Foreign Relations of the United States: Diplomatic Papers, 1945, The American Republics, Volume IX

740.00112A EW/5–2145

The Acting Secretary of State to the Ambassador in the Dominican Republic ( McGurk )¹⁶

No. 303

Washington , May 21, 1945.

The Acting Secretary of State refers to the Department’s circular airgram of April 28, 1945, 4:20 p.m. [9 a.m.],¹⁷ concerning the considerations which will govern the maintenance of the Proclaimed List following the cessation of hostilities in Europe. This circular airgram stated that instructions would be forthcoming on the individual problems of each of the other American republics.

There is enclosed a memorandum dated April 27, 1945, entitled “Policy with Respect to Proclaimed and Confidential Lists in Post-Hostilities Period: Western Hemisphere”. This memorandum together with its enclosures sets forth the future listing policy for the Western Hemisphere in greater detail than was possible in the circular airgram.

There is also enclosed a memorandum entitled “Country Memorandum for the Dominican Republic” which has been approved by the Interdepartmental Proclaimed List Committee. This country memorandum outlines the progress that has been made, analyzes the present Proclaimed List and replacement situation, and contains recommendations approved by the Committee concerning the withdrawal of the Proclaimed List for the Dominican Republic.¹⁸

[For text, mutatis mutandis, of remainder of this instruction, with extract of two additional paragraphs preceding the last, which were not applicable to the Dominican Republic, see instruction 7152, May 15, to Rio de Janeiro, page 663.]

[Enclosure 1]

Memorandum

[ Washington ,] April 27, 1945.

Subject: Policy with respect to Proclaimed and Confidential Lists in Post-Hostilities Period: Western Hemisphere.

Reference is made to the circular instruction of September 20, 1944,¹⁹ concerning the continuation of the Proclaimed List in the period following the cessation of organized resistance in Europe, and to the Department’s circular airgram of April 28, 1945.

I.

As was indicated in the Department’s circular telegram [airgram] under reference, discussions have recently been held in Washington between British and United States officials with respect to post-hostilities listing policy. The substance of the conclusions arrived at has already been forwarded to the Embassy in Department’s circular telegram under reference. It will be useful, for the purposes of the discussion which follows, to outline briefly the background of these discussions and these conclusions.

In May, 1944, a widely publicized statement²⁰ of an officer of the Department indicated that the List could probably be withdrawn more quickly from countries far removed from the area of battle than from others. On December 8, 1944, the Interdepartmental Committee on Economic Foreign Policy approved, in final form, a document²¹ which stated an agreed policy of continuing the List for some period after cessation of organized resistance in Europe. An earlier edition of this document²² had been made the basis for the statement of September 26, 1944, to the effect that the List would be so continued, and that it would be withdrawn most rapidly in those countries which had effectively eliminated Axis spearheads. Neither the Executive Committee document nor the statement of September 26, 1944, which was issued simultaneously by the British and the United States, however, settled specifically the question of the manner in which the List would be withdrawn after V–E²³ day. In other words, although this Government and that of the United Kingdom had announced that the Lists would continue, neither government had settled whether the Lists would continue unmodified, whether there would be a gradual decrease, and so forth.

It was believed, however, from reports received during the course of the last several months, that the British view would be that the Lists should be cut drastically immediately after V–E day, and that only a “hard core” of principal offenders should thereafter be carried on the Lists until the final elimination of the Lists themselves in toto. It was thought, also that the British favored elimination of the Confidential Lists, which, on the other hand, the Interdepartmental Proclaimed List Committee considered to be at the very least a highly desirable adjunct to the published lists, and one which should be continued while there existed the export controls which made possible the functioning of a confidential list. In recognition of the need to find a common meeting ground and reconciliation of views, therefore, a memorandum was prepared by the Department and cleared with the Interdepartmental Proclaimed List Committee. This memorandum, a copy of which is enclosed as enclosure 1,²⁴ thereafter served as the basis for discussions with Mr. Dingle M. Foot, Parliamentary Secretary for the Ministry of Economic Warfare, and with officers of the British Embassy in Washington. These discussions extended from April 16 to April 21, 1945, and resulted in the drafting of a second memorandum (enclosure 2 hereto)²⁵ which was jointly submitted by the Department and Mr. Foot and the British Embassy to the Proclaimed and Black List Committees.

II.

This tentative agreement falls into several categories. The more important of the points are summarized hereinafter. The memorandum itself (enclosure 2) will of course set forth the recommendations more fully.

a) The Lists in the Eastern Hemisphere are to be eliminated as follows: minor offenders immediately after V–E day; the intermediate category four months thereafter; and “hard core” approximately one year after V–E day. The Department’s view is adequately expressed in enclosure number 1 to this instruction; the British urged strongly that circumstances connected with the necessity for removing wartime restrictions made it impossible to continue the Lists in any manner more extensive than that above outlined.

b) The program already under way in the Western Hemisphere is to continue. That is, the program of mass deletions to reward progress in replacement programs. It is recognized that it will not be possible to hold to a line in any Western Hemisphere country more drastic than that adopted for Eastern Hemisphere countries, and that, therefore, deletions even in a country like Argentina will have to follow a pattern similar to that in a country like Spain. On the other hand, an attempt will be made to emphasize the distinction between cooperating and non-cooperating countries, and to implement the statement of September 26, 1944, by withdrawing the Lists promptly from the cooperating countries while continuing it in substance until the deadline set by the Eastern Hemisphere schedule in those countries which had not eliminated spearhead concerns and carried out an effective replacement and control program.

c) The Confidential Lists are to be eliminated shortly after or upon V–E day. It was felt strongly by the British authorities that they could not continue secret lists after actual cessation of hostilities.

d) The Lists are to remain flexible enough to take care of cloaking offenses. It is recognized that control of cloaking is difficult of fulfillment in the absence of extremely flexible secret lists; but every effort will be made to maintain the effectiveness of the List by the continued application of the usual Proclaimed List policies, including the listing of such cloaks as may be necessary to maintain the List’s prestige. Additional listings should be considered in the light of the post-hostilities listing program, so that the additions of names which would not qualify for a residual list will be kept to a minimum.

e) The necessities of the war in the Pacific are not intended to be affected by the memorandum. This, of course, does not prohibit deletions of Japanese names in connection with mass deletion programs and the like, where local controls have become adequate.

III.

Principally, the following points may be made with regard to the memorandum, accepting the document as a working compromise between varying points of view:

a) The fundamental time-table is set by the schedule of deletions for the Eastern Hemisphere. Since it seems obviously impossible to adopt a more stringent policy in any of the American republics than would be adopted with respect to one of the European neutrals, it becomes necessary to work within or where appropriate, in advance of, the schedule established for the latter countries. For example, it may be accepted as following from the document that reductions of the lists will take place in Argentina, even if that country has not moved forward with an effective replacement program, parallel with the reductions contemplated for (say) Spain.

b) It thus becomes necessary to take immediate steps to effect a substantial reduction or perhaps complete elimination of the lists in the cooperating countries, in order to comply with the September 26, 1944 statement that such a distinction would be made, and in order to use withdrawal in such countries as a talking point to persuade other countries to put a replacement program into effect, or to spur a lagging program. If there is uncertainty as to how long the Lists will be continued in the non-cooperating countries, it may be possible, within the four or five month period before the Lists are cut to the “hard core”, to obtain some action from them, or at least to obtain a definite promise of action, to which the withdrawal could be related.

c) It becomes obvious that the sooner withdrawal is effected in cooperating countries, the more clear will become the distinction between the sheep and the goats. Moreover, should such withdrawal in cooperating countries come substantially before announcement of V–E day, the period during which the Lists will continue in the other countries, in terms of months rather than dates, will be substantially lengthened.

d) Although the fundamental pattern is of course fixed in the memorandum, as explained above, the problems of the American missions in the other American republics have, of course, been always before the Department with respect to this problem. It is hoped that enough flexibility may be retained, within the framework thus outlined, so that withdrawal of the Lists in the manner contemplated will not injure chances for successful completion of replacement programs on which the various missions have for so long worked. It is intended, also, that opportunity shall be afforded to those missions having particular problems to comment and to consult with the Department on these matters. The Department attaches great importance to the replacement programs and to the work of the missions in this field, and continued and intensified efforts will be made during the remaining period to carry this work to a successful conclusion.

e) As indicated in the Department’s circular telegram [airgram] of April 28 under reference, this program contemplates rapid elimination of the Lists in the Central and Caribbean republics, and in Mexico and Ecuador; probably in Brazil and Chile; and possibly in Peru and Venezuela. It is proposed that the Lists will be wholly or virtually withdrawn in many of the Central and Caribbean republics, in Mexico and in Ecuador in the first practicable supplement after V–E day. The virtual withdrawal of the Lists in the other named countries is possible for the same supplement, but will await the comments of the missions in these countries. Subject to the already-mentioned requirements imposed by the time-table for the Eastern Hemisphere (cf. III–a), deletions in the other republics—Argentina, Bolivia, Colombia, Paraguay and Uruguay—will await implementation of a satisfactory replacement and control program by those countries.

f) It is anticipated that a public announcement will be made of the steps being taken when the deletions are made, and that it will in that announcement be emphasized: 1) that the Lists are being withdrawn, in accordance with previously announced policy, in countries which have put into effect satisfactory controls and eliminated spearhead concerns; 2) that the elimination of names from the Lists under such a program in no way implies anything other than that local controls are deemed adequate to deal with the persons previously listed; and 3) that deletion from the Lists under these circumstances does not imply a “whitewash” of the deleted names.

