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the United States Government upon the discount of drafts by the Casa Grande Sugar Plant, be expedited, if possible without further delay, and in accordance with the plan proposed, whereby an administrator appointed by the Peruvian Government would take full charge of the Plant, with power to dismiss employees, to deposit in the Peruvian Treasury until after the termination of the war the proceeds of the Plant, to prevent the actual owners of the Casa Grande Sugar Plant from raising funds on these deposits, and to dispose of the shares of the Plant, whenever the actual owners of these shares should wish to sell them.

The Government of Peru ascribes great importance to the prompt settlement of this question, in the first place, because, having met all the demands of the Government of the United States compatible with the laws of Peru in the matter, it feels that it should expect an equally conciliatory attitude on the part of the United States Government. Secondly, because public sentiment in Peru would be greatly

. perplexed at the refusal of a friendly Government to assist in preserving economical interests in Peru, when these interests are not harmful to those of the friendly Government. And thirdly, because of the great loss and trouble which the closing of the Casa Grande Sugar Plant would cause, as has been stated in detail on a former occasion.

If negotiations should exist, as it is understood, tending to the purchase of the Plant by a responsible concern agreeable to the United States Government, these negotiations, in the judgement of the Government of Peru, should not interfere with the immediate granting of the licenses required to enable the Plant to continue its operations, for, the conditions under which the licenses would be granted would permit to continue these negotiations and would even facilitate them.

The Legation, therefore, trusts that the Department of State will kindly hasten the favorable adjustment of the question, advising the Legation at its earliest convenience of its decision thereon.

File No. 763.72112C26/50A

The Secretary of State to the Peruvian Minister (De Freyre)

No. 158

WASHINGTON, May 6, 1918. Sir: I have the honor to acknowledge the receipt of your note of February 27, 1918, in regard to your Government's desire that the Casa Grande Sugar Plant, a firm incorporated at Bremen, Germany, and operating in Peru, be permitted to discount the drafts it receives in payment for sugar shipped to Chile, and thereby to continue its business.

I take pleasure in transmitting to you the reply of my Government as to whether an enemy trade license would be issued by this Government to permit American banks or bankers or their branches in Latin America to finance the marketing of Peruvian sugar in Chile by discounting the drafts of the Casa Grande Sugar Plant.

You will appreciate that the enemy character of the Casa Grande Plant and of its owners, so far as this Government is concerned, is clearly established under the terms of our statutes and has been evidenced by many acts committed in the interests of the Governments with which the United States is at war. Under the circumstances, it is with reluctance that this Government would contemplate any relaxation of the existing rules against the maintenance of trade relations between American individuals or corporations and the Casa Grande Estate and its owners.

Nevertheless, in view of the urgent request of the Government of Peru and as an evidence of the sincere friendship existing between the Government of Peru and the Government of the United States if the Peruvian Government, with the consent of the Casa Grande Sugar Plant, will appoint an administrator who will take over the actual management and control of the business and property; and if such an administrator will possess the authority to dismiss German employees at the property, and if this power will be exercised in the case of any employees or any of the present owners of the Casa Grande Plant who, under American laws, are enemies of the United States; and if the net earnings of the plant will be deposited in the Peruvian Treasury until after the determination of the war between Germany and the United States; and if none of the sums so deposited with the Peruvian Treasury will be used as a basis of credit upon which the owners of the Plant may realize but if all such sums shall remain free, clear, and intact in the Peruvian Treasury—the Government of the United States is disposed to grant a temporary license which would permit American banks or bankers or their branches in Peru to finance the marketing of the Casa Grande sugar in Chile.

It is understood, however, that such a temporary license would be granted pending a prompt decision by the owners of the Casa Grande Estate as to whether they would authorize the Peruvian administrator of the Estate to make a sale of any or all of the shares of the corporation or of the Estate itself should such a course seem preferable—in such a manner as would safeguard the interests of the present owners of the Plant, Accept [etc.]

ROBERT LANSING

File No. 763.72112C26/62

The Peruvian Minister (De Freyre) to the Secretary of State

WASHINGTON, May 14, 1918.

[Received May 16.] SIR: In reply to your note of the 6th instant with reference to the conditions under which the United States Government is disposed to grant a temporary license which would permit American banks or bankers, or their branches in Peru, to finance the marketing in Chile of sugar pertaining to the Casa Grande Sugar Plant, I have the honor to inform you that my Government will promulgate an Executive order establishing the control of the Peruvian Government over the Casa Grande Sugar Plant, in conformity with the provisions contained in your aforementioned note. Accept [etc.]

