810.5151 Williams Mission/48
The Ambassador in Chile (Sevier) to
the Secretary of State
No. 167
Santiago, August 14, 1934.
[Received August
27.]
Sir: Referring to the Department’s instruction
No. 52, July 5, 1934, concerning the visit of Dr. John H. Williams of
the New York Federal Reserve Board and Mr. Donald R. Heath of the State
Department to study exchange conditions in Chile and other Latin
American countries, I have the honor to submit the following report.
The Financial Mission augmented by Mr. Eric Lamb25 arrived at the
airport at 4:30 P.M. on August 4th. The next day, Sunday, was devoted to
resting from the trip and studying the memoranda and other material
which the Embassy had prepared for use in discussing exchange problems.
In view of the extremely limited time which these gentlemen could spend
in Santiago, it was deemed desirable first to have a full round-table
discussion with the members of the staff in order that the Mission might
obtain all possible information from the Embassy; second, to hold
interviews with the more important representatives of American business
in Santiago including both those individuals who might be expected to
favor pushing for special treatment on frozen credits, those who because
of the interests of their companies might be expected to oppose such a
policy, and those who presumably would have a broad neutral view of the
situation. Following the interviews with the Americans it was felt that
the Mission should be presented to the Minister for Foreign Affairs,
hold an interview with Mr. Ross, the Minister of Hacienda, who is a
controlling factor in the Chilean policy of exchange and subsequently as
time permitted meet members of the Chilean Foreign Office, officials of
the Central Bank and other prominent individuals. Dr. Williams being in
entire accord with this procedure, on Monday morning a session took
place at the Embassy and in the afternoon discussions were held with Mr.
Leo Welch, the manager of the National City Bank in Santiago, and Mr.
George S. Laing, manager of the West India Oil Company, a subsidiary of
the Standard Oil Company of
[Page 39]
New
Jersey. The next day the following individuals were interviewed: Mr.
Philip Bonsai of the International Telephone and Telegraph, Mr. J. F.
Owens of the Compañía Eléctrica, Mr. Percy Seibert, of the Braden Copper
Company and Mr. Edward Craig, of Anaconda Copper Company, Mr. Horace
Graham, Director of the Compañía de Ventas de Salitre and Mr. Paul
Miller, Controlor of that Company. On Thursday morning a discussion was
held with Mr. Arthur J. Pack, the Commercial Secretary of the British
Embassy who outlined in some detail the experience of the British in
liquidating frozen accounts. At 11 o’clock Dr. Williams accompanied by
Mr. Scotten and Mr. Scott of the Embassy had a long interview with the
Minister of Hacienda. A memorandum giving a report of the conversation
which took place is enclosed. Later in the morning, the members of the
Financial Mission were presented to Dr. Cruchaga, the Minister for
Foreign Affairs, and subsequently had a conversation with Mr. Germán
Vergara, the Under Secretary for Foreign Affairs. On Thursday afternoon,
through the kindness of Mr. Bohan, the Commercial Attaché, a reception
was given at Mr. Bohan’s house where an opportunity was afforded for
meeting the following officials of the Central Bank and other important
Chileans: Sr. Guillermo Subercaseaux, President of the Central Bank of
Chile, Dr. Luis Schmidt, Vice President of the Central Bank of Chile,
Sr. Otto Meyerholtz, General Manager of the Central Bank of Chile, Dr.
German Max, Economist of the Central Bank of Chile, Sr. Fernando
Mardones, Director of the Budget, Sr. Anibal Alfaro, Director of
Municipal Budgets, Sr. Renato Márquezado, Chief, Comptroller General’s
office. Friday morning a final discussion and summary of work
accomplished occurred at the Embassy in which careful consideration was
given to the report of Dr. Williams embodied in the Memorandum dated
August 8, a copy of which is enclosed. In view of the very limited time
at the disposal of Dr. Williams he was unable to devote any space to the
question of the American retirement funds in the Caja de Empleados
Particulares. He discussed this problem orally, however, and it will be
the subject of a special memorandum.
It should be stated that Dr. Williams’ report represents the considered
views of the Embassy and the Financial Mission arrived at after a
complete discussion and debate on each phase of the subject point by
point. As it embodies in final form the combined opinions of the Embassy
and the Mission after all points of divergence had been eliminated or
compromised, the Embassy is not submitting a separate report but
recommends to the Department the favorable consideration of Dr.
