[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
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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.
