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State Department and Foreign Affairs Records

Records of the Foreign Service Posts of the Department of State (RG 84)

Portugal

Portugal, under the rule of Antonio Salazar, remained a neutral throughout the war, despite the terms of her alliance with Great Britain.  Portugal had a centuries-old alliance with the British, as well as close economic and trade relations (Great Britain was Portugal's leading trading partner), as well as Portugal's dependence on United States petroleum, coal, and chemical supplies, which influenced its conduct during the war, and thus could be described at one level as a pro-Allied neutral.  And yet Portugal carefully maintained a balance in its trade between the Allies and the Axis.  After all, Germany was Portugal's second largest trade partner, and enjoyed significant advantages, particularly after Germany's occupation of France gave it a direct overland route to the Iberian Peninsula, through which it could both supply Portugal with greater quantities of imports than the Allies and pose a military threat if Portugal attempted to curtail exports important to the German war effort.

The Germans had many financial interests and ties with the Portuguese.  I.G. Farben and other major German concerns, such as E. Merck and Siemens, had fairly large interests in Portugal. The official German purchasing agency in Portugal during the war was Soc. Financiera Industrial Ltda .(SOFINDUS).  This organization purchased Portuguese products for the Germans and coordinated the operations of various German firms in Portugal.

Portugal allowed Great Britain to trade and receive credit backed by the pound, allowing the British to obtain vital goods at a time when it was short on gold and escudos.  By 1945 the British owed Portugal over $322 million under this arrangement.

Portugal provided the Axis less formal but also advantageous trade facilities, permitting Germany and Italy to incur sizable debts in their clearing agreements with Portugal and advancing them significant amounts of escudos in government and private contracts.  Deficits under the Portuguese clearing agreement with Germany averaged between $5-9 million between 1943 and 1944.  Also, Portuguese merchants were an important source of vital smuggled commodities to the Axis, including industrial diamonds and platinum from Africa and Latin America.

The heated competition between the belligerents for its important resources greatly benefited Portugal's economy and generated large profits for its businesses and banks.  Although the Allies took a far greater share of Portugal's strategic goods during the war than the Axis did, Portugal exported one material to Germany without which, the Allies believed, Germany could not continue to wage war: wolfram, which when refined into tungsten and used in the steel-hardening process had myriad vital industrial and military uses.  Germany and Portugal negotiated secret agreements in accordance with which Portugal exported an average of over 2,000 metric tons of wolfram to Germany annually between 1941 and mid-1944, about 60 percent of Germany's estimate minimum industrial requirement.

Germany paid for its Portuguese imports, including wolfram, with German goods and escudos, as well as gold (most of which came through Switzerland) and Swiss francs purchased with gold. Estimates of the total amount of looted gold received by Portugal ranged from $50.5 million to $106.6 million.  When pushed by the Allies for information about the gold it had received, Portugal did not respond.

The Allies' objective was to purchase enough of wolfram to satisfy Portugal's export demands and prevent as much as possible from going to the enemy.  Portugal's trade with the Allies and Axis worked to its great advantage as both sides paid inflated prices for wolfram.  Portugal profited so much from the wolfram trade that it maintained its wolfram exports to Germany well into 1944 in the face of growing from the Allies to curtail that trade, which was far more important to the German war effort than to that of the Allies.

In January 1944, the Allies began to pressure Salazar to embargo all wolfram sales, but Portugal resisted, defending its right as a neutral to sell to anyone and fearing that any reduction in its exports would prompt Germany to attack Portuguese shipping, bomb Portuguese cities, or even launch an invasion from occupied France across Spain.  The United States could have used greater threat of an oil embargo to compel Portugal to end the trade with Germany, but they placed greater importance on negotiating access to air and naval bases on the Azores.  Portugal, despite its neutrality, granted the British access to the Azores bases in October 1943 and extended such access to the United States a year later.

On the eve of the D-Day invasion in June 1944, after the Allies threatened economic sanctions, the Portuguese government imposed a complete embargo on wolfram exports to both the Allies and the Axis.

Anticipating Germany's collapse, the Portuguese Government on March 18, 1945, issued a decree on "movable property" which recognized the United Nations' position on loot.  On May 14, 1945, the full Safehaven objectives suggested to the Portuguese Government by the American Embassy were achieved.  In an official decree Portugal declared adherence to Bretton Woods Resolution VI, froze all German assets regardless of custody or location, arranged for a census of German assets and nationals, and prohibited the importation and exportation of foreign currency. The Portuguese Government took over German official establishments in Portugal "pending the emergence of a government in Germany."