Williams’ report with which, as above stated, it is in entire
concurrence. Pending the receipt of the Department’s instructions after
it shall have had an opportunity to study the question with Dr. Williams
[Page 40]
in Washington, the Embassy
will take no action toward any further negotiations with the Chilean
Government on exchange matters.
In conclusion the Embassy desires to take this opportunity of expressing
its appreciation of the helpfulness of Dr. Williams, Mr. Heath and Mr.
Lamb whose efficient and concentrated efforts in Santiago were of great
assistance in clarifying the complex exchange situation and were
particularly helpful in drawing forth new information which served to
throw additional light on the problem of American frozen credits.
Respectfully yours,
For the Ambassador:
Robert M.
Scotten
Counselor of
Embassy
[Enclosure 1]
Memorandum of a Conversation Between the Chilean
Minister of Hacienda (Ross) and Dr. John H. Williams, Mr. Scotten, and Mr.
Scott
Dr. Williams opened the interview by alluding in general terms to the
economic difficulties which he had found in the Latin-American
countries which he had visited and which were due, in his opinion,
largely to the drastic decline in prices and consequent falling off
of exports and to other causes which were nobody’s fault in
particular and beyond the control of the countries involved. Mr.
Ross at this point interjected the remark that that was true but did
not represent the whole picture of Chile’s difficulties, one side of
which was to find sufficient markets for its exports. The United
States, for example, was a creditor country, [and although?] wishing
to obtain remittance on its debts in Chile [it?] had shut out one of
the chief Chilean products from its markets, namely, copper, and
therefore it might be said that it was partly to blame for not
securing better remittances from Chile since it itself had destroyed
a large source of exchange for American needs. Dr. Williams replied
that he was inclined to personally agree with Mr. Ross on this point
but that the question of copper tariff represented certain political
and other considerations in the United States very difficult to
overcome.
Next, in reply to Dr. Williams’ inquiry concerning the present
economic situation in Chile, and what disposition the Minister of
Finance might be contemplating making of the excess exchange
availabilities which it was understood were now accruing, Mr. Ross
outlined his general policy as follows:
First, he stated that the general position of Chile was better but
that in reality appreciable surpluses of exchange were not being
created for the reason that Chile had been living off its own fat,
so to speak;
[Page 41]
that is, it had
been eating up stock of merchandise on hand which would need to be
replenished. Imports, therefore, would inevitably have to be
increased causing a corresponding drain on exchange availabilities.
Speaking in general terms about our treatment on exchange, the
Minister endeavored to drive home the point that a preponderant
share of exchange created by Chile’s exports came back to the United
States. Copper, for example, sold say at 7 to 8 cents in England and
of this price 6 cents returned to the United States.
Dr. Williams pointed out that this was another problem involving the
question of exchange used for financing charges, etc.
With regard to his policy concerning the rate at which the peso
should be held, the Minister stated that for the time being he would
attempt to hold it around its present level of 25 to the dollar;
this was necessary because the gold washing industry could not be
kept up if the peso appreciated much more than this, nor could
agricultural and certain other products be exported at a profit with
a higher peso. He added that he was looking toward stabilizing the
peso at about this rate with the gold dollar, that is to say, not
the old gold dollar but the new gold dollar if or when we went back
to a definitely stabilized gold standard.
With regard to the long-term bonds, the Minister of Finance stated
that he had not reached a final decision in the matter: that nothing
could be done for the moment but that he was absolutely clear on one
point, namely, that Chile would not sign any agreement whose
complete fulfillment could not be clearly foreseen. Having this
principle in mind, therefore, he was looking towards a settlement on
the bonds which would be in the form of devoting certain dollar or
sterling revenues to supply the service on these obligations. These
revenues would be derived from the Nitrate Sales Corporation and the
bonds would be placed on an income basis, the bondholders only
receiving a fluctuating income from the sources of revenue which had
been allocated for that purpose. Were an attempt made to settle the
long-term bonds on a fixed charge basis, the basis would be so small
as to be ridiculous and inacceptable.
