The Chargé in Argentina (Cable) to the Secretary of State

No. 261

Sir: I have the honor to refer to the Department’s telegrams No. 41 of October 18, 1926, 1 p.m., No. 45 of November 24, 1926, 2 p.m.,9 No. 9 of March 1, 1927, and No. 11 of March 9, 1927, 3 [7] p.m., and subsequent correspondence relative to the purchase by the Argentine Government of various naval units comprised in the forthcoming naval programme authorized by this Government.

The situation at present I understand is as follows:

The Bethlehem Steel Company has been unsuccessful in arriving at an understanding with the Argentine Government. This may be put down to several reasons, the primary one of which is the cost of manufacture in the United States. It has been decided, and this is from an authoritative source, that the light cruisers will be built in [Page 431] Italy and the flotilla leaders in Great Britain. The building programme has not been completely contracted for so that there is an opportunity of Bethlehem coming to an understanding either for future units or possibly destroyers.

I am led to understand that the allegations made by the American companies some four months ago are not without foundation, as it was the original intention of Admiral Domecq Garcia, the Minister of Marine, and Admiral Galindez, who is Chief of the Naval Mission in Europe, to award the complete construction to Italy. … Pressure brought to bear on the basis of the slogan “Buy from those who buy from you” brought about the tentative awarding of the flotilla leaders to Great Britain. From what I understand, Admiral Garcia has done and will do everything possible to keep any portion of the plan from American builders.

The Electric Boat Company stands in a rather stronger position than the Bethlehem Steel Company in view of the fact that a Commission formed prior to the awarding of any contracts reported that the double-hulled boats of the Holland type were far in advance of any type constructed in Europe and should be adopted for the Argentine Navy. President Alvear, with his well-known feeling for France, desired the submarines to be built there, and it is possible that the Electric Boat Company, which has licensees in that country, may adopt the plan of constructing them abroad under the American patents in order to conciliate his point of view.

I have recently been informed that Admiral Garcia proposed to the Minister of Finance that the debt of $20,000,000 which France owes to Argentina should be utilized by the construction of naval units in that country, and suggested that four submarines at present practically completed in France should be considered as part payment. I understand that the French Government does not wish to release these units which they have constructed for themselves, but have proposed to construct four more. As these would not be of the Holland type, it would be running contrary to the findings of the Argentine Board on submarines.

In my last two interviews with the Minister for Foreign Affairs, in which I emphasized the point of possible financing in the United States and the feeling of the Department concerning a portion of the construction going to American shipbuilders, I met with absolute silence and a statement that the question was entirely in the hands of the Minister of Marine and President Alvear to whose attention he had called the matter, and that he could do nothing further.

I have [etc.]

Philander L. Cable
  1. Telegram No. 45 not printed.