Office of the Historian

740.24112 RP/53: Telegram

The Chargé in Bolivia (Woodward) to the Secretary of State

La Paz, February 18, 1944—10 a.m.
[Received 8:30 p.m.]

505. Developments in connection with the control and expropriation of Axis firms as provided in the expropriation decree of February 11 (reported in my telegram 472 of February 12)25 are:

1.
The Junta and the members of the Economic Defense Board having Cabinet rank have held daily meetings this week toward the end of preparing and promulgating the decree law mentioned in article 2 of the expropriation decree. This decree law issued to prescribe in considerable detail the procedure to be followed in the expropriation and replacement of Axis firms.
2.
It is very likely that considerable of the social philosophy of the Junta will be incorporated in the decree law and that an attempt will be made to provide for the transfer of Axis assets to existing organizations of workers, to cooperatives to be formed and to small businessmen rather than to the large existing Bolivian firms.
3.
The Economic Defense Board has issued instructions to interveners to remain on duty during the entire business day of intervened firms and to supervise rigidly all transactions toward the end of preparing the firms for audits and appraisals. I have obtained authentic data on the intervened firms which discloses that at the present time 33 Axis firms and branches are intervened. This includes 13 Japanese firms in La Paz and the interior which were intervened by Junta.
4.
The Banco Central and all commercial banks were instructed by the Economic Defense Board on February 11 to deny all banking facilities to Axis firms. Inasmuch as this broad directive might be interpreted to include non-Proclaimed List firms owned by desirable German nationals (including German-Jew refugees) the banks have asked clarification but in the meanwhile are observing the directive in respect of Axis firms on Proclaimed List. The Economic Defense Board on February 14 directed the banks to grant full banking and exchange facilities to intervened firms on the sole responsibility of the Interventors on the grounds that the Interventors had been given plenary powers of management and responsibility. The banks have asked that this directive which countermands its predecessor of February 11, be clarified. Presumably it does not contravene the Paz Estenssoro26 directive governing exchange to Axis firms reported in our telegram 399 of February 2.27
5.
The Banco Central continues to pursue a very rigid policy toward granting foreign exchange to Axis firms and a study of the exchange sales by the La Paz branch of the bank to Axis firms since the revolution indicates that less than $12,000 has been sold. Most of this was granted to finance the importation of Axis drugs from Argentina. In so far as the Embassy can determine, there has never been a comparable period since the outbreak of the war in which so little foreign exchange has been granted to Axis firms.
6.
The La Paz newspapers have carried extensive articles on the subject since the promulgation of the expropriation decree. It is apparent that the Axis elements are extremely worried. Borgolte28 is trying to sell; Eisner29 is trying transfer his assets to Bolivian born minor children; and a recent intercept indicates that Kyllmann Bauer30 is seriously apprehensive.

Woodward
  1. Not printed.↩
  2. Victor Paz Estenssoro, Minister of Finance under the Junta.↩
  3. Not printed; this was an instruction to the Banco Central to limit exchange for Axis-tainted firms to those importing from Argentina (824.5151/380).↩
  4. Rodolfo Borgolte, included on the Proclaimed List.↩
  5. Bernardo Eisner, included on the Proclaimed List.↩
  6. Kyllmann, Bauer y Cía, a wholesale food company that imported extensively from Argentina, and was also included on the Proclaimed List.↩