The possible introduction of other types of lists is outside the scope of this memorandum.

[Enclosure 2]

[ Washington ,] May 5, 1945.

Country Memorandum: Dominican Republic

I. Spearheads ²⁶—Résumé of Action with Respect to

A. Completely Eliminated

(So far as is known no transfer of titles of enemy properties has occurred. “Elimination” amounts to gradual liquidation under administration rather than outright dissolution. Proceeds arising either from operation prior to liquidation or from liquidation are understood to have been dissipated in administrative expenses or to have been permitted to accumulate in blocked accounts in favor of the enemy nationals. The post war disposition of any balances in the blocked accounts has not yet been determined).

[Here follow a list of 10 eliminated spearhead interests, an indication that no spearheads were in process of elimination, a statement covering intervention or other non-elimination action against 8 spearheads, and a list of 4 remaining spearheads.]

II. Non-Spearhead Concerns—Résumé of Action with Respect to

[Here follow an indication that no non-spearhead concerns had been, or were in process of being, eliminated, and a listing of two non-spearhead firms that had been intervened or had faced other non-elimination action.]

III. Disposition of Enemy Trade Marks and Patents

[The statement under this section on trade marks and patents has been omitted by the editors in this and subsequent country memoranda.]

IV. Proclaimed List and Replacement Situation

The Proclaimed List for the Dominican Republic contains 28 names as of May 5, 1945.²⁷

The Dominican Republic declared war on Japan on 12–8–41 and on Germany and Italy on 12–11–41. With a strong centralized government Dominican controls have in general been effective from the beginning. The most dangerous enemy nationals were at once confined in concentration camps and deported to the United States. With the deportation of the Nazi leaders, the Nazi organization collapsed, and subversive activity has been a practical impossibility. Enemy interests have been placed under controls wherever continued activities might endanger the security of the Hemisphere, and, in the application of its controls the Dominican Government has looked upon the Proclaimed and Statutory Lists as lists of the suspicious entities subject to the controls.

Except for the accumulation of blocked balances in favor of enemy nationals, the principal weakness in Dominican controls is the repeated refusal of the Dominican Government to vest or force the sale of certain enemy interests. In negotiations initiated to secure a satisfactory adjustment of this situation, the Dominican Government has consistently argued that security did not require vesting or forced sale, and that intervention was sufficient for the purposes of economic warfare and adapted to circumstances prevailing in the Dominican Republic. Since the Dominican Government has not pressed for the deletion of Proclaimed List firms, the Mission has never been in a position to offer deletions as in other countries, as a quid pro quo for a vesting or forced sale program. In this connection the Mission seems to feel that even the proposal outlined in the circular telegram of September 20 for inducing foreign governments to eliminate spearhead Axis firms does not offer a basis for quid pro quo bargaining with the Dominican Republic. The Mission recommended, therefore, in its despatch no. 654 of 1–15–45 that, because of “the peculiar situation existing in the Dominican Republic”, the American Government “pursue its policy of liquidating the Proclaimed List independent of the Dominican Government”. In support of this recommendation the Embassy stated that in its opinion and in the opinion of the British Legation there are no Axis spearhead firms operating in the Dominican Republic and that, secondly, it is unlikely that the Dominican Government is sufficiently concerned about any of the spearhead firms or individuals to care whether or not they are removed from the Proclaimed List.

On the other hand in response to the Department’s circular telegram of September 20 the Dominican Foreign Office stated that the Dominican Government offered its “fullest cooperation in the application of sanctions against firms wherever located which remain on the Black List²⁸ during the period following the cessation of organized resistance in Germany”.

Specifically, with respect to the withdrawal of the Proclaimed List for the Dominican Republic, the Embassy recommended that two enterprises which have been closed and their owners, together with six individuals who are believed to be no longer dangerous to the Allied war effort, be deleted at once. The Committee approved the deletion of all but one of these names on 4–30–45 and their deletion will be published May 4 [5].²⁹ The Embassy further stated that the remaining names could all be safely removed from the Proclaimed List with the termination of the war in Europe, and that there are no spearhead firms whose listing should be continued after the war. The British Legation was stated to have expressed its concurrence in these recommendations.

The British are understood to have no “hard core” list for the Dominican Republic.

V. Recommendations regarding withdrawal of List

A. In spite of certain deficiencies in the Dominican controls outlined above, the Dominican Government has in general cooperated in the economic warfare program and through deportation and repatriation has appeared to eliminate all but one of the enemy-owned and controlled firms in the Dominican Republic. It is therefore recommended that the Proclaimed List for the Dominican Republic be withdrawn in the June 8 supplement with the exception of a “hard core” list which would consist of enemy-owned or controlled firms which have not been effectively eliminated and any notorious individuals who are internationally regarded as Axis collaborators.

B.

• 1. The Dominican Government should be informed that this Government had hoped that by V–E Day the elimination of spearhead firms would have progressed to the point where the Proclaimed List for the Dominican Republic could have been completely withdrawn. The Dominican Republic should be asked immediately what its plans are with respect to the elimination of the remaining spearheads. If at all feasible, assurances should be obtained from the Dominican Government that elimination will occur in the future and the Dominican Government should be informed that this Government proposes to withdraw the Proclaimed List for the Dominican Republic with the exception of a hard core list as defined in the preceding paragraph in the June 8 supplement.
• 2. The Dominican Government should be informed that the spearhead firms which will remain on the Proclaimed List will be considered ad hoc for deletion as they are effectively eliminated.
• 3. The Dominican Government should be informed that the Proclaimed List will remain in full force with respect to the names which remain on the List.

[Addendum 1]

[ Washington ,] May 5, 1945.

Country Memorandum: Panama

I and II. Spearhead and Non-Spearhead Concerns

There are no spearhead firms in Panamá. Moreover, the Embassy has reported that there is not a single known Axis enterprise in operation in Panamá, and the activities of local non-enemy individuals, friendly to or guilty of aiding the Axis, have been rigidly curtailed since Panamá’s declaration of war on December 7, 1941.

Panamá’s entry into the war was quickly followed by the establishment of an Alien Property Custodian who proceeded with a policy of liquidating Axis firms and placing the personal assets of enemy aliens under its control. Those enemy aliens who were considered dangerous to the security of the Republic and the Panamá Canal were interned and subsequently were removed to the United States.

In addition, the unofficial cooperation of Panamanian Government officials resulted in the ready availability to the Embassy of information (particularly that obtained from examining bank records and commercial licenses) which made it extremely difficult for enemy interests to conceal undesirable activities or connections.

III. [Not here printed.]

IV. Proclaimed List and Replacement Situation

With the issuance of Cumulative Supplement No. IX–3 on May 4 [5], 1945 the Proclaimed List for Panamá was reduced to 12 names representing the Embassy’s proposed post-hostilities list in addition to 2 names included in the British “hard-core” list but not in ours, and the names of 2 firms closely linked with firms of the same name now listed in Switzerland. There are no Japanese names on the residual list for Panamá .…

The Panamanian Government has never expressed any formal reaction to the proposed virtual withdrawal of the Proclaimed List for that country, having limited itself to an expression of appreciation for being informed in advance of the joint United States-British statement of September 26, 1944 and the reasons therefor.

Local controls in Panamá are not based on the Proclaimed List nor has the Panamanian Government ever been asked to establish official controls over Proclaimed List Nationals as such. It is therefore believed that even a complete withdrawal of the Proclaimed List for Panamá would not adversely affect Panamanian local controls.

