835.51/903
The Ambassador in Argentina (Bliss) to the Secretary of State
[Received April 17.]
Sir: Referring to my telegrams No. 29 of March 31, 5:00 p.m., and No. 30 of April 4, 7:00 p.m., and to the Department’s No. 18 of [Page 724] April 1, 3:00 p.m., I have the honor to report that the information conveyed in the first named communication was given me by an eminently responsible person who had just had an interview with the Minister for Foreign Affairs, in the course of which the statements in regard to the British loan were made. As indicated, however, in the telegram, the issue of this loan depended upon the settlement of the percentage of exchange to be allotted to British interests. This point has not been settled and most recent reports indicate that the prospects for an agreement are not good. Yesterday it was reported that the Prince of Wales was intervening in the negotiations; today that the Argentine Government has sent its final instructions.
As to the sterling loan, later reports indicate that it might be for twenty-six years instead of for twenty years as telegraphed. Presumably there would be no amortization payment for the first five years. The working of the loan, if it is made, would be somewhat as follows. The bankers in London would create a sterling credit for the Argentine Government, and the latter would issue four percent sterling bonds which would be given to holders of the blocked pesos owned by British interests. The pesos thus received by the Argentine Government would be applied by it to pay off some of its internal floating debt which at present pays a higher interest than four percent. The holders of the blocked pesos could take their sterling bonds and discount them with English banks. In this way it is supposed that the problem of finding a market for the ten million pound loan would be overcome. Such an arrangement, however, represents a gamble in exchange for the Argentine. If sterling appreciates quicker than pesos, this country will be the loser.
I have heard the fear expressed in responsible quarters that were a similar arrangement attempted in the United States it would be more difficult to reach an agreement, as it is doubtful if the American concerns would so readily take further Argentine bonds.
In connection with the Roca Mission negotiations, La Prensa of April 2 contained a special despatch to it from London of the previous day to the effect that the British millers were opposed to an Argentine proposal for grading wheat, although they were disposed to cooperate in the establishment of a freer market, such as would free the Argentine from the dominion of the few big export houses, but that this should be done in a cautious manner. One English proposition to this effect is stated to have been that an Anglo-Argentine wheat exporting company should be created with a capital of £1,000,000 sterling, subscribed one-half by the Argentine Government, and the rest by the British millers. The Argentine idea appeared to be that a system of wheat certificates would be the best solution.
Respectfully yours,
P. S. Though relatively little has been said as to this aspect of the situation, I learn from a source that should be well informed that the British demands in connection with customs tariff reductions would cost the Treasury here some 14,000,000 pesos a year. In return the British could give nothing but promises not to place the products of this country in a less advantageous position than at present.