Memorandum by the Assistant Secretary of State (White) of a Telephone Conversation With Mr. Hugh Knowlton of the International Acceptance Bank

Subject: Proposed Loan to Argentina for Naval Construction

I called Mr. Knowlton on the telephone and referred to his conversation with Dr. Young, particularly to his statement to Dr. Young that he would be prepared to stipulate that American firms have the fullest and freest opportunity to compete for any proposed work. In the event, I said, that Mr. Knowlton should write us a formal letter and state that such a stipulation had been made and that an equal opportunity would be accorded American firms to bid, the Department would reply stating that it would have no objection to the proposed financing. I might add also that the Department of course would be very glad to see some of the work go to American firms.

Mr. Knowlton stated that since his conversation with Dr. Young he had telegraphed to his representatives in Buenos Aires inquiring whether American firms would be accorded a free and equal opportunity to bid. The reply had been unsatisfactory, stating that no such assurance would be given. Mr. Knowlton said that he would telegraph again and make his inquiry clear. There might have been some misunderstanding.

I stated that I would be glad to have him do so. It seemed to me impossible that such a stipulation would not be granted by the Argentine Government. I also stated that it was the Department’s practice in connection with loans the proceeds of which were to be used for construction work to ask that the bankers concerned should see that there was nothing in the contract which would preclude American concerns from bidding for the work in question. Mr. Knowlton stated that he would let me know what further reply he received from the Argentine.

F[rancis] W[hite]