Commercial and financial transactions with Japan probably are not possible. The foreign trade of Panamá flows through the United States Customs Service located in the Canal Zone, and the foreign exchange available to Panamanians is in dollars represented by drafts on New York banks.

The program of elimination of Axis interests and activity in Panamá may be regarded as completed, although it has apparently not been determined what disposition will be made of assets now under the control of the Alien Property Custodian.

V. Recommendations Regarding Withdrawal of the List

In as much as the Interdepartmental Proclaimed List Committee has already reduced the Proclaimed List for Panamá to 12 names, it may now be considered virtually a post-hostilities List. It is recommended that this List be withdrawn in the forthcoming supplement with the exception of Atlantis, S.A., Hapag-Lloyd, Schering Kahlbaum A. G., International Laboratories, Inc., and Tokalon Products, S.A.

[Addendum 2]

Country Memorandum: Mexico

[ Washington ,] May 7, 1945.

I. Spearheads—Résumé of action with respect to

(The following names indicated as spearhead were so classified by the Embassy, together with the Department, in the early part of 1942 in the course of negotiations with the Mexican Government concerning the Mexican vesting program.)

A. Completely eliminated

(It is not known in each case whether the firm represented has been liquidated or whether it continues in operation under the ownership of the Mexican Government or private individuals of satisfactory political sympathies. In each instance, however, the Mexican Government is understood to have vested title, and the enemy interest in the firm has been “eliminated”.)

[Here follow a list of 57 spearhead interests and an indication that no other such interests remained.]

II. Non-spearhead concerns—Résumé of action with respect to

A. Completely eliminated

The Mexican Government has vested some 250 former Proclaimed List entities and related interests in addition to the spearhead interests listed under I–A. Many of these entities would also fall within the spearhead definition suggested in the September 20 circular telegram and accepted for other countries. In each case title is understood to have passed to the Mexican Government. It is not known whether the going concern represented by some of the names were ultimately liquidated or sold to satisfactory ownership. It is believed that very few have been sold. Some of the entities are actually no more than blocked credits to which title has been seized.

B. Process of elimination

Many of the non-spearhead, as well as spearhead, entities are understood to be held by the Mexican Government pending their sale to satisfactory ownership or their final liquidation.

C. Intervention or other non-elimination action

None

III. [Not here printed.]

IV. Proclaimed List and Replacement situation

Mexico declared war upon Germany, Italy and Japan on May 22, 1942.

There are 535 names on the Proclaimed List for Mexico. Two group deletions have been made in recognition of the highly satisfactory character of the Mexican local control program. A third group of 109 deletions was approved for publication April 30, 1945 but was not published at the request of the Embassy.

The Embassy has expressed the opinion, after consultation with the Mexican Foreign Office, that the controls exercised by the Mexican Government over enemy businesses and properties is so complete that the gradual reduction of the Proclaimed List for Mexico can be undertaken without endangering the objectives of the Proclaimed List or injuring its still considerable prestige in Mexico. The Embassy feels that group deletions gradually published would serve to emphasize the Proclaimed List status of the persons and firms whose names are last to be deleted from the Proclaimed List for Mexico.

The Proclaimed List for Mexico contains, in addition to the third deletion group, 350 Japanese names and 83 names looked upon by the Embassy as residual in the light of the Department’s circular telegram of September 20, 1944.

Little consideration has heretofore been given to the Japanese firms and individuals whose names are included in the Proclaimed List. Since the Embassy understood in its preparation of a categorization of the Proclaimed List for Mexico that it was not the Committee’s intention to consider within the near future the deletion of any Japanese names, the Japanese names were not listed according to seriousness of offense. With few exceptions the Japanese on the List were included on the basis of their Japanese nativity or extraction rather than upon demonstrated sympathies or overt activities. Most of them are of relative unimportance in the economy of the country. In the event that the Committee should contemplate the deletion of the Japanese names, the Embassy has requested instructions so that it might make appropriate recommendations.

Concerning the control exercised by the Mexican Government over Japanese persons and interests in Mexico it is understood that there are approximately 5000 Japanese residing in Mexico. Only two of these are confined in what might be termed a concentration camp but which is actually a prison in the old colonial fortress at Perote, Veracruz. Except for these two, all Japanese enjoy almost complete liberty with few restrictions and are able in general to devote themselves to their usual occupation. Shortly after the declaration of war upon Japan, Japanese citizens were compelled to reside in Mexico City. They were subsequently allowed to leave that city and even to return to their former places of residence, except in the maritime zones and zones bordering the United States. There have even been exceptions to the latter rule.

The Mexican Government has vested more than 20 Japanese business enterprises, including the Mitsui and other important Japanese interests. It is not known how extensive the control of Japanese properties is in comparison with that of German properties, nor is it known whether or not significant Japanese properties remain wholly without control.

The interpretation of the satisfactory character of the Mexican control program has turned in great part upon the interpretation of the word “occupar” as it appeared in the Mexican Enemy Property Law of June 11, 1942. Article 7 of that law empowered the President of the Mexican Republic to “occupar” property of any kind belonging or presumed to belong to an enemy country or its nationals, as well as those properties in which enemy countries or their nationals had an interest even though title were vested in a third person. In an attempt to ascertain accurately the Mexican interpretation of this word, as well as of other provisions of the decree, the Embassy requested that the Mexican Government state whether title or ownership of vested companies remained with the original owners or had been transferred to the Mexican Government. The Embassy further inquired whether the title were held in trusteeship or in real ownership. The Embassy also inquired whether during the period between intervention of a company and the determination of its disposition by the Mexican Congress, after the end of the emergency, the original owner had any claim or rights in the property. In addition, the Embassy asked that the Mexican Government define the exact legal status of the owners in reference to the vested properties and what obligation, if any, the vested firms had toward them.

In reply to these questions the Mexican Government stated that in accordance with its Law of Enemy Properties and Businesses the title of ownership of the intervened properties during the state of the emergency had been transferred to the Mexican Government which held possession, administration, and free disposition of these properties. When the state of war had been concluded, the Congress of the Union would decide as to the form in which the properties should be administered, adjusted, or liquidated. Thus the title of ownership held by the Mexican Government constituted in its opinion an effective property right, and during the period between vesting and the reaching of a decision by the Congress, the original owner had no title or any right to the property. Former owners removed from the vested firms had no connection with the firms and the companies had no obligations to them other than those motivated by humanitarian considerations.

On the basis of the foregoing statements made by the Mexican Government the names of the principal vested firms were deleted from the Proclaimed List in the course of the last half of 1943.

Despite the foregoing assurances of the Mexican Government, however, with respect to its interpretation of “occupar”, the corporate bodies of the vested firms continued in existence, and it was understood that their directors continued to meet even though the only asset of these firms was their claim for the return of their properties or the proceeds from the sale of these properties. Moreover, the Mexican Government was understood to have in contemplation an expropriation enabling act under which the properties understood to be already vested might be finally expropriated. The legal situation of the Mexican companies appeared therefore to be both similar and dissimilar to that of companies vested by the United States Alien Property Custodian. The legal situation was similar in that the Mexican Government might sell the properties and pass valid title, leaving only the proceeds of the sale to be disputed. Undesirable officials might be removed from the vested firms, and the ultimate disposition of the companies or the proceeds was left to the Mexican Congress.

The legal situation differed essentially in the firmness of the title vested in the two governments. The Alien Property Custodian enjoyed firm title but the Mexican Government did not seem to have firm title, although it had the power to pass firm title. Actual expropriation appeared to be required, therefore, to make the legal status of vested firms in Mexico exactly like that of vested firms in the United States. In support of the acceptance of the Mexican decree-law as vesting satisfactory title in the Mexican Government were the repeated assurances on the part of the Embassy and officials of the Mexican Government that the President of Mexico had no intention of returning to original owners the formerly German owned, drug and chemical firms taken over by the Mexican Government, and that the President firmly intended to carry out the final expropriation of these firms as a preliminary step in the development of a Mexican chemical industry.

