462.OOR/10–2945: Circular telegram

The Secretary of State to the Diplomatic Representatives in the American Republics

Deptcirtel Aug 28, 9 a.m.36 and cirgam Oct 9, 9:35 a.m.37 Dept believes that problem of final disposition of German assets in this Hemisphere is urgent and should be considered at November 15 meeting of Inter-American Social and Economic Council or at earliest possible Council meeting after that date. At such meeting Dept is prepared to introduce a Resolution along following lines:

Each of the American republics should satisfy its legitimate war claims against Germany out of German assets within its own jurisdiction. The prior right of each American republic to assets subject to its control is affirmed by Mexico City Resolutions XVIII and XIX.
German assets in excess of legitimate war claims should be distributed in some equitable manner among war-devastated United Nations. Such excess might be made available in form of a credit for purchase of goods and services.
Application by each American republic of German assets to its legitimate claims against Germany should be regarded as a set-off as should also the proposed surrender of the surplus in manner specified in preceding paragraph. We should agree that such set-off is a complete defense to claims of Germany and of former German owners arising out of nationalization and Safehaven 38 proceedings envisaged [Page 182] in the pertinent Rio, Washington39 and Mexico City Resolutions. The Peace Treaty with Germany should contain an express waiver of claims arising out of nationalization action taken between Sep 3, 1939 and effective date of Treaty; and should provide that former German owners must look to German Govt for compensation.
It will be necessary to define the terms “legitimate war claims” and “German assets”.
A caveat is that looted property should be returned to former owners.

The plan which we propose has several advantages:

It is a logical conclusion to replacement program40 (Rio Resolution V, Washington Resolutions and Mexico City Resolution XVIII) and Safehaven program (Mexico City Resolution XIX) which aim at permanent elimination of influence of persons and firms which have engaged in activities inimical to the security of Western Hemisphere.
It solves troublesome question of post-war claims for property seized under the Resolution referred to and avoids outright confiscation.
It satisfies moral claim to German assets of those United Nations in war-devastated areas which have suffered most and at same time furnishes equitable basis for satisfaction of war claims of American republics.
Surrender of surplus assets should not injure economy of any republic since surplus can be made available in form of goods for war-torn areas.

In your discretion please inform appropriate authorities and cable their views.

For your confidential information it is somewhat doubtful whether or how soon Control Commission in Germany41 will vest German external assets. Separate treatment of Argentina is for this reason and others impracticable.

Embassies at Buenos Aires and Caracas should not inform Argentine and Venezuelan authorities pending further instructions.

  1. See despatch 12,760, September 13, from Santiago, p. 780.
  2. Not printed.
  3. For documentation on the Safehaven program, see Foreign Relations, 1944, vol. ii, pp. 213 ff.
  4. For the recommendations of the Third Meeting of the Ministers of Foreign Affairs of the American Republics which met at Rio de Janeiro in January 1942, see Department of State Bulletin, February 7, 1942, pp. 117 ff.; for those of the Inter-American Conference on Systems of Economic and Financial Control which met in Washington, July 1942, 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, 1942).
  5. Term applied to the substitution of friendly capital for enemy capital in Axis-dominated business firms in the American Republics.
  6. For documentation on the reparations problem in Germany, see vol. iii, pp. 1169 ff.