811.20 Defense (M)/2727: Telegram

The Acting Secretary of State to the Ambassador in Colombia ( Braden )

217. Reference your 294, July 23. The Department has referred the matter of the three letters of credit to the Treasury for immediate action under the recent Executive Order freezing Japanese funds.

It is clear that the recent freezing order is not sufficient to make the instructions from the Office of Control of Exchange and Exports requiring the issuance of irrevocable letters of credit by New York banks the solution of the problem. It is still necessary even with this freezing order to have some supplementary Governmental action either in the form of executive decree or legislative enactment, as you may determine, to perfect the prohibition of exports except to the United States. After discussion with Wright66 it seems to the Department that the best method would be a decree, resolution or other similar action requiring as a matter of law the sale of all platinum to the Bank of the Republic (with the one possible exception mentioned below). This method, according to Wright, has the advantage that it might encourage the proper authorities to use more vigilance to prevent smuggling than they otherwise would. Wright states that it is his belief that the basic exchange legislation is sufficiently broad [Page 47] to enable either the Ministry of Finance or the Control Board to issue an appropriate decree or regulation to this end. Your views are requested. The Department will naturally be guided by you as to the form the Governmental action is to take, provided that it achieves the main objectives which are, first, the ironbound prohibition of exports except to the United States, and, second, keeping smuggling to a minimum. The present set-up leaves loopholes which must be stopped. The one exception referred to above is the South American Gold and Platinum Company which should be allowed, if the Colombian authorities approve, to continue its exports of platinum directly to the American market.

With respect to the closing paragraph of your 294, please telegraph the amount of platinum now on hand which it is suggested the Metals Reserve Company offer to purchase and also telegraph the price at which you believe it necessary for the Metals Reserve Company to offer. If possible, this price should not be in excess of that set forth in the Department’s 196.

Chargeable to Metals Reserve Company, in accordance with Section V–45, Foreign Service Regulations.

Welles
  1. Possibly James H. Wright of the Division of the American Republics.