The Ambassador in Argentina (Bliss) to the Secretary of State

No. 1914

Sir: In my telegram No. 107 of December 14, 1 p.m., and in the closing paragraph of my despatch No. 1895 of December 13, reporting on the proposed plan of the Minister of Finance of the Province of Buenos Aires for the payment of sinking fund and interest on the provincial debts, I stated that I had been informed he had referred the matter back to the British and French Councils of Foreign Bondholders. This statement was made on information given me by Mr. Muller (see page 4 of despatch No. 1895) who told me he had, at the request of the Provincial Minister of Finance, Dr. Indalecio Gómez, drafted a telegram to be sent by the Minister to Paris and London.

I now have the honor to report that La Nacion having published on the 23rd instant an account of the proposed plan of Dr. Gómez, I conversed with Mr. Muller who told me that, having read the article in La Nacion, he had interviewed Dr. Gómez and learned that, contrary to the indications the Minister had previously given him, the matter had not been taken up, except in a very informal manner, with Paris and London. Mr. Muller also told me Dr. Gómez informed him that he intended to present his proposal to the Provincial Legislature on Monday, December 26. I asked Mr. Muller please to inform Doctor [Page 771] Gómez that in view of this information and of his having been to see me regarding his plan for payment of interest on the loans, I wanted him to know I intended to take up the matter informally with the Minister for Foreign Affairs. Mr. Muller reported that Dr. Gómez did not seem surprised at my message, merely asking to be kept informed of any developments in the ease.

However, Dr. Saavedra Lamas having planned to be out of town for the weekend, I was not able to see him until the 26th. There is enclosed herewith a copy of a memorandum of my talk with the Minister for Foreign Affairs from which it will be seen that he said he would talk with Dr. Indalecio Gómez.

Although it had been the intention to submit the plan to the Provincial Legislature on the 26th instant, this was not done until yesterday. In the law submitted to the Legislature by the Provincial Government, it is proposed to suspend for a period of three years, from January 1, 1933, the payment on the sinking fund of the Provincial public debt, excluding the loans authorized by the law of October 18, 1932. The proposed bill further authorizes the Executive Power of the Province to effect, during that three-year period, a partial payment of the interest on all or a part of the foreign loans, the Executive Power being authorized to issue certificates, carrying an interest not to exceed five per cent., for the balance of interest due.

The bill further provides that beginning January 1, 1936, the Provincial Government shall renew the payment on the interest and amortization of all loans, the sinking funds being devoted in the first instance to the cancellation of the said certificates, following which the sinking fund will be paid in normal ratio. It further provides that after an examination of the financial situation of the Province in the years 1933 and 1934, full payment on the service of the debts will be renewed if circumstances permit.

It would seem from the main features of the bill as outlined above that there is still a possibility for the Minister of Finance to endeavor to reach an agreement with American bondholders for the payment of interest on loans floated in the United States and to try to reconcile such an agreement with the original agreement made with European holders.

I shall continue to follow this matter closely, bearing in mind that any representations I may make, either to the Minister for Foreign Affairs or to the provincial authorities, should be made informally, confining myself to an endeavor to prevent definite action being taken which would appear to discriminate against American interests.

Respectfully yours,

Robert Woods Bliss
[Page 772]

Memorandum by the American Ambassador (Bliss) of a Conversation With the Argentine Minister for Foreign Affairs (Saavedra Lamas), December 26, 1932

I called by appointment yesterday afternoon at four o’clock on the Minister for Foreign Affairs. In opening the conversation, I recalled that he had invited me to his office to talk with him and the Minister of Finance of the Province of Córdoba at the time a difficulty was being experienced between the American bankers and the Cordobese Government regarding the arrangements for payment of the American loan and that therefore he would permit me to bring up a matter regarding loans in which Americans were interested with another Province. I then explained to him that Dr. Carlos Indalecio Gómez had recently been to see me twice to acquaint me with the arrangements he had made with British and French bankers regarding the service on the Buenos Aires loans but which he found were not acceptable to the banking interests representing American holders of the provincial bonds. I explained these arrangements to Dr. Saavedra Lamas and stated the reasons why they were found to be discriminatory against American interests. I also told him that having learned that Dr. Gómez intended to present his proposals to the Buenos Aires Legislature yesterday, I had asked last Friday if Dr. Saavedra Lamas could receive me in order to bring this matter to his attention, at the same time having sent word to Dr. Gómez that in view of his initiative in coming to me and our frank talks, I wanted to tell him I was going to bring up the matter with the Minister for Foreign Affairs. At the same time, I pointed out that my informal conversation with him was prompted by the desire to bring to his attention a proposed action on the part of a Provincial Government which, if ultimately carried out, would result in an unwarranted discrimination against American holders of provincial bonds while favoring those of Great Britain and France.

After listening to my full explanation, the Minister said that perhaps Dr. Indalecio Gómez was desirous of submitting his project to the Legislature in order that some member thereof might object to the plan as being unfavorable to American interests and thus give Dr. Gómez an opportunity to get out of the compromise in which he found himself with the French and British Councils of Foreign Bondholders. In any event, he said he would take up the matter with Dr. Gómez and talk with me about it again.

R[obert Woods] B[liss]