Foreign Relations of the United States Diplomatic Papers, 1933, The American Republics, Volume IV

835.5151/124

The Chargé in Argentina (White) to the Acting Secretary of State

No. 2097

Buenos Aires, June 2, 1933.
[Received June 12.]

Sir: I have the honor to report that the dissatisfaction which has existed during the past months with the Exchange Control Commission has been greatly intensified of late, at least in so far as American business and banking is concerned, by the hindrances which it is placing in the way of securing dollar exchange.

The theory which is finding ever greater acceptance with the Argentine financial authorities is that it is the sale of Argentine produce which originates exchange, and the countries which buy most will get most permits. Whatever may be thought of this policy, it at least affords a working rule.

Since the month of April, the American demand for Argentine hides and wool has greatly increased, so that it is expected that for the past month the ordinary norms of trade will be reversed and Argentine exports to the United States will exceed imports from our country.

Notwithstanding that this situation ought to be viewed favorably here, the Exchange Control Commission has done nothing to help the movement, but rather the reverse. This body is composed of one or two specialists, who really control its administration, and some other citizens of prominence, who not being specialists, and having other business to attend to, let things go their way. None of the members of the Exchange Committee can devote all their time to its work. While each bank is represented sooner or later in turn on the Exchange Commission, these temporary members are in fact merely spectators. Among the specialists is one non-Argentine, an officer of an European bank, who is freely charged by Americans with being Anti American and using his position to give business to his institution. Whether this accusation is just, I am not in a position to pronounce; but the mere fact of the inclusion of such a foreigner is sufficient to give rise to such charges. This individual has recently had additional power, by reason of the illness of another expert who usually has most to say in matters of United States exchange.

On May 31st, there appeared a circular to all banks, which is quoted in the enclosure. This places the dollar in a position of inferiority with other currencies. It is claimed by the Commission that this was not its intention; but the terms none the less are sufficiently clear.

Although I understand that the Minister of Finance has been made alive to the situation and is considering means of remedying it, this particular circular is still in force, so, with the approval of the two American banks, I requested as of urgency an interview with the Minister of Foreign Affairs and left the enclosed memorandum with him. He promised that it would be forwarded to Doctor Hueyo in half an hour’s time.

Respectfully yours,

J. C. White

[Enclosure—Translation]

The American Embassy to the Argentine Ministry for Foreign Affairs

Memorandum

The following circular instruction was addressed by the Exchange Control Committee to all the banks of the city on May 31:

“Please be informed that from this date on, all permits of exchange granted by this Committee to be applied to transfers in United States Dollars, must be exclusively covered with dollars which the Bank buys through exportations to the United States.

“Furthermore, it is established that permits granted for the payment of collections or other transfers in Dollars, may be liquidated solely in that currency, it being necessary to obtain previous permission from this Committee in order to apply them to sales in other currencies.

“Should the Banks encounter difficulties in acquiring the amount of Dollars necessary to cover the permits granted, they will inform the Committee.”

This circular is prejudicial to the United States because it places the dollar in a position which makes it the only currency in which it is not possible to operate freely.

It imposes the application of dollar exchange arising from the purchase of Argentine products by the United States to the liquidation of drafts drawn in Dollars covering Argentine importations of European and other products.

It also permits the arbitrage of dollars into other currencies but does not permit the inverse operation. For example, an obligation in dollars must be covered with dollars and dollars only, unless special permission is obtained which would not only be difficult but also inconvenient to obtain.

On the other hand an obligation in any other currency may be covered by the purchase of drafts of the same currency or by buying foreign export bills in dollars arising from United States purchases in Argentina and converting them abroad in the currency required.

Buenos Aires, June 1, 1933.