolution VI.⁹⁹ Extension of blocking to others could be decided upon at a later date. The spearhead firms would include those firms which you will place in categories 1–A and 1–B and, in your discretion, a few of the firms which you will place in category 2,¹ as defined in enclosure no. 6 to your despatch no. 8862 of February 12, 1944.²

(b) for a law prohibiting all unlicensed communications and dealings, direct or indirect, with real and juridical persons residing in Axis and Axis-occupied territory.

It would be emphasized, however, that the above measures are considered to be only the most important of the minimum controls which should be immediately adopted in accordance with the Resolutions of the Washington and Rio Conferences and that this Government is hopeful that additional measures will be taken as soon as possible. At the same time it would be pointed out that the suggested measures would affect only those few concerns of Chilean nationality which are prominently identified with Axis activities and that the measures are primarily directed against persons residing in or controlled, directly or indirectly, from Axis territory.

The Department shares the Embassy’s hope that the Chilean authorities will soon adopt the comprehensive system of controls envisaged by the Washington Resolutions. Experience has shown, however, that the other American republics, and particularly those who have not declared war, have been reluctant to apply the more drastic techniques of vesting, liquidation and forced sale on a comprehensive basis and to apply controls to their own nationals. It is believed that in some instances the magnitude of the task of fully implementing the Washington Resolutions has been an effective deterrent to obtaining effective controls to limited categories such as the spearhead firms. The purpose, therefore, would be to present a limited program which could be immediately adopted without substantial political or economic repercussions and which would not prejudice the ultimate achievement of the broader objectives.

Secondly, it would be made clear that this Government is prepared to consider a revision of the Proclaimed List for Chile when additional controls, such as vesting, liquidation and forced sale, are effectively applied, with particular reference to the spearhead firms. In this connection the Department believes that it will be in a better position to consider the exact nature of the controls which will be necessary to accomplish this result after it has received the classification of Proclaimed List firms requested in the Department’s airgram 219 of March 29, 1944.

The above has been discussed with the British Embassy here which is requesting the views of MEW.

Please promptly report your views concerning the proposed plan of approach suggested above.

Hull

99. See Pan American Union, Congress and Conference Series No. 39: Final Act of the Inter-American Conference on Systems of Economic and Financial Control, Washington, June 30–July 10, 1942 (Washington, 1942), p. 17.
1. Category 2 included firms in which there were undesirable interests in contrast to category 1 which contained Axis-owned or controlled firms and category 3 in which were placed firms trading with or cloaking for Proclaimed List companies.
2. Not printed.