Memorandum by Mr. Willard L. Beaulac, of the Division of Latin American Affairs

Article 2, paragraph 3 of the Roca Agreement states:

“Out of the sterling exchange becoming available in accordance with the provisions of paragraph 1 above for remittance to the United Kingdom from Argentina during the year 1933, the sterling equivalent of 12,000,000 paper pesos shall be set aside for payment in cash, up to an amount in respect of each claim to be agreed between the Government of the United Kingdom and the Argentine Government, of claims in respect of peso balances awaiting on the 1st May 1933 sterling exchange for remittance to the United Kingdom”.

No similar provision was made in the agreement of December 1, 1933, between the Government of Argentina and the holders of American blocked funds.

It is understood that the 12,000,000 paper pesos provided in the Roca Agreement have been applied to unblocking small balances. A similar procedure would be extremely helpful to American holders of small blocked balances, since the smallest unit of blocked funds which may be converted under the agreement of December 1, 1933, is 10,000 pesos, equivalent to $3,876.60.

The committee which negotiated the agreement on December 1 has informed the Department that in the negotiations the Argentine Minister of Finance took the position that the 12,000,000 paper pesos provided under the terms of the Roca Agreement for the partial payment in cash to the British owners of blocked balances was a part of the trade agreement with the British, and that no relative or proportionate arrangement could be made on behalf of the owners of American blocked balances, for cash payment, excepting as a result of the trade arrangement between the United States and Argentina.

The committee also requested a specific understanding that any additional exchange arising from increased Argentine exports to the United States in the future over the average of the past three years should be definitely assigned to the earlier amortization of the monthly notes extending over fifteen years which Americans have accepted. The Minister replied in this case also that such an understanding should be made part of any trade agreement negotiated between the United States and Argentina.

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The committee has expressed the hope that if such an agreement is not practicable, definite provision will be made that such increase in the value of Argentine exports to the United States would be applied to the provision of exchange for future imports from the United States, and for the transfer of earnings from American investments in Argentina, and for any liquidation of any blocked balances which will not have been converted into notes under the terms of the agreement of December 1.

It is significant that this committee, which is important enough and so representative of American business in South America as to have been able to negotiate exchange agreements with both Brazil and Argentina, addressed a telegram to the Secretary of State upon his departure for Montevideo41 in which it said:

“Our negotiations now pending with Argentine Government if successful in enabling refunding over thirty million dollars American blocked balances should have relatively similar results (similar to results of Brazilian agreement), provided however it is recognized in any reciprocal trade agreements with Argentina as with other countries that provision for prompt and adequate future supply of dollar exchange for American imports is inherent to continuance of reciprocally satisfactory trade agreements [relations], as otherwise trade agreements must fail of effective results as Americans cannot continue or increase business with Latin American countries with seventy-five million dollars already blocked in such countries without assurance of obtaining promptly dollar remittances both for their exports and for earnings from American investments.

“This and any other reciprocal trade agreements with Latin American countries may be rendered futile unless concurrently provision is made for adequate dollar exchange as essential part of all trade agreements that insure equal treatment in provision of exchange by such countries as will be accorded by the United States for their imports into this market, and as may be accorded other countries by Latin America.”

  1. For correspondence concerning the conference at Montevideo, see pp. 1 ff.