835.5151/305
The Consul General at Buenos Aires (Warren) to the Secretary of State
[Received May 14.]
Sir: I have the honor to transmit for the Department’s information the substance of reports given me confidentially this week by the management of American banks in Argentina.
Unblocking arrangements to free foreign exchange that began with the Roca Agreement in October and afterwards with importers of British, American, Spanish, Italian, German, and Dutch nationalities, released approximately four hundred million paper pesos in bonds, ranging from fifteen to twenty years maturity and at conversion rates much more favorable than current official exchange.
There is a strong and increasing demand in Argentina for imported goods. Importers of all nationalities still have frozen something more than one hundred million paper pesos, partly representing peso credits frozen before agreements were made and partly accumulated in the [Page 520] last three months. There is not sufficient exchange available, either at the official rate permitted by the Finance Ministry, or at the free bank rate under import license, to relieve the accumulated pressure.
Under the auspices of the Buenos Aires Exchange (Bolsa de Comercio), importers of all nationalities have made representations to Dr. Pinedo, the Minister of Finance, that they plan, within the next ten days, to stage a demonstration of protest against exchange restriction unless the Government suggests remedial action immediately available.
It is reported to me confidentially that the Minister has under consideration and is prepared shortly to announce, a plan that will be available to all importers without respect to nationality. It consists in a scheme to unblock all remaining frozen exchange, attributable to imports, in five year Argentine Government notes, guaranteed as to interest, amortization, and maturity by this Government. The notes are to be offered in all denominations over one thousand pesos and are to be amortized ten per cent each six months until maturity, with interest at two per cent. The exchange conversion is proposed at the current official rate, which is now fluctuating widely with the growing weakness of the peso and the prospect of further official inflation.
It is not possible to report at this time the probable date the Minister will make public his proposal, nor the probabilities of its acceptance by the importing interests, in view of the fact that the arrangement is not yet generally known in the market.
Respectfully yours,