Foreign Relations of the United States Diplomatic Papers, 1934, The American Republics, Volume IV

835.5151/309

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

No. 283

Buenos Aires , May 18, 1934.
[Received May 28.]

Sir: In reply to the Department’s telegraphic instruction No. 49 of May 16, 2 p.m. concerning blocked peso balances, I hereby submit the following report on each of the five points raised in the Department’s telegram. This report has been prepared in collaboration with Consul General A. M. Warren, as well as with the Commercial Attaché, Dr. Dye, and has the approval of both of them. An additional report will be submitted shortly.

1: The best estimates of the total sums blocked are from 150,000,000 to 200,000,000 paper pesos. Any estimate as to the total held by principal nationalities is very difficult. Estimates of the balance held by Americans range from 35,000,000 to 60,000,000 pesos. It is probable that 40,000,000 is a fair figure. It is not believed that the British hold very large balances, although they do hold some blocked pesos. The estimate of the Italian blocked pesos is from 15,000,000 to 18,000,000 pesos.

2: The percentage of the American total represented by accumulated earnings on investments in Argentina and the principal holders of blocked accounts in this category, together with the approximate amounts held by them, can be determined only after patient and long continued personal investigation. The principal holders are the West India Oil Company, the International Telephone and Telegraph Company, the Westinghouse Electric Company, and possibly the International Harvester Company, the Ford Company and General Motors, although it is believed that recently the latter Companies have been clearing out their frozen accounts by buying in the open market. However, the Managers of these Companies in Argentina object to making known, even in a confidential way, the exact amounts of their holdings. A quicker and more definite way of ascertaining this total would be to consult the head offices of the larger Companies operating in Argentina, and a practical method of beginning would be to take the list of those who subscribed to the last issue of frozen pesos, which can be secured from the Foreign Trade Council in New York.

3: No action has been taken or recommendations made by the special exchange committee of the American Chamber of Commerce because that committee was a fact-finding committee which has investigated the subject and made its report and is taking no further action. No action has been taken by groups representing other nationalities except the Association of Importers, which comprises many nationalities. Their action was primarily directed to secure relief from the Government’s decree of November 28, 1933, depreciating the peso and causing tosses to importers who had already sold goods imported on the basis of contracts made at the rate of exchange in force prior to November 28, 1933. That committee was not primarily a committee for the unfreezing of peso balances. As a matter of fact, the members of this committee do not, except in part, represent the holders of frozen balances.

4: Opinions of informed American business men and bankers regarding the Argentine Government’s latest proposal are held in suspense awaiting the return of the Minister of Finance in order to see just what is proposed to other nationalities, as there is no basis for action at present except an official statement issued to the press by the Ministry of Finance, a copy of which was sent in the Commercial Attaché’s report of May 8. In this statement outlining the operation proposed to the Italian Government by the Ministry of Finance, it will be noted that the Ministry states its intention to grant similar offers to other importers. The Embassy is endeavoring to secure a copy of the actual agreement signed between the Italian Embassy and the Ministry of Finance.

5: In my opinion, no action can be taken at present and this is the consensus of opinion of all bankers and business men who have been consulted. While this is a personal opinion, I do not believe that our own Government should take any position at all until it is determined in Congress whether the President shall be given powers to negotiate reciprocal trade agreements. Certainly no position should be taken until we have more definite information from the Argentine Ministry of Finance, which will probably be forthcoming within a few days.

Respectfully yours,

For the Ambassador:

Eugene M. Hinkle

Second Secretary of Embassy