800.01B11 Registratian/1–2649
Memorandum by the Director of the Office of European Affairs (Hickerson) to the Secretary of State
Discussion:
By letter dated January 26, 1949,2 the Attorney General3 has requested for the second time the Department’s views on the desirability of attempting to compel the Amtorg Trading Corporation4 to register under the Foreign Agents Registration Act. Amtorg has refused to register voluntarily, claiming exemption under Section 3 (d) of the Act as a firm engaged only in bona fide trade on behalf of a foreign principal.
In replying to the previous request of April 1948, the Department in a letter dated May 25, 19482 pointed out the protection afforded American firms by dealing with the Soviet Union through Amtorg, a New York State corporation subject to the courts of the United States, and stated its belief that if Amtorg were compelled to register the Soviet Government would dissolve Amtorg and handle its trade [Page 755] through official channels. The letter gave the Department’s opinion that such a development would be detrimental to the best interests of American firms doing business with the Soviet Union but stated that the Department did not wish to oppose prosecution of Amtorg if the Department of Justice was satisfied, on the basis of the evidence, that the courts would rule in favor of the United States.
In May 1948 officials of the Department of Justice informally expressed doubt that the evidence was of such nature that an American court would compel registration. In recent discussion an official of the Department of Justice has stated, also informally, that additional information has been accumulated to build up a case. However, the exact nature of the evidence has not been disclosed to the Department.
It continues to be the opinion in the Department that the existence of Amtorg as a corporation subject to United States courts provides a measure of protection to American firms engaged in American-Soviet trade and that action to compel registration would result in the dissolution of Amtorg, since it is believed Amtorg would probably not submit to the requirements of the Act, particularly the provision that registrants provide frequent detailed reports of their activities in the United States. It is felt however that this factor is not paramount and that the Department should interpose no objection if the Department of Justice is convinced, on the basis of the evidence in its possession, that prosecution of Amtorg is in the over-all interest of the United States.
Recommendation:
If you approve, signature of the attached reply5 is recommended.