Negotiations with Portugal for the restoration of looted gold, estimated by the Allies in July 1946, at $139.3 million, and the disposition of German external assets, estimated in June 1946 at $36.8 million, began in September 1946. The Allies initially sought about $51 million (Investigations in 1947, however, indicated that the Bank of Portugal had received between $43 million and $53 million), but Portugal offered only $4.4 million for which it expected full compensation from liquidated German assets.  The two sides reached a tentative accord in February 1947, in which the Portuguese agreed to give up roughly $4 million in liquidated German assets in exchange for as much as $7.2 million for their claims against Germany.  But the accord was not implemented because of an impasse over looted gold.

The Allies lost some of their negotiating leverage when the United States unblocked Portuguese assets in the United States in August 1948.

As gold negotiations dragged on into the 1950s and the value of these assets depreciated the State Department grew frustrated and convinced a reluctant Treasury Department to agree to Portugal's terms.  The Department of State also feared that the impasse might jeopardize what it considered to be the more important strategic goal of gaining United States access to an Azores air base and integrating Portugal into postwar Europe. Finally, in October 1958 the United States, Great Britain, France, Portugal and West Germany reached an agreement, and in December 1959 Portugal delivered $552,000 to the Allies and about $4.5 worth of gold to the Tripartite Gold Commission.  In addition, Germany paid Portugal about $13.7 million to reimburse it for the gold and to cover its wartime damage claims, for which Germany received still-unliquidated German assets in Portugal.  (Note 88)

Records of The U.S. Embassy, Lisbon, Portugal

Lisbon was the chief distribution port for International Red Cross Committee relief supplies to prisoner-of-war and internment camps; the main link for civilian flights between the United Kingdom and the United States; and, a notorious center for spies.

Lisbon became the center for tens of thousands of refugees from Central Europe, the Low Countries, and France.  The Portuguese Government allowed Jewish organizations to relocate from occupied Europe to Lisbon during the war.  Although Portugal sought in 1940 to halt the entry of refugees and the issuance of visas for them, many Portuguese disregarded their government's policies.  Aristides de Sousa Mendes, a Portuguese diplomat in Bordeau, France, disobeyed his government's orders and issued 10,000 visas before he was recalled and dismissed. During 1941 and 1942 the Portuguese Government allowed 5,000 refugees to pass through Portugal to the United States.

     General Records 1936-1945, 1950-1952 (Entry 3126)

