740.31112 RP/7–1045

The Chargé in Venezuela (Flack) to the Secretary of State

No. 7481

Sir: …

The procedure of liquidation under these Resolutions75 is dilatory in its method of application in that, although a Government representative is named to supervise the liquidation (usually the individual who has acted as interventor under the Venezuelan control system), the actual liquidation is usually conducted by the main party at interest (such as the manager, the principal partner, etc., as the case may be) in a business-as-usual fashion. This procedure permits the firm in liquidation to realize full value for its assets, thereby minimizing the possibility of claims for damages in the event Venezuelan emergency legislation is held to be unconstitutional. This method, however, is not conducive to a speedy and satisfactory liquidation contemplated by the “overall” plan.

. . . . . . . . . . . . . .

Based upon the Department’s top secret instruction No. 3056 dated May 23, 1945, a note was recently handed to the Acting Minister for Foreign Affairs,76 who in his regular capacity of Director of International Policy in the Foreign Office is also a member of the Com mission for the Control of Properties Subject to Intervention, inquiring what plans the Venezuelan Government had with respect to the elimination of the remaining spearheads. The Acting Minister, upon receipt of this note, replied that the matter would be placed in the appropriate channels for action and he trusted the “overall” plan could be effected at an early date. The only official reply to this note was an interim reply stating that the matter was now before the three Ministries concerned (Interior Relations, Foreign Affairs, and Finance) and that full reply awaited their decision. It is possible that formal final reply will not be made until after the return of Dr. Parra [Page 1435] Perez, the Minister for Foreign Affairs, who has not yet returned from the United States where he attended the San Francisco Conference,77 and until the Department has replied to the memorandum enclosed with the instruction under reference.

Shortly after delivery of the above-mentioned note to the Foreign Office, the Minister of Finance78 and the President of the Commission for the Control of Properties Subject to Intervention on separate occasions during informal conversations mentioned that the matter of natural born citizenship was an obstacle to ordering liquidation of Gathmann Hermanos and the Valentiners. It should be noted that the matter of natural born citizenship was thus first officially (although informally) raised as an obstacle to the “overall” plan, whereas previously it had not been considered an impediment in the case of Blohm & Company nor in the case of Breuer, Moller & Co., Sucrs., in the latter of which the principal partner, Von Jess, is a natural born Venezuelan.

. . . . . . . . . . . . . .

Venezuelan economic warfare aims have had solely one objective, to wit, the control of dangerous persons and firms for the duration of the war. The Venezuelan attitude toward commercial elimination of undesirable persons and firms at our behest has been limited to the organizations that might be considered as direct subsidiaries of German organizations, such as the local Bayer and Schering Companies. The possibility that the Allied Group Control Council79 might extend jurisdictional authority to include German assets in Venezuela is lacking in that the majority of spearhead capital in this country could be protected by citizenship, either natural born or naturalized.

Considering the tenor of the memorandum under reference, the issue would appear to be whether it is preferable to accept the Commission’s proposals approving reorganization of the remaining spearhead firms with the undesirable persons retaining a minor share participation and, presumably, freely investing the remainder of their capital elsewhere or whether the line should be held and these firms perpetuated in the Proclaimed List for the remainder of its existence. It is submitted that our gain by accepting such reorganizations cannot balance the loss in our prestige for failure to live up to the publicized statements of policy heretofore made with regard to these matters. In view of the present attitude of the Venezuelan Government, it may well be that the only consistent course to follow is to maintain the spearhead firms (Gathmann, Meyer, Steinvorth, and Valentiner) on the Pro claimed List indefinitely.

Respectfully yours,

Joseph Flack
  1. Governmental orders directing certain firms to be liquidated.
  2. Julio Alfredo de la Rosa.
  3. United Nations Conference on International Organization, April 25–June 26, 1945.
  4. Rodolfo Rojas.
  5. For documentation on the German reparations problems and the Allied Group Control Council, see vol. iii, pp. 1169 ff.