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

No. 7654

The Secretary of State refers to secret despatch no. 2971 of September 27, 1945 from the Embassy at Bio de Janeiro30 reporting that the Brazilian Government does not agree with the position of the American Government that German assets within Brazil are sufficient to satisfy Brazilian war claims and that the disposition of German assets in the Western Hemisphere should be the subject of inter-American consultation on the assumption that claims of the American states can be satisfied entirely out of German assets within their control, and further that the Brazilian Government reserves the right to present in due course its reparations claims.

The assumption by the Brazilian Government of this position furnishes an opportunity to point out to the Brazilian Government that it is to its advantage to complete the Axis replacement program by the nationalization or liquidation of all remaining properties owned or controlled from Germany in order to satisfy its reparation claims out of the proceeds. Recent reports from the Embassy at Rio de Janeiro, notably confidential despatch no. 3053 of October 5 and telegram no. 3180 of October 19, 5 p.m.,31 provide further grounds for believing that the Axis replacement program will be brought to a satisfactory termination in Brazil, but it is understood that there remain some enterprises owned or controlled, directly or indirectly, from Germany which the Brazilian Government has not yet nationalized or liquidated.

It should likewise be emphasized to the Brazilian Government, in view of the position taken that confiscated German assets in Brazil will not be sufficient to satisfy Brazilian war claims, that the Brazilian Goverment should be very careful not to release proceeds of nationalized or liquidated properties to persons suspected of being representatives of German interests until a thorough investigation shall have been made in Germany as well as in Brazil of the beneficial ownership of the properties. It is understood that there have been surrenders, and that other surrenders are under consideration, of the proceeds of nationalized or liquidated properties to Brazilian and neutral nationals who are the nominal owners. It is possible that Safehaven investigations [Page 678] will confirm the German beneficial ownership of these properties, and if so, the proceeds thereof are properly applicable to satisfy reparations claims. The Embassy has already been informed of the results of Safehaven investigations confirming the German ownership of Fábrica Nacional de Tambores Ltda. (ex-PL) and corroborating the evidence of German ownership of Aços Phenix Ltda. (PL).

It is requested that the foregoing observations be brought to the attention of the Brazilian Government, and that the Brazilian Government be also informed that the Government of the United States is ready and willing to consult with it at any time regarding the beneficial ownership of any properties as to which the evidence of German ownership and control is not considered conclusive, to make all information which it has in its possession regarding the ownership of such properties available to the Brazilian Government, and to transmit requests for the investigation of the ownership of any such properties to Germany where Safehaven officers may be in a position to examine the records and to interrogate the officers of German concerns.

  1. Not printed.
  2. Latter not printed.