          Boxes 1-137
          1941
          Box# File #    File Title or Subject
          40   711.3     Trading With Enemy location: 350/58/67/10/02
          40-41     800            Political Reports
          46   848    Relief, Refugees
               851.6     Banking, Frozen Assets, etc.
          1942
          Box# File #    File Title or Subject
          52   631    Trade Relations
          53   710    Spain-Portugal
               711    Germany
               711.2     Neutral Shipping
          58   800    Azores
               800    Bolivia
               800    France
               800    Italy
               800    Morocco
               800    North Africa
               800    Portugal
               800    Rumania
               800    Spain
               800    Vatican
               800    Yugoslavia
               800.1     Franco-Salazar Meeting
          60   820.2     Axis Espionage
          61   848    Relief Measures
               850    Economic Matters
               850.6     Insurance
               851    Financial Matters
               851    Reported Activities of German Authorities at Paris in Seizing
                         Holdings in French Controlled Companies in Argentina
               851.51 Report-"Switzerland, The Reich's Foremost Supplier of
                         Foreign Exchange," June 26, 1942
               851.6     Banking
               854    Inventions, patents, Trademarks
          62   863    Mines, Including Tungsten and Wolfram
               863.4     Diamonds
          63   871    Mail Intercepts
          1943
          Box# File #    File Title or Subject
          69   624.4     Smuggling
               631    Trade Agreements-German Foreign Trade
               631    Trade Agreements-Portugal Trade with Axis and Axis
                      Occupied Countries
               631    Trade Agreements-Portugal-France and North Africa
               631    Trade Agreements-Portugal-French Moroccan Trade
               631    Trade Agreements-Portugal-Hungary
               631    Trade Agreements-Portugal-Spain
               631    Trade Agreements-United States-Italy
               631    Trade Agreements-United States-Spain
               710    Political Relations-Japan-Portugal
               710    Political Relations-Spain-France
               710    Political Relations-Spain-Germany
               710    Political Relations-Spain-Portugal
               710    Political Relations-Miscellaneous
          70   711    Germany
               711    Implementation of the Anglo-Portuguese Agreement
               711    Italy
               711    Joint Declaration of United Nations Governments toward
                         Transfer of Property in Enemy-Controlled Areas
               711    Attitude Toward Neutral Nations (President Roosevelt's
                         Speech)
               711.1     Neutrality
               711.3     Enemy Property
               711.5     German Exchange with Latin America  loc: 350/67/10/06
          71-72     800            Political Reports
          75-76     820.02         Subversive Activities
          77   848    Relief, Refugees
          78   850.6     Insurance
               851    Foreign Funds Control
               851.6     Banks, Banking
               854    Trademarks, Inventions
          79   863    Mines, Mining
               863.4     Diamonds and Diamond Smuggling
               863.4     Gold
               863.5     Base Metals
          80   871    Mail Intercepts
          1944
          Box# File #    File Title or Subject
          88   624.8     Smuggling
               624.8     Smuggling-Diamonds
               624.8     Smuggling-Gold
               624.8     Smuggling-France-Spain
               631    Trade Relations-Anglo-America
               631    Trade Relations-United States-Spain
               631    Trade Relations-General
          89   710    Political Relations-Argentina with Bolivia, Denmark, and
                         Argentina
               710    Political Relations-Chile with Italy
               710    Political Relations-Portugal with Argentina, Brazil,
                         France, Germany, Italy, Japan, Netherlands, and Spain
               710    Political Relations Spain with France, Germany, Great Britain,
                         Hungary, Japan, and Mexico
               711.2     Neutral Trade
          90   711.3     Trading With Enemy-Administration and Personnel of
                      Safehaven Project
               711.3     Trading With Enemy-General Correspondence on Flight of
                         Capital, Looting, etc.
               711.3     Trading With Enemy-Individuals  location: 350/67/11/02
          92-95     800            Political Reports
          99-100 820.02  Axis Activities
          101  840.3     Fine Arts
               848    Relief Measures
          102  850    Economic Matters
               850.6     Insurance
               851    Foreign Funds Control
               851    Financial Conditions-Funds Control of Individuals and
                         Companies
               851    Financial Conditions-German Assets
               851    Financial Conditions-Italian Assets
               851    Financial Conditions-Swiss Blocking of Funds
               851    Financial Conditions-General Correspondence
               851.51 Exchange
               851.6     Banks, Banking
               851.6     Swiss Banking Agreement
          103  854    Copyrights, patents, Trademarks
               863    Mines, Mining
               863.4     Precious Metals-Gold
               863.4     Precious Metals-Diamonds
               863.5     Base Metals
          105  871    Censorship Intercepts
          1945
          Box# File #    File Title or Subject
          115  600    Commercial Relations
               624.4     Smuggling
               631    Trade Relations-British/American Agreements
               631    Trade Relations-with Spain and Portugal
               631    Trade Relations-Hispano/Italian Agreements
               631    Trade Relations-Hispano/Swiss Transit Trade
               631    Trade Relations-Supply Purchase Agreement
               631    Trade Relations-Trade Agreements Act
               631    Trade Relations-Wolfram
          117  710    Political Relations-General
               710    Political Relations-Portugal-American
               710    Political Relations-Portugal-Japan
               710    Political Relations-Russia
               710    Political Relations-Great Britain-Spain
               710    Political Relations-Russia-Japan
               710    Political Relations-Germany-Spain
               710    Political Relations-United States-Brazil
               711    Reaffirmation of Portuguese Neutrality Following Turkish and
                         Egyptian Declarations of War
               711.1     Neutrality, Neutrals
               711.2     Trading With Enemy
               711.3     Safehaven
          117-120 800    Political Reports
          124  840.3     Looted Art
               848    Relief
               848    UNRRA
               850    Economic Matters
          125  850.6     Insurance
               851    Foreign Funds Control
               851    Foreign Funds Control-French Assets
               851    Foreign Funds Control-German Assets
               851    Foreign Funds Control-Italian Assets
               851    Foreign Funds Control-Individual Cases
               851    Gold Declaration
          126-128 851    Safehaven
          129  851.5     Portuguese Gold Transactions
               851.6     Banks, Banking
               854    Patents, Trademarks, and Copyrights  loc: 350/67/12/01
          130  871    Censorship
               879.6     Deutsche Lufthansa

     Classified General Records (Confidential File) 1941-1949, 1950-1952 (Entry 3127)