Telegram no. 582 of May 3, 1945³⁰ states that the President of Mexico has requested that draft decrees for the expropriation of the vested chemical and pharmaceutical firms be prepared. It is anticipated that these decrees will be ready for signature within a few days. Since any deletions from the Proclaimed List before the issuance of these decrees might give rise to the exertion of pressure upon the Mexican Government by the former enemy owners of vested properties for the return of these properties, the Embassy strongly recommends that there be no change in the Proclaimed List for Mexico within the immediate future. The Embassy cautions that the foregoing information must be regarded as strictly confidential. A despatch of April 23, 1945³¹ reports that the President of the Junta de Administration has emphasized in the course of discussions with the Embassy that considerable pressure is being brought to bear upon certain members of the Intersecretarial Committee by dispossessed German owners of vested firms. The former German owners hoped to persuade the Mexican Government to relinquish its intervention. When the Junta became aware of this pressure, the Junta supplied the Intersecretarial Committee with information from its files demonstrating the Nazi character and sympathy of one of the firms whose release from intervention was being considered. It appears therefore that the deletion from the Proclaimed List at this time of the names of the former owners of vested properties, especially the 83 residual names, would not only weaken the position taken by the Junta in support of the vesting orders but might be used by the former owners as an argument to secure the revocation of vesting orders. The Embassy does not believe that the Mexican Government will return businesses to former owners as long as their names remain on the Proclaimed List, although the Embassy recognizes that former owners might regain control of certain firms, once vesting is relinquished, through the use of cloaks. The Embassy feels therefore that there is strong reason for retaining certain persons on the Proclaimed List and observes that these persons are also potential recipients of Safehaven funds. Their Proclaimed List status would, if continued, prevent their direct participation in any transfers of funds at least through normal channels.

V. Recommendations regarding withdrawal of List

A. In view of the satisfactory local control program developed in Mexico, it is recommended that the Proclaimed List be withdrawn for Mexico in the June 8 supplement with the exception of a “hard core” list which would consist in the case of Mexico of Japanese names, British “hard core” list, and a very few notorious individuals internationally regarded as Axis collaborators.

B. Unless information concerning the contemplated withdrawal should in the Embassy’s opinion have a possibly adverse effect upon the expropriation program now under way, it is recommended that the Embassy inform the appropriate officials of the Mexican Government of the proposed withdrawal and urge that the Mexican Government complete its expropriation program so that Mexico can take its deserved place among the favored nations in the withdrawal of the Proclaimed List.

C. The Mexican Government should be informed that the Proclaimed List will of course remain in full force with respect to the names retained on the Proclaimed List.

D. Although the Committee has not reached a final decision on the disposition of Japanese names and has not heretofore been especially receptive to recommendations for deletion of Japanese names, it is understood that in the future the Committee will be receptive to recommendations by the Embassy for the deletion of inconsequential Japanese names, Japanese spearhead firms which have been eliminated, etc.

[Addendum 3]

[ Washington ,] May 7, 1945.

Country Memorandum: El Salvador

I. Spearheads—Résumé of action with respect to

The Embassy has never referred to “spearhead” firms. However, it has reduced its list of names recommended for retention on the post-hostilities list from 84 to 21. It is assumed that these 21 names are considered by the Embassy as spearheads of Axis influence in El Salvador. The following analysis of action therefore refers to these 21 names.

. . . . . . . . . . . . . .

II. Non-Spearhead Concerns

Approximately seventeen firms not included in the above list were intervened by the Salvadoran Government. Three of these were sold, and the rest continue to operate under intervention. At least sixty-five persons were deported to the United States or repatriated.

III. [Not here printed.]

IV. Proclaimed List and Replacement Situation

Salvadoran controls are based on the Salvadoran Black List which includes all names on the Proclaimed List as well as enemy nationals who are not important enough to qualify for the Proclaimed List. Controls are administered informally by the Black List Committee. There has been close cooperation with the American and British missions.

Laws passed by the Salvadoran legislative assembly provided for the closing of all listed firms, appointment of inspectors, administrators, or liquidators, and the sale of proscribed firms at public auction. However, the Salvadoran constitution was generally interpreted as prohibiting the seizure and sale of Axis property. To obviate this impediment to the elimination of Axis interests, an amendment to the 1939 constitution was passed in February 1944, which permitted seizure, intervention and sale of enemy property. In conformity with this constitutional amendment a comprehensive law providing specific authorization for such action was drawn up for enactment by the legislative assembly. Before any action could be taken the Salvadoran Revolution occurred, and the matter was dropped. According to the Minister of Finance,³² the decree of July 1944, which revalidated temporarily the constitution of 1886, left in force the principle of intervention Contained in the February amendment. Another law for seizure and sale of Axis property was drafted by the Ministry of Finance, but was not presented to the legislature since it was considered advisable to wait until the new constitution was enacted to see how the matter of enforced sales would be handled. The Embassy has hesitated to enter into any discussions on these matters in view of the unsettled political situation. Nothing further has been reported by the Embassy in this regard since the advent to power of the new Castaneda Castro government.³³

As a result of these constitutional difficulties only five firms were completely liquidated and intervention must in general be regarded as the strongest form of control exercised in El Salvador. All funds of listed firms and persons are frozen, and no transactions are possible without a license issued by the Ministry of Finance. Transactions between any Salvadoran and enemy territory are prohibited by means of exchange controls; financial transactions with European neutrals can be undertaken only through special licenses issued by the Ministry of Finance.

There are two Japanese names on the Proclaimed List for El Salvador. Mitsui Bussan Kaisha never had an agency or representative in El Salvador; Benjamin Tanabe was deported and the ownership of his restaurant was transferred to his Salvadoran wife.

The Embassy has never indicated whether the Salvadoran Government would object to withdrawal of the Proclaimed List. Inasmuch as local controls are not based upon the Proclaimed List but on the Salvadoran Black List, it is presumed that it would not.

The British post-hostilities List includes six names (marked # in section 1 above); twenty-one names have been suggested by our Embassy for the residual list. A copy of the Embassy’s despatch no. 82 of 3–26–45³⁴ is attached for the information of the Committee.

While the Salvadoran program for elimination of Axis interests cannot be regarded as fully completed, it appears unlikely that further steps will be taken by the Salvadoran Government, especially in view of the still confused political situation.

V. Recommendations

1. The Committee proposes to withdraw the Proclaimed List for El Salvador in the June 8 supplement with the exception of a hardcore List which will consist of these names:

[Here follows a list of 12 names.]

2. The Salvadoran Government should be informed that this Government had hoped that by VE–Day the elimination of Axis spearheads would have progressed to a point where the Proclaimed List for El Salvador could have been completely withdrawn. The Salvadoran Government should be asked immediately what its plans are with respect to the elimination of the remaining spearheads. If feasible, assurances should be obtained from the Salvadoran Government that elimination will occur in the near future.

3. The Salvadoran Government should be informed that this Government proposes to withdraw the Proclaimed List for El Salvador with the exception of the hard-core List indicated in paragraph no. 1 above in the June 8 supplement, and that while the spearhead names which will remain on the Proclaimed List will be considered ad hoc for deletion as they are effectively eliminated, the Proclaimed List will remain in full force with respect to the names which remain on the List.

[Addendum 4]

[ Washington ,] May 10, 1945.

Country Memorandum: Costa Rica

I. and II. Spearhead and Non-Spearhead Concerns

Only four spearhead firms operated in Costa Rica, Guillermo Niehaus & Company; F. Riemers & Company; Cia. Agricola do Acosta; and Hubbe Hijos. All are included in the Proclaimed List. As was stated in a memorandum to the Interdepartmental Committee on the Proclaimed List dated April 18, 1945, spearheads have been virtually eliminated in Costa Rica and no longer represent a threat to hemispheric security; only certain urban properties of Guillermo Niehaus & Company remain to be expropriated. The Costa Rican Government has used expropriation and auction to eliminate each of the spearhead firms.

The Department authorized the Embassy in instruction no. 750 of November 11, 1944³⁵ to inform the Costa Rican Government that the spearhead firms are the ones in whose effective elimination this Government is primarily interested and that no recommendation is made with respect to the remaining names on the Proclaimed List since that is considered a matter for the decision of the Costa Rican Government. The Embassy was also authorized to state that this Government is desirous of consulting fully with the Costa Rican Government before effecting any withdrawal of the List and in this connection is prepared to retain on the List certain names which the Costa Rican Government believes should be retained in order to furnish support for local control measures. It was to be pointed out, however, that effective elimination of the spearhead firms would make possible a complete or virtual withdrawal of the List at any time which the Costa Rican Government might consider advisable subsequent to the cessation of hostilities in Europe.