Dr. Williams next attacked the question of our frozen credits calling
attention to the fact that in view of our well-known and traditional
policy in regard to insisting upon most-favored-nation treatment,
the United States Government had not been inclined to look very
complacently upon the granting by Chile of special exchange under
compensation treaties to certain countries for the liquidation of
their frozen credits; that as a result of his investigation in
Chile, he had found that the global amount of American credits in
Chile which could be classed as frozen was comparatively small and
that in view of these facts it would seem that Chile might make some
arrangement
[Page 42]
to supply
exchange at a preferential rate for the liquidation of these
American credits bearing in mind the fact that Chilean products
entered the United States free from control and that Chile had a
great stake in maintaining and augmenting its nitrate markets in the
United States. Dr. Williams added that obviously as the United
States had devalorized its dollar by 41% it would not expect
liquidation on the basis of the old dollar but that the rate of
16.55 pesos to the dollar would perhaps appear a fair one. The
Minister of Finance immediately countered by asking if we wanted a
compensation treaty similar to the French one. Dr. Williams answered
“no”, that such an arrangement tended to canalize trade in narrow
channels, would be restrictive and would not be advantageous to
either Chile or the United States. “No”, Mr. Ross replied, “it would
be disadvantageous to Chile but even more so to the United States.”
Mr. Ross then said unequivocally, “We will give you a compensation
treaty if you insist upon it to provide exchange at a special rate
but if you do not accept compensation, we will not furnish you
exchange at a rate lower than the current market rate. This”, he
added, “you can accept as a definite decision on my part.”
Referring to compensation purely on its own merits the Minister
pointed out that were the French scheme adopted it would take years
to liquidate American frozen assets. In this connection he referred
to the fact that the Germans had become convinced of the
disadvantages of the compensation system and had not renewed on June
30th their compensation treaty with Chile. Furthermore, he pointed
out the fallacy of the theory that special exchange is paid for by
the country in which the frozen credits are held. As it has worked
out, the funds that supply the special exchange are actually paid
for in the country imposing the compensation due to the fact that
nitrate is sold in such countries at an artificial price. For
example, nitrate is sold in the United States at $25.00 a ton, but
in Germany it is sold at $35.00 and in France at $32.00, and at
correspondingly high prices in Belgium and Italy. In receiving
nitrate quotas for those countries Chile is obliged to agree to sell
at no less than these prices. We might say, therefore, that in
France the French farmer is paying the cost of the liquidation of
the frozen funds of his compatriots at the preferential rate. (Note: The exact reason for this situation
was not made quite clear by the Minister and it was decided to
obtain more specific information on this point from the Nitrate
Sales Corporation.)
Touching for the moment on the relation of the problem of current
trade, the Minister points out that exchange availabilities for
compensation countries were held down to the amounts created through
the compensation agreements. The trade of these countries was
correspondingly restricted, therefore, as would be ours were we to
insist upon that type of arrangement.
[Page 43]
Reverting to the question of our frozen credits, the Minister stated
that he felt sure that they were not nearly as large as we had
perhaps supposed; that the sum total of these blocked funds had been
greatly reduced due to the fact that large amounts had been invested
or had been lost; that certain types of funds or investments such as
those held by the International Telephone & Telegraph Company
and the Compañía Eléctrica, were not properly classifiable as frozen
credits. In this connection he referred to his experience with the
British; that he had tried to get the British to give him an
accurate list of their frozen credits; that the first list supplied
had contained enormous sums alleged to be frozen credits; that,
however, when it came to the point of finding out exactly how many
pesos were in the bank awaiting transfer, the funds had shrunken
enormously.
In developing the discussion of the frozen credit problem, Dr.
Williams stated that of course he could not say what might be the
final position taken by the Department in the matter; that, as the
Minister was aware, the Department laid great stress on the
principle of most-favored-nation treatment and its deeply rooted
philosophy in this question might play a strong part in its final
decision. Laying this aside for the moment, however, he invited the
Minister to make whatever suggestion he cared to towards a practical
solution of the frozen credit problem. Mr. Ross replied that while
we had been arguing principles, he had been endeavoring to liquidate
funds as much as possible so that if the argument of principles
continued for a long enough time, a point might be reached where we
might agree on principles whose application however would be
unnecessary since the problem would have ceased to exist.
Specifically, however, the Minister suggested that we follow the
same procedure as the English, namely, make a complete list of our
frozen credits and all American funds, in fact, available in a
completely liquid form desiring transfer. The Minister could then
see his exchange problem as a whole and could make suitable
arrangements to supply exchange cover over a certain period of time
as exchange became available. Peso accounts would present only an
exchange problem but in the case of accounts due in dollars he
pointed out that the problem was more complicated and some
arrangement would have to be made as to finding a suitable rate.
