810.5151 Williams Mission/67
The Ambassador in Argentina (Weddell) to the Secretary of State
[Received November 26.]
Sir: I have delayed replying to the Department’s Instruction No. 143 of October 5, 1934, in order to forward at the same time a report on the balance of payments between Argentina and the United States, which was being prepared by the Consulate General.
Before reporting to the Department on American foreign exchange difficulties in Argentina, Dr. Williams freely discussed the problem with both the Embassy and the Consulate General. In my despatch No. 380 of August 13, 1934, on “Argentine Blocked Funds Held by Americans”, I reported that shortly after Dr. Williams’ departure from Buenos Aires, the exchange situation had improved to a considerable extent by the marked appreciation of the peso at that time, permitting many holders of blocked funds to liquidate their accounts with no great loss to themselves.
I further advanced the view that the best interests of the United States would be served by a constructive general policy to be applied to all Latin America for the encouragement of the ultimate release of exchange quotas. The alternative to such a policy, it was stated, [Page 538] was a strict bargaining which might arouse resentment where the United States holds a favorable balance of exchange, and which would undoubtedly restrict further such exchange as is now given to American importers where our exchange position is unfavorable, as in this country.
The yardstick for future exchange treatment accorded American importers would doubtless be the amount of United States imports of Argentine agricultural and meat products. Argentina has used its exchange restrictions as a means of exacting trade agreements with other countries, and I can see no reason to doubt that it is similarly using them vis-à-vis the United States. In the Embassy’s despatch No. 454 of October 19,15 I pointed out that in the opinion of one of the leading American banks here the Argentine authorities are making no effort to facilitate American imports to this country, presumably for the purpose of putting pressure, through American commercial interests, on Washington to conclude a reciprocal trade agreement beneficial to Argentina. This point of view is shared by many Americans in business in this country. And, as reported in the Embassy’s confidential despatch No. 471 of November 2,15 an official of the Ministry of Finance, recently admitted as much to a member of the Embassy staff.
The interest taken by Argentine officials in the forthcoming trade discussions in Washington is self-evident. Both the President and the Minister for Foreign Affairs, knowing that I shall be leaving shortly for the United States, have within the past few days expressed their lively hope that the coming months may see the conclusion of a mutually satisfactory reciprocal agreement, especially one which would admit to our markets a modicum of Argentine meat.
There is enclosed a statistical statement on the balance of payments between the United States and Argentina for the first nine months of 1934,15 which the Consulate General has obtained from the Argentine Exchange Control Commission. The latter office stated that these figures represented such facts as were now available. The Consul General has informed me that the American banks in Buenos Aires, which were approached for an estimate of the amount of free exchange provided in order to arrive at the real as opposed to the apparent balance of payments, advised that they are unable to make an estimate on the grounds that there has been arbitrage in considerable amounts in dollars and that requests for official exchange in substantial amounts are still pending while the actual exchange has been purchased in the open market so that in effect some amounts of official exchange may be said to represent anticipations.
Respectfully yours,