III. [Not here printed.]

IV. Proclaimed List and Replacement Situation

There are 164 names on the Proclaimed List for Costa Rica. It will be recalled that on the basis of the Embassy’s categorization of the List in despatches no. 190 of March 23 and no. 214 of March 28, 1945,³⁶ 78 names classified in Category B 1–3 were deleted in Supplement No. IX–3 dated May 5, 1945. This group deletion leaves on the Proclaimed List for Costa Rica 164 names; 78 in Category B 4–7; and 86 in Category A, the Embassy’s proposed post-hostilities List. It will be recalled that in the Embassy’s despatch no. 190 the Embassy stated that it was believed that no opposition would be offered to the removal from the Proclaimed List of any of the names in Category B but that, of course, an opportunity should be granted the Embassy to consult with the local government before any of the Category A names are removed.

There are only six Japanese names on the Proclaimed List for Costa Rica, all of them included in Category A.

In Costa Rica the Proclaimed List is basic to local freezing and property controls. These controls on the whole have been satisfactory both as to legislation and administration. Costa Rican legislation provides for expropriation, liquidation, forced sale and intervention of economic business enterprises. Authority exists for the removal of undesirable employees. Proceeds of sale and profits of controlled business enterprises are blocked.

The Embassy reported in telegram no. 187 of March 29, 1945^36a that the Minister of Finance is very concerned lest Germans return to Costa Rica when controls are relaxed after the war and increase the strength of what he termed the German financial oligarchy which was powerful prior to the war. He desired a law passed which would leave him the decision regarding expropriation of all Italian and German properties. The Embassy believed that while the Minister was sincere regarding the possibility of the return of German business and financial influence after the war he might also be motivated by the desire to secure funds for the Treasury through wholesale expropriations. The Embassy has since reported that the Minister of Finance has now introduced into the Costa Rican Congress a bill consisting of amendments to the Law of Economic Defense which would provide for more drastic action with regard to the expropriation of German properties in Costa Rica.

The program in Costa Rica has so nearly reached a satisfactory conclusion that the only reason for not withdrawing the List virtually or completely lies in possible Costa Rican Government objection thereto.

It is believed that the Embassy’s Category A List is much too long even for consideration as a hard-core List for Costa Rica. The British have proposed a post-hostilities List consisting of 16 names, although an additional 9 names are presently being considered by the Black List Committee for possible addition thereto.

V. Recommendations

It is recommended that the Embassy be instructed to consult immediately with the Costa Rican Government to determine its attitude regarding virtual withdrawal of the Proclaimed List for Costa Rica in Supplement IX–4 and that if the Costa Rican Government believes that it can satisfactorily maintain its controls over undesirable elements in that country the List be withdrawn in the forthcoming supplement, with the exception of a hard-core List consisting of Japanese names, any notorious individuals who are internationally regarded as Axis collaborators and possibly Guillermo Niehaus & Company which could be considered for deletion when the remaining properties have been eliminated. The Embassy should be requested to report immediately the names which would qualify for such a hard-core List. However, if the Costa Rican Government believes that the continuance of a more extensive Proclaimed List is necessary as a basis for its controls and needs more time to amend or implement its control legislation so that it can do without the Proclaimed List, the Embassy should review carefully the names which it has placed in Category A, in consultation with the British Legation, and recommend for retention on the List only those few names which unquestionably should remain.

[Addendum 5]

[ Washington ,] May 11, 1945.

Country Memorandum: Cuba

I. Spearheads—Résumé of action with respect to

[Here follow a listing of four names which constituted the British “hard-core” list for Cuba, and an indication that no other spearheads were known to remain.]

II. Non-Spearhead concerns—Résumé of action with respect to

[Here follow an indication that no non-spearhead interests had been, or were in process of being, eliminated, and a list of 53 non-spearhead interests subjected to intervention or other non-elimination action.]

III. [Not here printed.]

IV. Proclaimed List Situation

Cuba declared war against Japan on December 9, 1941 and against Germany and Italy on December 11, 1941.

Of the 99 names on the Proclaimed List as of April 24, 1945, only about 13 commercial entities are understood to continue to operate, and, of these, three are being administered by the Cuban Enemy Property Custodian.³⁷ All enemy interests have been subjected to the Custodian’s control in the form of either intervention or administration. These forms of control are understood to involve the freezing of all funds belonging to the firms or individuals, the release of which is authorized to them by the Custodian as living expenses and commercial operating costs require.

Administration entails, in addition, the appointment by the Custodian of an administrator who administers in behalf of these firms or persons the properties of sufficient importance to require such action. Those Proclaimed List entities which are not alien enemies are not subject to the control of the Custodian and constitute the 13 businesses operating independently of Cuban controls.

Information is neither complete nor exact with respect to the nature of the Cuban enemy property controls. It would appear that actual ownership of the properties under the control of the Custodian rests with the original owners and that administration is merely a stricter form of control than intervention. Administration seems to be employed where the intervened property is of such significance in the economic life of the community that its preservation is desirable. The Custodian is empowered, however, with the President’s³⁸ approval to sell enemy properties which in his opinion should be alienated for reasons of public interest.

A new Enemy Property Custodian has recently been appointed and was requested by the Mission in January 1945³⁹ to inform the Mission specifically with respect to certain significant aspects of the controls exercised by him, such as title of ownership and future disposition. It is the Mission’s opinion that the present Custodian, unlike the former Custodian, is a vigorous official who would be disposed to maintain severe controls and to extend them. This official unfortunately occupies several offices and with little time to devote to enemy property, is not without opponents inside the new administration. Although a full account of the information received by the Mission from the Enemy Property Custodian in response to the Mission’s request has not yet been received, the Mission comments that the information is fragmentary and disappointing, and does not include authoritative statements regarding some of the most important aspects of Cuban policy and practice. The Mission observes that happily the German assets known to exist in Cuba are quite insignificant in amount and suggests that the Committee, in reviewing the Proclaimed List for Cuba, may wish to proceed on the assumption that Cuban controls over persons and properties of the enemy aliens are, with the exception of those afforded by internment, of negligible value. Therefore, since the total number of names included in the Proclaimed List for Cuba is relatively small, the Mission states that it contemplates no group deletions, so that the efficacy of continuing local controls will perhaps be a question of less weight in Cuba than in other countries.

The Mission, in preparing its categorization of the Proclaimed List for Cuba, divided the names into two categories of which one contained the names to be retained on the List during the post-hostilities period, and the other, the names which might be deleted upon the cessation of organized German resistance. With respect to the latter names the Embassy felt that where possible the person or entity concerned should be asked to sign a standard undertaking.

Most of the names considered by the Embassy as residual were those of persons and firms subject to some form of Cuban control. They are either interned and/or their properties administered or intervened. Except for possibly persons interned, two enemy agencies, and two persons having interests in Germany, none could be considered “spearhead”. The Embassy felt that a decision with respect to the deletion of the firms and persons subject to Cuban controls should be delayed until the new Cuban administration had had an opportunity to consider the nature of the existing controls and their possible continuance or extension. The Embassy presumed that where administration or intervention proved to be adequate, the relevant names might be deleted from the Proclaimed List. With respect to internment, the Mission felt that it might be illogical to delete names on the basis of internment only to find such persons relieved of all controls once they had been released from internment. The Mission accordingly recommended that the names of interned persons be retained for the time being on the Proclaimed List, and that upon the release from internment of an individual, his eligibility for deletion be considered.

There are eight Japanese listed on the Proclaimed List for Cuba. These eight listings represent three commercial enterprises, all of which have been subjected to Cuban controls. None of them is known to be of such a significant character as to warrant the description “spearhead”.

V. Recommendations concerning withdrawal of List

A. It is recommended that the Embassy be instructed to consult immediately with the Cuban Government to determine its attitude regarding withdrawal of the Proclaimed List for Cuba in Supplement IX–4,⁴⁰ and that, if the Cuban Government believes that it can satisfactorily maintain its controls over undesirable elements in that country, the List be withdrawn in the forthcoming supplement, with the exception of a hard core list consisting of enemy owned or controlled firms, if any, Japanese names, British hard core names, and any notorious individuals who are internationally regarded as Axis collaborators. The Embassy should be requested to report immediately the names which would qualify for such a hard core list. If the Cuban Government should believe that the continuance of a more extensive Proclaimed List is necessary as a basis for its controls and needs more time to amend, implement, or reorient in terms of changing conditions its control legislation, so that it can do without the Proclaimed List, the Embassy should review carefully the names which it has placed in its residual list, in consultation with the British Legation, and recommend for retention on the List only those few names which unquestionably should remain.

B. The Committee is not making a final decision on what disposition should be made of Japanese names at this time. Up to now the Committee has not been particularly receptive to recommendations for the deletion of Japanese names. In the future the Committee will be receptive to recommendations by the Mission for the deletion of inconsequential Japanese names, Japanese spearhead firms which had been eliminated, etc.