Though not entirely clear, the implication was that it would be
difficult to force the Chilean debtor to buy sufficient exchange to
meet his dollar credits dollar for dollar but that some compromise
perhaps would have to be made between creditor and debtor on some
intermediate exchange rate.
The interview was closed by Dr. Williams and the members of the
Embassy staff bringing up the question of the retirement funds of
Americans in the Caja de Previsión de Empleados Particulares and
reminding the Minister that a satisfactory settlement of these cases
[Page 44]
was considered
indispensable. The Minister stated that he felt it was fair for
Chile to pay the funds of Americans residing outside of Chile in
full. Americans in Chile, however, he felt could not expect to
receive their dollars in full in view of the relative purchasing
power of the dollar in Chile to the peso. He asked for a list of
depositors and Mr. Scotten showed him a list which he had with him
which was transmitted to the Department in despatch No. 78 of March
28, 1934.26 The
Minister was informed that this list had been left months ago at the
Foreign Office. Our impression on the Caja matter was that the
Minister was disposed to pay the dollar and peso accounts in full to
Americans residing outside of Chile but that it would be very
difficult to obtain any special treatment for Americans who elected
to remain in Chile.
[Enclosure 2]
Memorandum by Dr. John H. Williams, August 8,
1934
During our stay in Chile, we have discussed the American exchange
problems in considerable detail with the Embassy staff which, in
advance of our arrival, had prepared two important memoranda, one on
“Exchange Problems in Chile” and one on “Exchange and Compensation
Factors affecting American Trade with Chile”. We then interviewed at
the Embassy in the presence of the Ambassador and the staff, a
number of Americans representing a broad variety of American
interests in Chilean industry and trade. These men, who were
interviewed individually, are:
- Mr. Leo Welch, Manager, National City Bank in
Santiago.
- Mr. George S. Laing, Manager, West India Oil
Company.
- Mr. Philip Bonsai, International Telephone and Telegraph
Company.
- Mr. J. F. Owens, Compañía Eléctrica.
- Mr. Percy Seibert of the Braden Copper Company.
- Mr. Edward Craig of the Anaconda Copper Company.
- Mr. Horace Graham, Director of the Compañía de Ventas de
Salitre.
- Mr. Paul Miller, Controlor of the Compañía de Ventas de
Salitre.
Accompanied by Mr. Scotten and Mr. Scott, I then had
an interview of an hour and a quarter with Sr. Gustavo Ross, the
Minister of Finance. As the situation stands here, Mr. Ross is the
final authority on all economic and financial questions and is his
own director of exchange control.
I.
There are four possible alternative policies for handling our
exchange problems in Chile:
[Page 45]
1) By compensation treaty, which would include preferential treatment
of frozen credits at the official rate of exchange, which in terms
of our old gold dollar would mean 16.55 pesos per U. S. dollar, and
in terms of the new gold dollar 9.6 pesos per dollar.
2) A general agreement with Chile, along lines already described in
the Embassy’s memorandum of March 27, 1934, but including also
liquidation of frozen credits on most-favored-nation terms at the
official rate of 9.6 to 1. This we understand to have been the State
Department’s position. This general agreement would give us freedom
from exchange control and an exchange rate on current trade equal to
that furnished compensation countries. In addition, by this
agreement Chile would undertake to repay in dollars those having
dollar deposits in the “Caja de Previsión de Empleados Particulares”
and to furnish dollars at the official rate of exchange to those
having peso deposits in the “Caja”.
We understand that the Chilean Government has been willing to accept
this agreement, in principle, in all respects except for its frozen
credits provision; but that the State Department in view of this
exception has not gone forward with the agreement, on the ground
that to omit the frozen credit provision would represent
acquiescence in less than most-favored-nation treatment with respect
to this item.
3) A general agreement on the lines of (2) above as to current trade
and the treatment of American depositors in the “Caja de Previsión”,
but with either (a) an agreement to liquidate
frozen credits at some other rate of exchange than the official rate
of 9.6 to 1, or (b) an understanding that an
equitable settlement along these general lines would be effected
privately between the Chilean Government and American holders of
frozen credits.
