Foreign Relations of the United States: Diplomatic Papers, 1942, The American Republics, Volume V

811.51/4186a: Circular telegram

The Secretary of State to Diplomatic Representatives in the American Republics

Washington, May 18, 1942—4 p.m.

Treasury Department is about to amend General Ruling No. 5 under Executive Order No. 8389 by adding the following at the end of that Ruling: “United States and foreign currency imported or otherwise brought into the United States on and after March 19, 1942, shall be deemed to be ‘securities or evidences thereof for the purposes of this general ruling”.⁴⁵

This amendment will extend United States control of currency imports beyond that established under General Ruling No. 6A issued on March 13, 1942.⁴⁶

Treasury is also about to issue the following press release:

“The Treasury Department today extended the controls over importation of securities so as to cover the importation of currency. Prior to today’s action, controls over the importation of currency have been limited to importations from blocked countries and Proclaimed List nationals. Under this ruling, currency upon importation into this country will be forwarded immediately to a Federal Reserve Bank as fiscal agent of the United States. The Federal Reserve Bank will thereafter hold such currency or deliver it to a domestic bank to be held until such time as the Treasury Department has authorized its release. It was pointed out that just as in the case of the provisions applicable to securities which are subject to similar control, the provisions of the amended general ruling applicable to currency imported from Latin America will be so administered as to prevent interference with legitimate importations of currency from that area, including the bringing in by travelers of reasonable amounts of currency for traveling expenses. Treasury officials suggested that the fact that an importation of currency from Latin America was bona fide could be more easily established if such currency were sent into the United States by and for the account of the central banks (or the equivalent or analogous institutions) of any of the American republics under appropriate assurances from such banks or institutions.”

You are instructed to arrange as soon as practicable a meeting with the Minister of Finance or other appropriate officials of the government to which you are accredited and bring the foregoing to their attention. You should assure the Minister of Finance, particularly if substantial amounts of American currency circulate from hand to hand in his country, that every effort will be made to prevent interference with legitimate importations of currency into the United States and further that it is not the intent of this Government to impede the use of United States currency as part of the circulating media of such American republics as have found dollar currency a convenient supplement to their own currency.

You may point out, however, that the Axis countries, particularly Germany, are known to have seized large amounts of American dollar currency and that this currency is being disposed of in part by channels involving persons in neutral countries of Europe and various persons in the American republics. By these means the Germans are able to acquire foreign exchange for their war effort.

It is the hope of this Government that the American republics in keeping with the spirit of Resolution No. V of the Third Meeting of the Foreign Ministers of the American Republics at Rio⁴⁷ will cooperate to the best of their ability in defeating the Axis countries in their efforts to derive advantage from looted currency.

To this end it is suggested that the export of dollar currency from countries having central banks be restricted to such banks, which, it is assumed, will make every effort to convince themselves that all dollar currency which they buy from individuals and other banks is not directly or indirectly related to liquidation of currency by the Axis. Pending investigation by the Central Bank as to whether there is a direct or indirect Axis interest in imported currency, the Central Bank might place such currency into blocked accounts.

It should be emphasized that the mere fact that currency has been imported from Europe is regarded by this Government as prima facie evidence that there is beneficial Axis interest in such currency. Moreover, so long as dollar currency moves freely from neutral European countries to the Western Hemisphere, a market for such currency is maintained which is of benefit to the Axis. This Government would view with favor action by the American republics to prohibit further importation of dollar currency from countries outside the Western Hemisphere except reasonable amounts imported by travelers. Such action by the other American republics would be given appropriate weight in the administrative applications of General Ruling No. 5 to currency exported by the central banks of such countries to the United States and would contribute to the protection of their nationals from the risks of loss involved in dealings in currency originating with the Axis.

In the case of countries which do not have a central bank, it is suggested that exports of currency be confined to a similar institution designated by the Government.

Please inform consulates.

Hull

45. The amendment took effect on May 19; for text and subsequent amendments of Ruling No. 5, see 5 Federal Register 2159, 7 Federal Register 3770, and 8 Federal Register 12286.
46. 7 Federal Register 2083.
47. For correspondence concerning this meeting, held January 15–28, 1942, see pp. 6 ff. For text of the Resolutions see the Final Act of the Meeting, Department of State Bulletin, February 7, 1942, pp. 117–141; Resolution V recommended that the American Republics cut off commercial and financial intercourse with nations signatory to the Tripartite Pact (League of Nations Treaty Series, vol. cciv, p. 386).