[Addendum 6]

[ Washington ,] May 11, 1945.

Country Memorandum: Haiti

I. Spearheads—Résumé of action with respect to

[Here follow a list of 25 completely eliminated spearheads and an indication that no spearhead interests remained in Haiti.]

II. Non-spearhead concerns—Résumé of action with respect to

A. Completely eliminated—

The Haitian Government has confiscated the property of all persons and concerns of German nationality or residence whose names were included in the Proclaimed List. The Haitian Government has also confiscated other enemy interests, both Proclaimed List and otherwise.

B. Process of elimination—none

C. Intervention or other non-elimination action—

The Haitian Government in the latter part of 1943 vested the properties of all Italian persons and concerns whose names appeared in the Proclaimed List. Subsequently, however, about the middle of 1944, the Haitian Government relieved all Italian entities of vesting and is understood to have released at least some, perhaps all, of their property from controls. The nature and full implications of any continuing control are unknown.

III. [Not here printed.]

IV. Proclaimed List and Replacement Situation—

Haiti declared war against Japan on December 8, 1941 and against Germany and Italy on December 12, 1941. The Haitian Government is understood to have confiscated all German Proclaimed List property, except trademarks and patents, known to exist in Haiti.

There are 51 names on the Proclaimed List for Haiti as of May 5.

In submitting a categorization of the Proclaimed List for Haiti the Mission has developed a List I of persons and firms which in its opinion should be retained on the Proclaimed List for Haiti as long as that List exists and a List II of names which may be deleted at such time as the Committee may indicate and after appropriate prior consultation with the Haitian Government.

The Embassy’s List I contains the following spearhead names. In classifying persons and firms as spearhead the Mission has determined (a) whether the persons had the will and prestige necessary to become Axis leaders in Haiti and, (b) whether their firms were of such importance that they also had the means.

The Mission divides its List II of deletables into three principal groups in accordance with the seriousness of their offenses. In general the Mission feels that (1) Italian names may be deleted first, then the (2) names of repatriated Germans together with the worst Italian offenders, and lastly (3) the worst German offenders together with the most important vested firms. The Mission believes it preferable to delete persons or firms belonging to a particular category simultaneously so that an explanation for each group can be inserted in the local press explaining the reasons for deletion. In order to avoid any possibility of advance notice to persons under consideration for deletion, the Embassy also recommends that the Haitian authorities be approached only regarding immediate deletions and that subsequent approaches be made regarding subsequent group deletions.

V. Recommendations Concerning Withdrawal of List

It is recommended that the Embassy be instructed to consult immediately with the Haitian Government to determine its attitude regarding withdrawal of the Proclaimed List for Haiti in Supplement IX–4, and that, if the Haitian Government believes that it can satisfactorily maintain its controls with respect to dangerous individuals and confiscated property without the support of a Proclaimed List, the List be withdrawn in the forthcoming supplement, with the exception of a hard core list consisting of the British hard core names, any notorious individuals who are internationally regarded as Axis collaborators, and possibly the names of .… The Embassy should be requested to report immediately the names which would qualify for such a hard core list. If the Haitian Government believes that the continuance of a more extensive Proclaimed List is necessary as a basis for its controls and requires more time to reorient its control legislation in terms of changing conditions, so that it cannot at once do without the Proclaimed List, the Embassy should carefully review the names which it has recommended for retention or addition, in consultation with the British Legation, and recommend for retention on the List only those few names which unquestionably should remain.

[Addendum 7]

[ Washington ,] May 11, 1945.

Country Memorandum: Honduras

I. Spearheads

In reply to the Department’s request for a list of spearhead firms, the Embassy at Tegucigalpa stated in despatch no. 1502 of November 27, 1944^40a that 16 firms “might possibly be so classified”.

[Here follow a listing of 10 spearhead interests in process of elimination and 6 others awaiting action, plus an indication that no spearhead interests had been completely eliminated.]

II. Non-Spearhead concerns

The 14 non-spearhead names on the Proclaimed List for Honduras include 2 firms and 12 persons. One firm has been sold and one firm is nearly liquidated. Nine persons have been deported and the funds of eight have been frozen by the Honduran Government.

III. [Not here printed.]

IV. Proclaimed List and Replacement Situation

The Honduran Government first established control over Proclaimed List persons and firms by Legislative Decrees Nos. 8 and 9 of December 17, 1941. Funds of Axis nationals were frozen and fiscal agents of the Government were appointed for all firms on the List as well as for all other German, Italian, and Japanese firms in the country. These agents were to check all transactions of the respective firms and were directly responsible to the Minister of Finance. No funds could be removed from any bank without the personal signature of the Minister of Finance and each firm was required to deposit periodically its monetary assets in a frozen account which the bank was required to establish for this purpose.

Executive Decree No. 46 of May 14, 1942 provided for the appointment of fiscal interventors for all firms controlled under Legislative Decrees Nos. 8 and 9. These interventors were given very broad powers to operate the enterprises subject to their control. Acuerdo No. 73–M of the Ministries of Hacienda, Crédito Publico and Comercio amended Decree No. 46 to give the interventors even more extensive powers, and the Embassy pointed out that while a fiscal delegate had acted merely as an overseer a fiscal interventor really had the power of a receiver for liquidating the firm under his control. The interventors were further empowered by Executive Decree No. 57 of November 1942 to sell the intervened properties, but there were few instances where this power was exercised since the government was reluctant to enact legislation making expropriation or forced sale mandatory; until May 1944 there were very few sales of Proclaimed List property.

Executive Decree No. 71 of May, 1944 provided for the auction sale of real and personal property of any kind belonging to persons natural or juridical who were nationals of Axis countries or their collaborators and also the forced transfer by auction sale of the business undertakings, property, stocks, and rights of any nature belonging to any persons domiciled or resident in Honduras, whatever his nationality, when said person in the opinion of the government is or has been engaged in activities prejudicial to the security of the American continent or favorable in any way to the totalitarian cause. This decree was confirmed and adopted by Legislative Decree No. 12 of December 21, 1944, and since October 1944 the Embassy has reported 41 separate sales of property belonging to six Proclaimed List firms or persons; the properties of one, Hans Moller, were sold by the Honduran Government subsequent to his deletion from the List in 1942.

There are no Japanese on the Proclaimed List for Honduras. All funds belonging to Japanese nationals have been transferred to the Honduran Treasury.

Exports to Axis nationals are prohibited, and due to lack of shipping space, there has been virtually no foreign commerce since the outbreak of the war.

The Embassy has never stated whether the Honduran Government wishes the Proclaimed List to be withdrawn. There is no Honduran Black List and until May 1944 controls were based on Axis nationality and on the American and British Lists. However, the wording of Executive Decree No. 71 (see above) may assure that local controls are continued even if the Proclaimed List is withdrawn.

In commenting on the administration of Proclaimed List properties in Honduras, the Embassy in Report No. 51 of April 21, 1945 states that graft on the part of Honduran interventors has been widespread. It reports this matter in the belief that it is almost inevitable that the administration of Proclaimed List properties in Honduras by government interventors will lead to extensive litigation at some time in the future at the instigation of the former German and Proclaimed List owners. The Embassy therefore states that while there is little likelihood of the return of any of the intervened properties to German ownership during the continuance of the present Government administration in Honduras, there is no assurance against the possibility of a “deal” between the former German owners and any opposition Government which might at some future date come to power.

The British post-hostilities List contains only five names: [Here follows list of five names] but two of these are not included in the Embassy’s list of spearheads.

V. Recommendations

1. The Committee proposes to withdraw the Proclaimed List for Honduras in the July supplement with the exception of a small hardcore List which will consist of enemy-owned or controlled spearhead firms which have not been effectively eliminated, the British hard-core List, and notorious individuals who are internationally regarded as Axis collaborators. The Committee felt that the virtual withdrawal should not take place in the June 8 supplement in order to allow one more month to press for implementation of the replacement program.

2. The Honduran Government should be informed that this Government had hoped that by V–E Day the elimination of Axis spearheads would have progressed to the point where the Proclaimed List for Honduras could be completely withdrawn. The Honduran Government should be asked immediately what its plans are with respect to the elimination of the remaining spearheads. If feasible, assurance should be obtained from the Honduran Government that elimination will occur in the near future.

