835.5151/290

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

No. 253

Sir: I have the honor to enclose herewith a memorandum from Dr. Dye, the Commercial Attaché, on the subject of the compensation of American fruit shipments with Argentine fruit shipments. This memorandum was prompted by a letter I received recently from Holtorf and Lindner, Inc. of New York City, enclosing correspondence on this [Page 517] subject with the Department and with the Argentine Ministry of Finance.

Respectfully yours,

Alexander W. Weddell
[Enclosure]

Memorandum by the Commercial Attaché in Argentina (Dye)

The correspondence of Messrs. Holtorf & Lindner, Inc., taken as a whole assumes the position that the United States Government should insist that the exchange derived from the sale of Argentine fruit to the United States should be set aside for the payment of American fruit shipments to Argentina and more specifically, that the exchange derived from the shipment of grapes to the United States should be set aside to pay for the shipment of American apples to Argentina, and that the United States Government should insist strongly upon this being done.

It also suggests that in order to enforce this position, an embargo should be placed on shipments of Argentine grapes to the United States’ until such time as the Argentine Government agrees to compensate fruit shipments in one direction with fruit shipments in the other.

In my opinion, while this might be satisfactory to the exporters and importers of fruit, particularly grapes and apples, it would damage our export trade to Argentina as a whole. The Argentine Government has definitely assumed the position that the exchange which derives from the sale of Argentine products to any country will be devoted to the imports from that country but that no more exchange will be given than derives from such sales. It is a position into which the Argentine Government was practically forced when it concluded the Roca Agreement with the United Kingdom, whereby they agree to give Great Britain all the exchange which derived from the sale of Argentine products to Great Britain except a certain sum which was to be set aside for service on their public debt. Other nations having “most favored nation” clauses in their treaties with Argentina, thereupon demanded the same treatment and agreements have successfully been made with the Netherlands, Belgium, Switzerland and other countries on the same basis. Therefore, by the process of elimination the exchange position has reached the point where only the exchange is left which derives from the sale of Argentine products to the United States’ to be utilized for imports from the United States.

For the past twenty-five years, as a general average, our exports to Argentina have been almost double our imports from Argentina. If we, as a government, assume the position that we will be willing to accept the arrangement that the exchange derived from the sale of [Page 518] Argentine products in the United States will be devoted to the purchase of American products and no more than that, we must immediately resign ourselves’ to a considerable decrease in our export trade to Argentina. Consequently, I do not believe that the United States Government should agree in principle to the balancing of our trade with Argentina.

The position evidently assumed by Holtorf & Lindner, however, is that the trade as a whole should not be taken into consideration but that only the exports of fruit and that we should insist on fruit shipments to the two countries’ balancing. However, if we were to take that position and take up commodity by commodity, there would be a large number of commodities for which no protection would be available.

They also suggest that an embargo should be placed on Argentine grapes in case the Argentine Government does not agree to this arrangement. However, at the present time, the State Department has no power to place such an embargo and only Congress has the power.

All of the above merely presents well-founded objections to the procedure suggested by Messrs. Holtorf & Lindner but they have a right to ask what specifically we propose to do about it as to present merely negative arguments is not sufficient. The immediate reply is that there is only one thing under the present circumstances which can be done, and that is for Congress to give the President of the United States the power to adjust international trade by means of treaties and leave in his hands the power to put an embargo if such should be necessary, or to raise or lower tariffs in an endeavor to secure a world-wide adjustment of our international trade.

As I see it, that is the only specific remedy which can be applied at the present moment. Whether such a remedy is to the interest of the United States as a whole is for the Congress of the United States to decide and it is quite possible that before a reply could be received by Messrs. Holtorf & Lindner in the United States, the Congress will already have decided the matter.