The Ambassador in Brazil (Berle) to the Secretary of State
[Received October 12.]
Sir: Supplementing Embassy confidential telegram no. 3044, October 3, 1945, 3 p.m.,20 I have the honor to transmit herewith a memorandum20 covering a conference held at the Ministry of Foreign Affairs on September 26, 1945, with the Ministers of Finance and Foreign Affairs, the Director of Exchange of the Banco do Brasil S.A. and other representatives of the Brazilian Government, with a view to ascertaining the intentions of the Brazilian authorities as to the completion of the program for the nationalization or liquidation of Axis enterprises in Brazil. As a result of the views expressed at that conference, I hereby confirm the recommendation made in my telegram above mentioned that the approved “intermediate group” names for Brazil be removed from the Proclaimed List of Certain Blocked Nationals during the current month, rather than to postpone such action until the general reduction of the Proclaimed List to the “hard core” in November, or later, under the program indicated in the Department’s telegram no. 2302, September 21, 1945, 8 p.m.20
In this connection, I desire to refer to the Department’s instruction no. 7152, dated May 15, 1945, which outlined the policies to obtain with respect to the continuance of the Proclaimed List in the post-hostilities period and set forth recommendations of the Interdepartmental Committee on Proclaimed List with respect to the reduction and ultimate withdrawal of the Proclaimed List in Brazil. The Embassy was directed to approach the Brazilian Government in accordance with the recommendations contained in the “country memorandum” [Page 673] transmitted with that instruction and, in its discussions with the Brazilian authorities, to stress the importance of eliminating the remaining Axis spearhead enterprises in this country. The recommendations in the “country memorandum” included the following:
“3. (a) The Brazilian Government should be informed that this Government had hoped that by V–E day the elimination of Axis Spearheads would have progressed to a point where the Proclaimed List for Brazil, with the exception of Japanese names, could have been completely withdrawn. The Brazilian Government should be asked immediately what its plans are with respect to the elimination of the remaining Spearheads. If feasible, assurances should be obtained from the Brazilian Government that elimination will occur in the near future, and the Brazilian Government should be informed that this Government proposes to withdraw the Proclaimed List for Brazil with the exception of a “hard core” list as defined in the preceding paragraph in the June 8 supplement.”
Reference is also made to the Department’s restricted telegram no. 1695, July 7, 1945, 2 p.m.,21 emphasizing the importance of ascertaining at an early date the intentions of the Brazilian Government as to the completion of the balance of the Axis replacement program in order to permit establishing arrangements for the reduction of the Proclaimed List to the “hard core” in Brazil and other countries.
It is felt, and it is understood that the interested authorities in Washington consider, that the performance of Brazil in the field of economic warfare against the Axis has been more satisfactory than that of almost any other Latin-American country. Now that assurances have been received from the Brazilian authorities that it is their intention to complete the nationalization or liquidation of the remaining enterprises in Brazil which are clearly subject to majority control from enemy territory, it is believed that it would be only just to accord a measure of recognition to Brazil’s excellent cooperation by reducing the Proclaimed List in this country to a “hard core” prior to the taking of like action in other countries, many of which have much less favorable records.
The Embassy has heretofore opposed the proposals to delete any substantial number of the so-called less serious offenders from, the Proclaimed List for Brazil because of the fact that, during the earlier part of this year, the progress being made in the Axis replacement program was far from satisfactory, both because few concerns were being effectively nationalized and because there were indications that certain sectors of the Brazilian Government appeared to be favoring, or at least considering, the reversal of action previously taken in certain important cases, such as Fábrica Nacional de Tambores Ltda. and Hermann Stoltz e Cia. It was felt, rightly or wrongly, that a substantial [Page 674] reduction in the Proclaimed List would be interpreted as a lack of interest on our part in the completion of the replacement program and further discourage the Director of Exchange, who is a key figure in the administration of the Brazilian controls and whose cooperation with the Embassy has been outstanding.
During the last few months, in addition to the Embassy’s efforts directed especially to eliciting a statement of the intentions of the Brazilian Government as to the completion of the replacement program, as a part of which there was presented to the Ministry of Foreign Affairs the memorandum of July 25, 1945 (a copy of which in translation was transmitted to the Department under cover of Embassy despatch no. 2235 of July 31, 194522), the Embassy has delivered several memoranda or notes, as indicated below, in the endeavor to prevent, or to obtain more careful consideration of, certain action which appeared likely to conflict with the objectives of the replacement program.
[Here follow descriptions of three communications addressed to the Brazilian Government, together with comments regarding various business firms in Brazil.]
… Therefore, the solution suggested by the Minister of Finance, namely, of eliminating the interests in these Brazilian enterprises owned by German nationals residing in Germany and thereafter maintaining the enterprises under continuing surveillance by the Brazilian authorities, with the cooperation of the Embassy, may be the best practicable solution, taking into account the fact that, as the Minister observed, these enterprises are considered of interest to the economic welfare of Brazil and should be preserved.
An early expression of views of the Department with reference to the handling of these cases proposed by the Minister of Finance, as outlined herein and in the accompanying memorandum of conversation, will be appreciated. It will of course be incumbent upon the Embassy to give some definite and clear-cut response to his suggestion in the near future.
It is requested also that the Embassy be notified as promptly as possible of the decision reached on my present recommendation for the elimination of the “intermediate group” names from the Proclaimed List for Brazil during October23 and, if such recommendation is approved, of the date on which such elimination will be effected. In the event that there is any uncertainty on the Department’s records as to the names which the Embassy believes should be removed at this time, the Department’s early advices are requested.[Page 675]
It may be mentioned that the number of petitions for deletion being received from firms and individuals included in the list of less serious offenders is steadily increasing and demands a disproportionate amount of time from the present reduced staff of the Economic Warfare Section, thereby distracting attention from the more important matters. The number of inquiries received from the Brazilian Foreign Office on cases of this nature has also increased noticeably within the last two or three months. It should be borne in mind that some of the “intermediate group” names undoubtedly would have been recommended for individual deletion before now, except for the belief that the reduction to the “hard core” in Brazil would be effected at the latest in September or early October of this year.
As was stated in my telegram no. 3044, the Ministers of Finance and Foreign Affairs have indicated that they feel it would be desirable and proper to remove from the Proclaimed List at this time the names of the less serious offenders not involved in the replacement program. Furthermore, as was reported in my despatch no. 2338 of August 6, 1945,24 Dr. Santos Filho and the Agencia Especial de Defesa Economica have heretofore cleared by far the greater number of the names recommended by the Embassy and approved by the Interdepartmental Committee for removal from the Proclaimed List in the “intermediate group”.