3. The Honduran Government may be informed at the most strategic time, in the discretion of the Embassy, that this Government proposes to withdraw the Proclaimed List for Honduras with the exception of a hard-core List as defined in paragraph no. 1 above in the July supplement, and that the spearhead firms which will remain on the Proclaimed List will be considered ad hoc for deletion as they are effectively eliminated; but that the Proclaimed List will remain in full force with respect to the names which remain on the List.

[Addendum 8]

[ Washington ,] May 11, 1945.

Country Memorandum: Nicaragua

I & II. Spearhead and Non-spearhead Concerns

The Embassy at Managua has never reported specifically which firms it regards as the spearheads of Axis economic activity in Nicaragua. Despatch no. 2606 of October 5, 1944⁴¹ stated that Nicaraguan war measures had already eliminated or effectively control all Axis spearhead firms, but the spearhead firms are not named. Because the Proclaimed List is basic to Nicaraguan controls the Embassy has recommended the permanent retention on the Proclaimed List of sixty names, but obviously this list is not one of spearheads. Despatch no. 2606, copies of which have been distributed to the Committee, contains for each of the sixty names a brief statement of existing or impending controls. It will be noted that this list contains the names of twenty persons who are not in Nicaragua, the greater number having been deported, or deported and repatriated, and who are not known to have any property in Nicaragua; eight names of liquidated business concerns which hold only defense bonds and little or no other property; and the names of fourteen other firms against which expropriation proceedings have been instituted. Aside from local considerations which, however, are determining, the Embassy believes that there is no useful purpose being served by retention of these names on the Proclaimed List.

III. [Not here printed.]

IV. Proclaimed List and Replacement Situation

Following a group deletion of 21 names in Supplement IX–3 dated May 5, 1945 there remain on the Proclaimed List for Nicaragua 65 names.

Nicaraguan local controls are directly based upon the Proclaimed List through the Nicaraguan List of Affected Persons. From early 1942 the Nicaraguan Government began a systematic liquidation of Axis firms by supervised retail sales of merchandise without restocking. Most firms had been substantially liquidated and some had been closed when Decree No. 276 permitting expropriation took effect on September 8, 1943. Thereafter the prior liquidation policy was continued and in addition properties were sold as a whole at public auction and by private sale in accordance with procedure prescribed by the decree. The amount of funds held by the National Bank of Nicaragua in Pro Defensa Patria bonds or in blocked accounts totals approximately C$3,000,000 ($600,000). Decree No. 355 of December 14, 1944 permits the National Bank to convert these bonds into cash if necessary to provide the owner with necessities.

The Embassy reported in Despatch no. 2606 of October 5, 1944 that the Nicaraguan Government intended to continue in effect its present sanctions against Proclaimed List nationals after the cessation of organized resistance in Germany and until the United States Government shall indicate that further control is unnecessary. The Foreign Office, Dr. Leopoldo Arguello Gil, executive member of the Consulting Commission on Controlled Properties, and officials of the National Bank of Nicaragua have expected and desired such continuation, at least until Nicaragua’s present program of expropriations can be completed.

The unanimous reaction of these persons to the proposed withdrawal has been very unfavorable. Dr. Arguello stressed that if a name were removed from the Proclaimed List it would be almost impossible for him to resist the personal pressure of that person’s friends and relatives to remove his name from the List of Affected Persons; that deletion would be probably regarded as clearance by the United States and the completion of any expropriation procedure would expose him and the local government to charges of persecuting persons absolved by the major power. Valle Quintero, the bank official directly in charge of enemy property, stated that deletion of a person’s name against whom expropriation proceedings had been instituted would cause great confusion to the bank; that many threatened law suits would in such event likely be brought; and further that the blocked cash or bonds of a person deleted would have to be released to such person or his agent.

The Embassy shares the official Nicaraguan view of the necessity of maintaining the Proclaimed List for Nicaragua in the post-hostilities period. It is therefore the Embassy’s recommendation that, although the Proclaimed List for Nicaragua falls literally within the circumstances warranting its complete withdrawal because of the effective Nicaraguan local controls, a post-hostilities List should be maintained in Nicaragua because of the official opposition to its withdrawal and because of the public’s probable belief that deletion is tantamount to clearance.

As has been stated above the Embassy’s post-hostilities List contains 60 names and there are now on the Proclaimed List only 65 names. The British post-hostilities List contains but 9 names.

V. Recommendations

A. Although the Embassy has not specified which firms in Nicaragua it regards as spearheads, the Committee believes that the Embassy should exert every effort with the Nicaraguan Government to secure the complete elimination as rapidly as possible of firms regarded by the Embassy as spearheads which are merely “effectively controlled” by the Nicaraguan Government. It is apparent that spearhead interests will be among the first to insist upon relaxation of Nicaraguan controls when the Proclaimed List is finally withdrawn from Nicaragua. While Nicaraguan controls have been encouraging in their results, the fact that there apparently remain spearhead interests which may eventually recover their former power and prestige when the List is withdrawn, if vigorous steps are not now taken to prevent such a resurrection, dictates that the virtual withdrawal of the Proclaimed List for Nicaragua be effected in the July rather than the June supplement. The Committee is prepared, therefore, to maintain the Proclaimed List for Nicaragua substantially unchanged until issuance of the July supplement in order to secure through cooperation with the Nicaraguan Government the greatest possible attainment of this Government’s economic warfare objectives.

The Committee has noted the Embassy’s observation that, if the direct objectives of the Proclaimed List alone be considered, no useful purpose will be served by retention on the List of 42 of the 60 names which the Embassy has proposed for continued listing. The Embassy, in consultation with the British Legation, should again carefully review these 60 names, and insofar as it is possible now to do so, select for ultimate retention as a hard core List only enemy owned or controlled spearhead enterprises which have not been completely eliminated, British hard core names, and the names of any individuals who are internationally regarded as Axis collaborators. Such a definition includes repatriated persons with property in Nicaragua, and can be construed to comprehend deported persons with properties in Nicaragua. It is hoped that the number of enemy owned or controlled spearheads which have not been eliminated may be reduced substantially between now and publication of the July supplement as a result of swift action on the part of the Nicaraguan Government to expropriate those spearhead interests which it now controls but in doing so perpetuates.

B. The Embassy should develop and report its hard core List to the Committee as soon as possible for review before approaching the Nicaraguan Government, indicating specifically which firms it regards as spearheads.

C. As soon as the hard core List prepared by the Embassy has been approved by the Committee the Nicaraguan Government should be informed of this Government’s desire to withdraw the Proclaimed List for Nicaragua with the exception of the hard core List in the July supplement, and should be urged to complete the expropriation of all hard core properties as soon as possible and to reorientate or amend its controls so that it can do without the Proclaimed List.

[Addendum 9]

[ Washington ,] May 12, 1945.

Country Memorandum: Guatemala

I. Spearheads—Résumé of action with respect to

[Here follows a listing of 294 spearhead interests divided into the following categories of control: 7 completely eliminated, 38 declared expropriated, and 234 residual which consisted of those a. owned in Germany, b. owned by persons deported to Germany, c. directly related to the 38 concerns mentioned above, or d. considered to be patently of an enemy character. Listed also as spearheads recommended for retention on the Proclaimed List and subject to expropriation for reasons included in the list were 15 additional persons and their properties.]

II. Non-spearhead concerns—Résumé of action with respect to

[Here follow a list of 2 completely eliminated spearhead concerns and an indication that all Proclaimed List non-spearhead properties had been expropriated or were in the late stages of expropriation.]

III. [Not here printed.]

IV. Proclaimed List Situation

Guatemala declared war against Japan on December 9, 1941 and against Germany and Italy on December 11, 1941.

There are 382 names on the Proclaimed List for Guatemala as of May 4, 1945.

The Guatemalan Government is in the midst of an extensive expropriation program. This program will comprehend within the proximate future all Proclaimed List agricultural properties in Guatemala. It is also understood to be the intention of the Guatemalan Government to include in its program commercial properties as soon as agricultural properties are out of the way.

Thus far, as suggested by the list of names included under I A, the Guatemalan Government has merely begun. It has been suggested that some rapidity in the final transfer of title might be expected, and it is believed that, circumstances remaining the same, the expropriation of agricultural properties will be completed within the proximate future.

