635.4131/95
The Chargé in Argentina (White) to the Secretary of State
[Received May 22.]
Sir: I have the honor to refer to the Department’s telegram No. 24 of May 5, 7 P.M. in regard to the application and effect of Article II, Clause I, of the Anglo-Argentine (Roca) Agreement.
I have taken up the question of the figures in which the Department is interested with the Commercial Attaché—Doctor Dye—and with the local branch of the National City Bank of New York, which has been following the exchange control question closely and which recently had a temporary representative attached to the Exchange Control Commission, and both of these have supplied opinions and figures which are enclosed herewith.4 I have also interviewed the President of the Exchange Control Commission, Doctor Celedonio Pereda, who has promised me some figures, and I also intend, when a suitable moment presents itself, to broach the matter to the British Embassy. I enclose herewith (Enclosure #1) a copy of a communication from Doctor Dye; (Enclosure #2) the pertinent portion of a conversation held between the Manager of the National City Bank and a former high Argentine banking official, which was considered by the City Bank and also by Doctor Dye as containing the best approximation to the figures in which the Department is interested and which Doctor Dye embodies in the text of his note; (Enclosure #3) figures supplied by the National City Bank in regard to the service requirements of the National Debt for the year 1932; (Enclosure #4) some figures for exchange offerings for the present year; (Enclosure #5) a table prepared by Doctor Dye showing the difference between export values in 1932 and exchange sold in the same year; (Enclosure #6) excerpts from the Buenos Aires Herald of May 11 giving export figures for the first four months of the present year.
With the assistance of the foregoing, I have the honor to submit a tentative consideration of the Department’s tentative figures as follows:
870 Million Paper Pesos For Exchange Available In 1933
While foreign exchange for sale is based on Argentine exports, a reference to Enclosures 1 and 5 reveals that there was a considerable discrepancy between the totals for the two figures in 1932. Last year the value of exchange sold exceeded that of the exports. This year, so far, the reverse is the case. The discrepancy however presents one of the numerous uncertainties inherent in making a forecast.
[Page 731]Exports for last year amounted to 1,286,237,000 Pesos. For the first four months of the present year the value of exports is 30.1% less (see enclosure #5). If we take 30% as the probable ratio of reduction, the total exports upon which exchange is based would be roughly 900 Millions. If we take the ratio of decline for the first quarter of approximately 26% then this figure would be somewhat in excess of 950 Millions. Turning to the actual exchange. Last year, taking Doctor Dye’s figures, 1,339 Millions were sold. For the first four months of this year, according to figures supplied in despatches Nos. 2030 of April 7 and 2056 of May 5,5 about 33% less has been sold. If this ratio is maintained, then comparing exchange figures with exchange figures, that for the present year would be slightly under 900 Million Pesos.
The Departmental figures of 870 Millions, as considered in the light of the preceding, would not appear to err on the side of optimism.
300 Millions as the Full Amount of Sterling Exchange Arising From the Sale of Argentine Products to the United Kingdom
In 1932 Great Britain took 35.6%, in 1931, 39% of the total Argentine exports (according to Argentine figures). Doctor Dye very naturally takes as a basis 35% on 950 Million Pesos which, roughly, would be somewhat in excess of 330 Millions; 35% of 900 Millions would be approximately 315 Millions. It will be noted, however, that in Enclosure #2 the higher figure of 400 Millions is indicated, allowing for the re-export of part of the British imports from Argentina. This re-exportation suggests a factor affecting this estimate. Another, as pointed out by Doctor Dye (see page 2 of Enclosure 1) is the very considerable discrepancy between Argentine figures for their exports and those of the corresponding British figures for imports.
Public Debt Charges to Countries Other Than the United Kingdom, 100 Millions
According to Enclosure #3, 68,703,682 (United States currency) were needed in 1932 for the service of the external debt, of which it would appear that $23,716,718 are for sterling. When one comes to translate this into Argentine Paper Pesos, the question arises as to exchange. Of late the United States Dollar has been fluctuating widely. Another important factor in this calculation is the partial or total defaults of certain provinces, notably Buenos Aires and Santa Fe. Of much less importance is the reduction effected by yearly amortization. I have been told that this last amounts to 1% a year, but a closer analysis in regard to amortization might, if it were of sufficient [Page 732] importance, be made on the basis of the debt service figures supplied in Despatch No. 1566 of March 18, 1932 and No. 1579 of April 1, 19326 (both entitled “Financial Data”).
Last year National Public Financial Services absorbed 154,982,000 of exchange; Provincial and Municipal 43,029; National Mortgage 6,382; making over 204 Millions. I am told that 200 Millions is the figure which the Exchange Control Commission contemplates for the external debt service this year. According to the figures in Enclosure #3 it would appear that sterling would take up 35% of the total. 65% of 200 Millions would be 130 Millions.
Public Debt Charges Payable in the United Kingdom, 80,000,000, m/n
If the sterling indebtedness takes 35% of the total, the figure would be 70 Millions. Of the sterling, over four million dollars worth is Provincial and nearly all of this for the Province of Buenos Aires. According to the memorandum (page 2) attached to Despatch No. 1940 of January 19,7 there would be a 12% reduction on this item. As will be seen from Enclosures Nos. 1 and 2, sixty millions would appear to be the figure contemplated.
Current Kemittances to the United Kingdom—180 Millions; Public Utilities—160 Millions
The only figures which I have so far on these two items are those in Enclosure No. 2 repeated in Enclosure No. 1. They are 150 Millions for merchandise. (Note: Imports of British merchandise last year amounted to roughly 180 Million Paper Pesos. According to British figures £10,663,101 exclusive of re-exports. The Buenos Aires Herald of May 12 publishes British Board of Trade figures for British exports to Argentina for the first quarter of the years 1931, 1932 and 1933 as follows in the order named: £5,033,260, £2,621,016; and £3,317,272, which would give this year an increase of from 26% to 27% over last, which probably corresponds to the fall in the Pound Sterling.)
For Account of Shipping Companies, 20 Millions
This figure does not appear to be included in the calculations made here. Doctor Pereda seemed to consider that it did not concern the Exchange Commission.
The authority for the statement contained in my telegram No. 40 of May 10, 7 [6?] P.M., establishing the order of precedence for [Page 733] British payments, was Doctor Pereda. According to Article II, Clause II of the Roca Agreement the distribution of Sterling exchange is to be settled by agreement between the Argentine and British Governments.
I will transmit further information whenever the same may become available.
Respectfully yours,