M. DE FREYRE

File No. 763.72112C26/65
The Peruvian Minister (De Freyre) to the Secretary of State

WASHINGTON, May 20, 1918. SIR: Supplementing the information contained in my note of the 14th instant with reference to the measures taken by my Government in regard to the Casa Grande Sugar Plant, I have the honor to advise you that my Government has given its approval to an agreement with the said Casa Grande Sugar Plant, whereby my Government will appoint a general administrator, who will effect the sales of the products of the Plant, will defray the expenses of its management, will deposit the balance to the order of my Government in the Caja de Depósitos y Consignaciones, and will also deposit therein the proceeds of the shares of the Plant, which their present owners may dispose of. These deposits will be retained by my Government until after termination of the war.

The Casa Grande Sugar Plant agrees moreover not to execute in any form any credit transaction based upon these deposits.

The general administrator, finally, will possess full authority to appoint and dismiss the employees of the Plant.

Mr. Emilio Althaus, former Minister of Foreign Affairs of Peru, has been appointed by my Government to be general administrator of the Casa Grande Sugar Plant.

As my Government has now complied with the conditions specified in your note of the 6th instant on the same subject, I have furthermore the honor to request that due notice be given to the proper officials of the United States Government that the sale and purchase of articles and products, and the discount of drafts, effected by the general administrator appointed by my Government, be not subject to the restrictions existing against the maintenance of trade relations between American individuals or corporations, and enemy individuals or corporations.

Before concluding, I am instructed to express, as I hereby have the honor to do, that my Government appreciates to its full extent the friendly spirit displayed anew by the Government of the United States upon this occasion. Accept [etc.]

M. DE FREYRE

File No. 763.72112C26/65

The Secretary of State to the Peruvian Minister (De Freyre)

No. 166

WASHINGTON, June 3, 1918. Sir: I have the honor to acknowledge the receipt of your notes of May 14 and May 20, 1918, with reference to the measures taken by your Government in regard to the Casa Grande Sugar Plant.

I note that an administrator of the property has been appointed by your Government to effect the sale of its product to defray the expense of operation and to deposit the balance, if any, to the order of your Government in the Caja de Depósitos y Consignaciones. I remark also that the administrator will possess full authority to appoint and dismiss employees at the property.

May I express my regret that no decision appears to have been reached as yet by the owners of the Casa Grande Estate as to conferring upon the administrator appointed by your Government the authority to make an absolute bona fide sale of the shares thereof, or of the Estate itself should such a course seem preferable—a decision which the American Government considers most important to be reached at the earliest moment, as indicated in my note of May 6.

Nevertheless, in view of the sincere friendship entertained by my Government for the Government of Peru, so cordially reciprocated by your Government, I beg to inform you that the American Government will take the necessary steps for the issuance of a temporary license permitting American banks or bankers in Peru to facilitate the marketing of the Casa Grande sugar in Chile and that the War Trade Board has already instructed the Mercantile Bank of the Americas to apply for such a temporary license, pending the communication to your Government by the owners of the Casa Grande Estate of their decision to authorize the administrator to dispose of the shares or the property as indicated above.

In the interest of a clear understanding on this point, I beg to add that the continued delay of the owners of the Casa Grande Estate in conferring such authority on the administrator will justify this Government in reconsidering the whole matter and in revoking without notice the licenses now to be granted.

As I have had the honor heretofore to indicate to you, it is contrary to the policy and interests of the United States to allow trade between this country and enemies of the United States, in respect to which stringent legislation has, as you are aware, been passed by the Congress of the United States. Accept [etc.]

ROBERT LANSING

File No. 763.72112C26/84
The Peruvian Minister (De Freyre) to the Secretary of State

WASHINGTON, June 5, 1918.

[Received June 6.] SIR: In reply to your note of the 3d instant referring to the conditions under which the licenses requested by my Government to permit the Casa Grande Sugar Plant to continue operating will be granted, and in order to dispel any misunderstanding, I have the honor to inform you that my Government fully comprehends that the agreement under which these licenses are granted is provisional, pending the declaration of the owners of the Casa Grande Estate authorizing the Peruvian administrator to dispose of their shares, in part or wholly, or of the property itself.

My Government has already notified the Casa Grande Sugar Plant that the administration thereof, established by the Peruvian Government, is temporary, pending the authorization of the actual owners of the Estate, to be given promptly to the Peruvian administrator, that a sale be made by the said administrator of their shares or of the property itself. Moreover, the agreement between my Government and the Casa Grande Sugar Plant, referred to in my note of the 20th ultimo, declares such an agreement to be provisional, stipulating in its last clause that the agreement will be concluded when the Peruvian Government so resolves, after giving a 15-days' previous notice.

In order, however, that the administrator appointed by the Peruvian Government may take over the actual management and control of the business, as required in your note of the 6th ultimo, he must be able to make a sale of the products of the Plant and to purchase the articles necessary for the maintenance thereof; and consequently he should not be subject to the restrictions imposed upon him at present. Nor would it be acceptable, nor in conformity with the friendly purposes of the United States Government, as expressed in your aforementioned note of May 6, 1918, that the administration

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