Foreign Relations of the United States: Diplomatic Papers, 1943, The American Republics, Volume V

840.51 Frozen Credits 35/122b: Telegram

The Acting Secretary of State to the Ambassador in Argentina (Armour)

Washington, October 30, 1943—8 p.m.

1674. The Department and the Treasury Department on October 29 presented the following two memoranda to the President regarding proposed Argentine freezing:

Treasury Memorandum

memorandum for the president, october 29, 1943

Freezing Argentina

Mr. Stettinius advised me this afternoon that he was sending you a short memorandum regarding the freezing of Argentina and suggested that I do likewise. We in the Treasury think that Ambassador Armour’s cable of October 27,⁸ again strongly urging the freezing of Argentina, is the best statement of the reasons for freezing. As the Ambassador states:

“. . . .⁹ The Mission must express the opinion, however, that an opportune moment has come to make public the United States’ attitude concerning the present Argentine Government. Therefore, the Mission would like to repeat its recommendation that an announcement be made of the amendment to Executive Order 8389 (freezing Argentina).”

A copy of this cable is attached.

For your information the Treasury Department, with the State Department’s approval, has taken the following provisional action:

(a) Treasury has specially blocked the assets of the two largest banks in Argentina, who for over a year and with the Argentine Government’s approval have been openly aiding the Axis. These banks were trying to transfer out of their names over $10,000,000 of assets before this Government could act.

(b) The Treasury has temporarily stopped transactions in Argentine accounts amounting to over $5,000,000 and involving the flight of funds from the Argentine or the transfer of substantial Argentine funds to new accounts where such funds could no longer be readily identified.

The Treasury has advance notice of additional transfers of a similar character within the next 24 hours amounting to $10,000,000. Moreover, the Argentine Central Bank has given standing instructions for the shipment of substantial amounts of its gold to Argentina on each Argentine ship henceforth leaving the United States.

Should you decide to take action in this matter, the necessary papers are ready for your signature.

(s) D. W. Bell¹⁰

Department’s Memorandum

memorandum for the president

Argentine Freezing

Developments since your Decision of October 25¹¹ Against a General Freezing at this time of Argentine Assets

1. Secretary Hull has telegraphed his concurrence in the Department’s position as stated to you contrary to blocking Argentina. A copy of this telegram is attached.

2. Ambassador Armour has cabled renewing his recommendation to block Argentina and stating that the Argentine Government is progressing to assisting Axis activities and that while blocking involves risks, he is willing to recommend immediate blocking action. A copy of this cable is attached.¹²

3. Transfers and attempted transfers of Argentine funds since October 25:

$1 million transferred largely to Uruguay.

Yesterday the Argentine Central Bank ordered private banks to transfer their funds to it. As a result, attempted transfers of $29,500[000] were ordered from Argentine bank accounts in New York to Argentine Central bank accounts at Federal. Of these $7 million have been made; $9,500,000 have been definitely blocked; $13 million are now pending. No serious disadvantage is discerned were such transactions to occur, except where individual accounts upon the evidence should be blocked.

Now pending: Transfers of $250,000 to Uruguay; $1 million to Swedish Riksbank. These transfers if accomplished would remove funds from U. S. control.

4. Department’s recommendations:

a. that there should be no general blocking this time for reasons previously given;

b. If contrary decision is made, general blocking should be preceded by attempt to get British and some major American Republics to take collateral action.

c. Since transfers effected or pending from Argentine to foreign account total only $2,500,000 for the current week, take no action beyond existing ad hoc blocking, continuing present scrutiny of transactions to prevent sudden flight of capital.

(s) E. R. Stettinius, Jr.

The President approved the Department’s memorandum.

The Treasury on Friday afternoon held up a total of $2,675,000 in Argentine transactions, including the proposed $1,000,000 transfer to the Swedish Riksbank, small amounts to Uruguay, and something over a million dollars transferred from several banks, including National City, to the Argentine Central Bank’s account at the Federal Reserve Bank in New York. Certain other of the transactions mentioned in the Department’s memorandum went through before the Treasury took restrictive action. $10 million, included in the $13 million mentioned as pending, are the National City and First National of Boston transfers and these did not actually arise on Friday.

On Saturday the Treasury had requests to approve transfers of a total of $11 million to the account of the Argentine Central Bank (including the National City and Boston bank items) and several hundred thousand dollars to Uruguay. In accordance with the President’s directive these transactions were approved. Moreover, the Treasury will on Monday approve the transactions held in suspense from Friday.

Thus the only transactions which have been effectively blocked are those of the Banco de la Nación and Banco de la Provincia. This includes the $9,500,000, plus an additional $1,600,000 which came through on Friday.

Stettinius

8. No. 2530, p. 496.
9. Omission indicated in the original.
10. Under Secretary of the Treasury.
11. See telegram No. 1647, October 25, p. 496.
12. No. 2530, October 27, p. 496.