835.5151/137
The Chargé in Argentina (White) to the Acting Secretary of State
[Received July 10.]
Sir: I have the honor to refer to the Department’s telegram No. 44 of June 26, 4 p.m. and to the Embassy’s reply No. 59 of June 28, 5 p.m., in regard to Argentine exchange control.
In view of the statement attributed to the Consul General on the strength of trustworthy banking sources to the effect that the Exchange Control Commission is embarking on a policy of allocating exchange of currency to British petitioners in accordance with the provisions of the Anglo-Argentine Treaty, I inquired of the First National Bank of Boston and of the National City Bank of New York whether it was thought that the distribution of exchange was at present being effected in accordance with the Roca agreement. The officer of the first named institution whom I interviewed stated that he was not prepared to answer in the affirmative. The granting of exchange permits was influenced by various factors; for instance, the higher price of grain, which was increasing the value of Argentine exports, helped to make the exchange situation easier. Another factor in the same sense was that the Argentine Government had already made its arrangements for payments on account of its external debt during the first six months of this year. My informant from the National City Bank was rather of the opinion that the Roca exchange purchases were not operating well and that many British claimants for exchange were not satisfied. On the other hand, the terms of the agreement provide that it should go into effect on the date of the signature, and I am informed that various British applications for exchange are being passed upon at the British Commercial Attaché’s office.
It is well to remember, however, that the Roca Agreement is only one aspect of the problem, as the theory has been adopted by the Minister of Finance that exchange should be distributed in proportion to the purchases of Argentine goods by the respective countries. The effect of this, if carried out, would naturally be to upset the normal distribution of goods. For instance, according to official figures, Holland received in the first five months of the present year approximately 11,850,000 gold pesos worth of Argentine goods, whereas the Dutch goods coming to Argentina during the same period amounted to about 3,724,000 gold pesos. This discrepancy of over eight million pesos, which may be compared with the excess of 11.36 million pesos gold of United States sales to Argentina over Argentine sales to the United States raises the question as to how the Argentine theory would work in this case. Would the Argentine public be compelled to consume [Page 749] eight million pesos more of Dutch products and eleven millions less of American automobiles, etc., or will the permits available for Holland be applied for, let us say, American purchases? Naturally the difference between exports and imports from Great Britain of over twenty-seven million pesos for the same period is more serious as Great Britain is a manufacturing country and therefore more likely to compete with American exports.
Apart from the alarm of the Argentines at the possibility of their meat sales to Great Britain shrinking and which caused them to accept the exchange provisions embodied in the Roca Agreement to which they were at first refractory, the Argentine theory of exchange control is, in a sense, a sort of club to be brandished in the hope that by so doing it will maintain and possibly increase the foreign market for Argentine products, which is at present affected by various restrictions. An instance in this sense would appear to be Spain which, after endeavoring to use retaliatory methods, found that being a country which exports to Argentina more than it imports, and [it?] was obliged to come to terms. The negotiations at present in progress have as their object, as the Minister of Finance told me, the equalizing of the sales and purchases of the two countries and there are also negotiations for a loan to unblock exchange. These negotiations contemplate a new commercial treaty.
The other evening, the Minister of Finance was dining at my house and he expressed the desire to discuss the trade situation between the two countries. I replied I was entirely at his disposal for any time he might name and it is possible he will invite me to confer. However, he also observed that the United States had received ninety million pesos of exchange allotments which was a sum entirely out of proportion to the United States purchases of Argentine products. He told me that in the negotiations in regard to the tariff clauses of the Roca Agreement, the British were endeavoring to obtain discrimination in favor of their automobiles. This I suppose could be done without violating the most-favored-nation clause by adjusting the taxation according to specifications of cylinder bores, etc., which would be favorable to British makes.
I feel reasonably hopeful that as long as the Economic Conference lasts it will be possible to obtain adequate consideration of American interests, but when that is over, unless something very definite has been accomplished that will facilitate commercial relations between the two countries, the United States will have to consider giving some facilities to Argentine exports such as they do not at present possess, at the risk of incurring discrimination against American interests here.
Respectfully yours,