File No. 835.6131/6

The Secretary of State to the Ambassador in Argentina ( Stimson)


You are instructed to communicate the following to the Argentine Government: The British and French Governments are prepared to purchase the surplus wheat of the Argentine Republic, approximately two [million] five hundred thousand tons, and some other cereals and to divert to the Argentine Republic trade the shipping and coal necessary to transport these cereals to Allied European ports, and under existing conditions it is not feasible to export gold for that purpose either from Allied countries or for their account from the United States which has limited the export of gold. The British and French Governments, therefore, propose that the Argentine Government and banks promptly work out some plan whereby the obligations of Great Britain and France shall be issued to represent purchase price of the Argentine Republic cereals and made the basis of the issue of Argentine circulation. The United States Government approves this plan and offers its good offices and cooperation in aiding in its consummation.

The following is for your information and guidance: Above note is being sent after consultation in London by Assistant Secretary of the Treasury Crosby with British Chancellor of the Exchequer and French Finance Minister, whose Governments are sending copies of above note to their respective diplomatic representatives in the Argentine Republic with instructions that simultaneous presentation be made by diplomatic representatives of three countries who should fully cooperate. It is important that proposed arrangements be made without delay in order that plans for diversion to Argentina of necessary shipping and coal should be made at once. You should explain that we are cooperating in this transaction because of [Page 367] our general interest in the Allies’ food situation and because our own plans for exporting cereals will be affected to some extent by arrangements made for export of Argentine surplus. British and French diplomatic representatives have instructions as to financial details of the proposed arrangement. You are expected to facilitate negotiations in every way in your power. You will appreciate, and British and French diplomatic representatives will doubtless explain in case of need, that the limited shipping and bunkering coal of the world must be very carefully allocated so as to most effectively feed the Allied nations with due regard to the rights of neutrals. Manifestly in this policy the United States must cooperate with European, Allies. There is a rumor that there is a movement on foot to purchase Argentine surplus cereals for Spain, and suspicion is that this would be for German account. You will realize, and British and French diplomatic representatives will doubtless make plain if developments so require, that under existing conditions Allies could not be expected to provide facilities of any kind for shipments to Spain of cereals thus purchased. It seems therefore certain that Argentine cereal surplus can be exported to Europe only under some arrangement with Allies; also explain that existing abnormal conditions in world trade and finance render necessary that each country selling to European belligerents shall finance trade balances in some such manner as is now proposed for Argentina. Our Government having already made loan arrangements concerning balances in its favor, please keep this Government fully informed regarding developments and bear in mind necessity for prompt settlement.