The Ambassador in Brazil (Berle) to the Secretary of State

No. 1533

Sir: Referring to the recent communications exchanged with the Department on the subject of the handling and timing of the contemplated withdrawal of the Proclaimed List of Certain Blocked Nationals for Brazil, and particularly to the Department’s instruction no. 7152 of May 15, 1945 and the Department’s telegrams nos. 1339 and 1348 of May 26 and May 28, 1945, respectively,14 I have the honor to transmit herewith a tabulation showing the names which, in the Embassy’s opinion, after lengthy consultations with representatives of the [Page 668] British Embassy in this city, should constitute the “hard core” to which it is contemplated the Brazilian section of the Proclaimed List will be reduced prior to its ultimate complete withdrawal in this country.

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

The Embassy is in some doubt as to the proper interpretation of the expression, “notorious individuals who are internationally regarded as Axis collaborators”, as a standard for selecting names for inclusion in the hard core. Strictly speaking, it may be questioned that there is any listed individual in Brazil, other than Jan Bata, who would qualify under this heading. On the other hand, it is this Embassy’s feeling, which the British representative here shares, that there are many other listed persons in Brazil who have been, and probably still are, more dangerous and objectionable than Jan Bata—at any rate persons who would be more readily accepted as enemies by public opinion in Brazil. Such are the Stoltzes (including Hans Ulrich Stoltz, recently released from police custody and recently recommended for inclusion in the Proclaimed List, to join his father and brother), the Uebeles and other individuals who were formerly the leading figures in Axis spearhead firms or in the German business community in Brazil. From the terms of instruction no. 7152, it would appear that it is not the intention to retain in the hard core persons who were prominently connected with enemy spearhead concerns which have been nationalized or liquidated or which are under the control of representatives of the Brazilian Government preliminary to nationalization or liquidation. In the Embassy’s opinion, on the contrary, it is precisely these individuals who should most properly be kept on the Proclaimed List to the bitter end, in the interest of assuring so long as possible their separation from the enterprises with which they were previously associated or of insisting upon their elimination from enterprises which are yet to be nationalized. It has already been pointed out (see particularly pages 46 to 48 of Embassy despatch no. 473 of March 15, 194515) that the Brazilian authorities have been of virtually no assistance in bringing about the removal of politically undesirable elements from firms in process of nationalization, and one principal reason for the Embassy’s concern over the withdrawal of the Proclaimed List is that its elimination will probably remove the last remaining effective bar, in a number of instances, to the resumption of relations between these undesirable individuals and the enterprises from which they have been or may be eliminated under pressure. At best, the removal of such persons from the Proclaimed List may well result in their entering some other enterprise in more or less direct competition with the former affiliation, whose prosperity it is now in our interest to endeavor to encourage.

[Page 669]

… The proposals and recommendations of instruction no. 7152 have also been discussed with the Acting Minister of Foreign Affairs,16 with whom I left a copy of the list delivered to the Minister of Finance. The Acting Minister stated that he was entirely in accord with the desirability of proceeding immediately to complete the nationalization or liquidation of enterprises controlled by enemy interests abroad, but observed that jurisdiction over that program is vested in the Ministry of Finance. The Director of Exchange of the Banco do Brasil has, of course, been fully advised on the matter, within the limits stated in the Department’s instruction, but again has emphasized that his hands are tied in the absence of cooperative support and authorization from above.

It is probable that some general assurances will be received from the Brazilian authorities with respect to their intention of proceeding with the implementation of at least part of the remaining replacement program. Unless these assurances are much more definite and explicit than is now considered likely, it will be, in the Embassy’s opinion, a matter of considerable doubt just how much further progress may be expected on the replacement program in Brazil. Probably most of the liquidations (as distinguished from pending nationalization proceedings) now in active progress will be completed; perhaps also a few more of the enemy-owned enterprises heretofore included in Categories I–1 and I–2 of the Embassy’s breakdowns of the Brazilian Section of the Proclaimed List will be nationalized through their transfers to Brazilian groups.

Under these circumstances, it is felt that when the time comes for the reduction of the Proclaimed List for Mexico to the hard core, it must then be decided by the Department and other interested agencies in Washington whether the progress made in the replacement program in Brazil and Brazil’s record otherwise as a cooperating country in the economic warfare field, coupled with whatever assurances may have been received from the Brazilian authorities, compare so favorably with the action taken and expected to be taken by Mexico and other cooperating nations that it would be unjust or unwise to stigmatize Brazil by postponing a comparable reduction in this country. This Embassy has practically no information as to the status of the replacement programs in other American Republics, and therefore finds it impossible to make such a comparison. The position recently taken by the Embassy in opposing an immediate drastic reduction in Brazil was based upon the belief that the present withdrawal or severe contraction of the List in this country would seriously impair the possibility of the successful completion of the unfinished portion of the replacement program in this country. On the basis of past [Page 670] performance and present prevalent feeling in Brazil that “the war is over”, it would seem unwise to entertain too sanguine hopes that the lapse of two, three or four additional months would completely change the picture. Nevertheless, it is recognized that a severe pruning of the List must be made in the American Republics in the relatively near future, in view of the schedule of withdrawal agreed upon with the British Government, and that purely local considerations must yield to the requirements of over-all policy and the principle of like treatment for countries similarly situated. It will be understood, of course, that the Embassy has no desire to place Brazil in a less favorable light than other countries which have given perhaps less effective cooperation.

Respectfully yours,

For the Ambassador:
DuWayne G. Clark

Commercial Attaché
  1. Telegram 1348 not printed.
  2. Ante, p. 653, 4th paragraph, to p. 656, 3d paragraph.
  3. Pedro Leão Velloso.