          Boxes 1-46
          1941
          Box# File #    File Title or Subject
          3    300    Refugees
               624.4     Smuggling
               711    War
               800    Political Reports
               820.02 Axis Activities
          1942
          Box# File #    File Title or Subject
          4    631    Supply Purchase Agreements location: 350/67/12/02
          1943
          Box# File #    File Title or Subject
          5    631    Supply Purchase Agreements
               820.02 Intelligence Reports
          1944
          Box# File #    File Title or Subject
          6    631    Supply Purchase Agreements location: 350/67/12/03
          1945
          Box# File #    File Title or Subject
          7-8  631    Supply Purchase Agreements
          8    631    Supply Purchase Agreements-Wolfram
               710    Political Relations
               710    Political Relations United States-Portugal
               710    Political Relations United States-Brazil
               711    Germany
               711    Japan
               711    Portugal
               711    Spain
               711.1     United States Proposal for Allied Economic Policy Toward
                         Neutral Countries
               711.1     Minutes of European Neutrals Committee   loc: 350/67/12/03
          9    800    Political Affairs-General
               800    Political Affairs-Argentina
               800    Political Affairs-Finland
               800    Political Affairs-Germany
               800    Political Affairs-Hungary
               800    Political Affairs-Italy
               800    Political Affairs-Japan
               800    Political Affairs-Poland
               800    Political Affairs-Portugal
               800    Political Affairs-Rumania
               800    Political Affairs-Spain
               800    Political Affairs-Tangier
               800    Political Affairs-Yugoslavia 
          9-10 820.02 Military Activities-Intelligence Reports
               820.02 Military Activities-Weekly Intelligence Meetings
               820.02 Military Activities-Individual Cases
          10   851    Funds Control-General
               851    Funds Control-Monetary Agreement
               851    Safehaven-Sale of German Vessels
               851    Safehaven-Individual Cases
               851.6     Banks, Banking
               879.6     Lufthansa
          11   851    Safehaven
          1946
          Box# File #    File Title or Subject
          12   631    Portugal-Germany [includes Safehaven information]
                        
          13   691    Navicert Control
               711.2     Safehaven
          13-14     800            Political Reports
          15   840.3     Looted Art
               850    Annual Economic Review of Portugal for 1945
                        
          16   851    Foreign Funds Control
               851.5     Gold
               851.6     Banks, Banking
 
     Top Secret General Records 1945-1949 (Entry 3128)

          Box 1

     Top Secret Subject Files 1946-1952 (Entry 3129A)

          Includes folders labeled: Safehaven (1947-1948); German External Assets 1950-
          1952); and, Safehaven Files (1950-1952)
          Box 1 

     General Records Relating to War Refugees 1942 (Entry 3130)

          Box 1

     Subject Files Relating to War Refugees 1944-1945 (Entry 3131)

          Box 1
 
     Records Relating to German External Assets in Portugal 1947-1956 (Entry 3138)

          Box# File # File Title
          1    236  German Assets: Financial Statements Allied Committee 1950-1952
                    Allied Committee Minutes 1950-1952
               321.3  Liquidation German Assets - Citations and Applications 1950-1952
               321.3  Liquidation German Assets - Four German Shipping Companies
                      1950-1952
               321.3  German Assets - Sale of Books - German Legation Building 1952
               321.3  Safehaven - Deblocking (Portuguese Decisions) 1951-1952-1953
               321.3  Safehaven - Deblocking (Allied Committee) 1950-1952, 1953
                     
          2    321.3  Safehaven - General 1949
               321.3  Safehaven German Assets 1950
               321.3  Safehaven German Assets - General 1951
               321.3  Safehaven German Assets Bavarian Gallery Paintings 1950-1951,
                      1952, 1955
               321.3  Liquidation of German Assets - Mozambique 1950, 1951
               321.3  Safehaven - Japanese Assets 1950-1952
               321.3  Liquidation of German Assets - Sheepskins 1951
               321.3  Safehaven - Radio Marconi 1951
               321.3  Safehaven - Liquidation of German Assets - Angola 1950-1952
               321.3  Safehaven - German Assets 1952
               321.3  Safehaven "Unfreezing Cases" General 1952-1953
                     
          3         Decrees and Agreements Re German Assets
               321.3  Minutes of Portugese Liquidation Commission Meeting 1950-1953
               321.3  Safehaven - Special Tribunal Decisions 1952-1954
                    Safehaven "A"
                    Safehaven "B"
               321.3  Safehaven German Assets Securities 1953-1955
               321.3  Liquidation German Assets - Citations and Applications 1953-1955
               321.3  German Assets - Financial Statement Allied Committee 1956
                     

     Subject Files of the Financial Attache, James E. Wood 1942-1945 (Entry 3139)

          Boxes 1-3
          Box #     File Title
          1    Banks
               Bank of Portugal
               Deutsche Bank
               Spanish Banks [includes a 174-page report prepared by the Foreign Funds
                    Control, March 1945, entitled "Four Leading Spanish Banks," that
                    includes information on Banco Hispano Americane, Banco Espanol
                    de Credte, Banco de Bilbao, and Banco de Visquije.
               Swedish Banks
               Foreign Exchange
          2    Blocked Assets-Swiss Government
               Bretton Woods
          3    Italian Affairs
               Gold-General
               German Government Assets
               Treasury Directives-General
               Treasury investigative Reports
               Portuguese Financial Position

     Company and Individual Files of the Financial Attache, James E. Wood, 1943-1945
     (Entry 3140)

          Box 1

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