Memorandum by the Chief of the Division of Latin American Affairs (Wilson)
General Palmer E. Pierce, Chairman of the Council on Inter-American Relations, and Mr. E. P. Thomas of the National Foreign Trade Council came in. General Pierce said that they had this morning discussed with Ambassador Espil the possibility of negotiating an agreement for the liberation of American frozen commercial credits in Argentina which would take the lines of the agreement recently negotiated with the Bank of Brazil.
Mr. Thomas said that Doctor Espil had asked them to prepare a memorandum regarding this matter, which they would do. He said [Page 756]that Doctor Espil had at first taken the position that discussions regarding exchange should take place concurrently with the conversations which Doctor Espil would have with the State Department regarding the possibility of negotiating a commercial treaty.33 Doctor Espil had expressed the view that anything Argentina might be able to do to assist American interests in exchange difficulties would be dependent upon Argentina’s increasing her sales to the United States. Mr. Thomas, however, said that he had argued the contrary view with Doctor Espil. He felt that the exchange discussions should in fact take place first and if possible be settled before the commercial treaty discussions become very far advanced. His theory was that with the release of American frozen credits in Argentina there would be a stimulus in commercial exchanges between the two countries and an increase in the exchange value of the peso, and that this would tend to improve the commercial relations between the two countries. This, he said, was what had actually occurred in the case of Brazil following the conclusion of the exchange agreement with the Bank of Brazil. Mr. Thomas said that he felt that he had convinced Doctor Espil of this point of view.
I inquired what amount of American frozen credits it was estimated would be affected by such an agreement as they had in mind. Mr. Thomas said that the total amount of American frozen credits in Argentina was estimated at between forty and fifty million dollars. In the case of Brazil it had been found that only about half of the total amount of frozen credits had been turned in for conversion, the holders of the balance preferring to keep the milreis in Brazil. On this basis it was, therefore, estimated that $25,000,000 in Argentina would be turned in for conversion if it is possible to reach an agreement.
Mr. Thomas said that it was his group’s plan to take up the matter of an agreement on exchange with Colombia after an agreement had been reached with Argentina. He estimated that about $10,000,000 of American frozen commercial credits were involved in Colombia.