Although Guatemalan controls therefore promise to be highly satisfactory and even go considerably beyond the limits set by this Government in the expropriation of enemy properties, a satisfactory condition cannot be said to exist at the present time. Moreover there is every reason to believe that both the Mission and the Guatemalan Government would strongly object to any drastic reduction in the Proclaimed List for Guatemala at this particular time, even though undertaken in recognition of its control program. It would seem that the situation in Guatemala is in this respect not unlike that in Mexico. In both countries the respective Missions object to the deletion from the Proclaimed List of the names of those persons whose properties have been or are being expropriated and who, with the deletion of their names from the Proclaimed List, would bring strong pressure to bear upon the local government in protest against expropriation. In such instances the deleted persons would surely refer to their deletion as clearance in the eyes of this Government. In Guatemala there is the additional factor that the expropriation program is based in great part, though not entirely, on the Proclaimed List. Especially with respect to commercial properties, the deletion of names from the Proclaimed List might be said to relieve them of expropriation. Undoubtedly the Guatemalan Government also understands that names will not be deleted from the Proclaimed List without consultation with that Government. Such consultation has heretofore been interpreted as concurrence, and it is not believed that the Guatemalan Government would concur in an extensive reduction program at this time.

A primary consideration in the reduction of the Proclaimed List for Guatemala is the treatment to be accorded deported and repatriated persons. It is the considered opinion of the Guatemalan Government that a person whose sympathies and activities were of such a nature that deportation was warranted and undertaken or that repatriation was desired should fall naturally within the category of entities whose properties should be vested. Since many of the properties included in the Proclaimed List for Guatemala are owned by persons who are interned in this country or who have been repatriated to Germany, consideration of these persons as spearhead add greatly to the length of residual list for Guatemala. It would appear that there is some justification in looking at least upon persons who have been repatriated as spearhead. Certainly in these cases ownership definitely rests in Germany.

There are no Japanese names included in the Proclaimed List for Guatemala.

The Committee has heretofore approved for deletion from the List for Guatemala some 30 names subject to the final concurrence of the Embassy and further consultation with the Guatemalan Government. In as much as the Guatemalan Government has not expressed its willingness to see these names deleted, final concurrence has not been forthcoming from the Embassy. On March 12 the Embassy transmitted to the Guatemalan Government a note enclosing two lists of names for its consideration with respect to deletion. List I included the names which have been approved for deletion from the Proclaimed List, and List II included 45 names which the Embassy felt might be deleted from the Proclaimed List at the conclusion of hostilities in Europe or at such time as circumstances made expedient. The Embassy pointed out to the Guatemalan Government that in November 1944 the Guatemalan Government had appeared anxious that the Proclaimed List should be reviewed in order that there should not be unnecessarily harsh cases affecting bona fide Guatemalan nationals or inoffensive enemy nationals. On the other hand it was generally understood at that time that, as a matter of mutual desire, persons deported from Guatemala in implementation of the United Nations war effort should be the object of forced transfer or total liquidation of their commercial and agricultural properties and investments, together with persons who had actively supported the German cause, regardless of nationality. With respect to the balance of 315 names, the Embassy observed that these names include for the most part the names of individuals who had been deported from Guatemala and the names of their commercial or agricultural properties. The Embassy, in relation to these names, stated: “It is contemplated that it may become expedient to effect deletions of the names of certain of these commercial and agricultural properties under the implementation of the expropriation procedure at such time as these pass from their present enemy ownership to your Excellency’s Government.”

Thus in the Embassy’s opinion the residual list should consist of some 315 names, subject to numerous deletions as the Guatemalan Government’s expropriation program proceeds. For example the Embassy has already recommended for deletion within the last few weeks 12 agricultural properties falling under this description. These deletions have been published. The Embassy points out that there are approximately 100 names of fincas alone which will presumably be deleted as title passes to the name of the Guatemalan Government. There are also the names of firms and of individuals who have been deported and repatriated leaving no property here for expropriation whose names the Embassy evidently would also consider for deletion.

V. Recommendations regarding withdrawal of List

A. Since Guatemala does not fall with respect to local controls among the countries where spearhead interests have been completely or practically eliminated and for which the Proclaimed List may be reduced to a hard core in June, it is recommended that the List for Guatemala be reduced to a hard core in July rather than in June. This delay in reduction would not only place Guatemala in the appropriate group of countries where spearhead interests have not been effectively eliminated but also would afford the Embassy at Guatemala and the Guatemalan Government additional time in which to reach a definitive conclusion with respect to the names to constitute the hard core list. It would appear that the hard core for Guatemala should consist of enemy-owned or controlled spearhead firms, the British hard core list, and possibly a very few notorious individuals who are internationally regarded as Axis collaborators. Such a definition includes repatriated persons with property in Guatemala, and can, if the Guatemalan Government and the Embassy so desire, be construed to comprehend deported persons with properties in Guatemala.

The hard core list as defined above would probably include with respect to this memorandum all of the names on page 2, a substantial part of the names on pages 3 to 7, and possibly some of the names on pages 7 to 10. The Embassy should carefully scrutinize each of these names and eliminate from its hard core list any person or firm whose activities were not sufficiently important or inimical to warrant expropriation, as well as of course any name not falling strictly within the hard core list as defined and interpreted above.

The Committee desires to avoid being a party to any agrarian expropriation program, and strongly believes that any expropriation based wholly or in part upon the Proclaimed List should be determined solely in the light of legitimate economic warfare objectives. This Government is interested from the point of view of economic warfare only in the elimination of spearhead interests.

B. The Embassy should develop and report its hard core list to the Committee as soon as possible for review before approaching the Guatemalan Government.

C. As soon as the hard core list prepared by the Embassy has been approved by the Committee, the Guatemalan Government should be informed that this Government had hoped that by V–E Day the elimination of Axis spearheads would have progressed to the point where the Proclaimed List for Guatemala could have been completely withdrawn. The Guatemalan Government should also be informed at that time of this Government’s intention to withdraw the Proclaimed List for Guatemala with the exception of the hard core list, in the July supplement, and should be urged to complete the expropriation of all hard core properties as soon as possible. The Guatemalan Government should be informed of the names on the hard core list at the time of these discussions.

16. This instruction was sent, mutatis mutandis, to most of the diplomatic representatives in the other American Republics.
17. Post, p. 661.
18. Country memoranda were also transmitted in instructions 76 to Costa Rica, May 23; 5182 to Cuba, May 21; 55 to El Salvador, May 23; 960 to Guatemala, May 21; 348 to Haiti, May 21; 1972 to Honduras, May 23; 7470 to Mexico, May 23; 1584 to Nicaragua, May 25; and 348 to Panama, May 21. Extracts of these memoranda, for reasons of convenience, have been inserted by the editors as addenda following the Dominican Republic Country Memorandum in the order in which they were dated. The instructions, not printed, were roughly similar to instruction 7152, May 15, to Rio de Janeiro, p. 663.
19. Foreign Relations, 1944, vol. vii, p. 530.
20. Statement made in the penultimate paragraph of an address by Francis H. Russell, Chief of the Division of World Trade Intelligence, on May 4, 1944, printed in Department of State Bulletin, May 6, 1944, p. 405.
21. Not found in Department files.
22. Report, not printed, entitled “Continuation of the Proclaimed List in Post Hostilities Period,” approved on August 28, 1944, by the Interdepartmental Committee on Post-Hostilities Controls over Foreign Property and on September 1, 1944, by the Executive Committee on Economic Foreign Policy.
23. Victory-in-Europe.
24. Memorandum dated April 13, 1945, entitled “Continuation of the Proclaimed List in the Post Hostilities Period,” not printed.
25. Undated memorandum on British-United States discussions relating to post-hostilities listing policy in the Western and Eastern Hemispheres, not printed.
26. Persons and business entities considered to be closely associated to the Axis cause and thus retained as a “hard core” group on the United States Proclaimed List and/or its British counterpart, the Statutory List.
27. For information concerning Cumulative Supplement No. 3 to Revision IX of the Proclaimed List, issued May 5, 1945, see Department of State Bulletin, May 6, 1945, p. 871.
28. A British non-published confidential list similar in purpose to the United States Confidential List.
29. See footnote 27, p. 316.
30. Not printed.
31. No. 24051, not printed.
32. Carlos Alberto Guirola.
33. Salvador Castaneda Castro assumed the office of President of El Salvador on March 1, 1945.
34. Not printed.
35. Not printed.
36. Neither printed.
37. Not printed.
37. Luis A. Collado Diaz.
38. Ramón Grau San Martin.
39. Request made in Embassy note 92 addressed to the Cuban Ministry of State, January 24, 1945, not printed.
40. Supplement IX–4 was to be the next scheduled revision of the Proclaimed List, the most recent having been issued on May 5, 1945.
41. Not printed.
41. Not printed.