4) Acceptance of the status quo as to current
trade; a definite agreement on the lines already indicated with
respect to deposits in the “Caja de Previsión”; and acceptance of
the status quo as to frozen credits, but with
an understanding to be worked out, either by the State Department or
privately, as to the best practical method for resolving this
problem.
II.
In approaching the consideration of these four alternative lines of
policy we have borne in mind the long history of negotiations with
the Chilean Government concerning our exchange problems, during
which time the economic and trade position of Chile has materially
changed for the better. This improvement has occurred particularly
since the period of active negotiation began last November. Our
Government has consistently refused to consider the first plan
outlined above, a compensation treaty, on broad grounds of general
policy. In pursuing the second alternative, the Department in the
[Page 46]
beginning was evidently
much concerned with receiving most-favored-nation treatment with
respect to current trade. But partly by reason of the pressure
exerted through our Embassy, acting on the Department’s
instructions, and in large part, by reason of the general
improvement in Chilean trade, this problem has already been resolved
without any formal agreement, so that today we are in fact receiving
equal treatment with respect to current trade, exchange being made
available to our exporters at the export bill rate of 25 to 1 and to
the compensation countries at the official rate plus a premium which
equalizes the price of exchange as between such countries and
ourselves. A formal agreement, therefore, would accomplish nothing
more than legalization of the existing status
quo.
As the Department has consistently contended, such a formal agreement
is unacceptable if not accompanied by an agreement with respect to
frozen credits giving us in this respect also most-favored-nation
treatment. All of the compensation treaties contain a provision for
the liquidation of frozen credits at a rate which is better than the
export draft rate now applied to current trade. Our problem has been
how to secure equally favorable treatment on frozen credits without
consenting to a compensation treaty. If now we should negotiate a
general agreement with respect to current trade, and acquiesce in
Chile’s refusal to include in it most-favored-nation treatment for
our frozen credits, we should apparently be relinquishing what has
been, from the beginning of the negotiations, a major contention of
principle, for the sake of a general agreement which now can give us
little more than the treatment we are already receiving.
III.
Our visit to Chile has impressed us with the complicated character of
the frozen credits question. It is not easy to determine what would
constitute for us most-favored-nation treatment or how desirable
such treatment would be if we could get it. The French and other
agreements are based on the official rate of exchange (three pence
gold); in terms of our devalued dollar this would be 9.6 pesos for 1
dollar, but in terms of the old dollar it would be 16.55 to 1. It
can be argued that Chile was not responsible for our devaluation and
is entitled to consider 16.55 to 1 as its official rate. But to get
even this rate, which the Finance Minister firmly refuses except as
part of a compensation agreement, it would be necessary to consent
to a time schedule which might mean only very gradual liquidation.
In the French agreement 20 per cent of nitrate sales to France are
blocked to provide exchange for frozen credits, so that unless
nitrate sales are large liquidation is slow. A number of the
Americans interviewed,
[Page 47]
when
asked whether they preferred slow liquidation at a good rate or
faster liquidation at a worse rate put greater stress upon the
latter.
To provide exchange at the official rate for frozen credits, Chile
compels the Nitrate Sales Corporation to sell exchange at that same
rate, instead of at the much more favorable export draft rate. Since
the nitrate industry represents largely American capital, such a
solution of our frozen credits problem would be at the expense of an
American interest. Our nitrate representatives, moreover, point out
that since they use a considerable part of their exchange to buy
American imports (including oil products, motors, electrical
equipment, rubber, etc.), any such attempt to improve the position
of American exporters on frozen credits would worsen our position in
current trade. It should be pointed out, also, that most of the
compensation treaties include only a portion of the frozen credits,
so that they do not pretend to provide a complete solution of the
problem.
To determine an equitable rate for the liquidation of our frozen
credits or the amount that would be liquidated were exchange
offered, presents great difficulty. Part were frozen in July, 1931,
when exchange control was imposed; and when the rate was about 8 to
1; but in reporting frozen balances creditors include as well the
subsequent accumulations, when the rate was fluctuating from 8 to 60
to the dollar. A large portion of the frozen credits, moreover, has
been invested in property or in securities, and in some cases large
profits have been made. Some credits have been liquidated at the
export draft rate, including some 18,000,000 pesos in response to
two general offers made by the Finance Minister this year. Some
credits are now so tied up that they cannot or will not be
liquidated. This part includes 50,000,000 pesos used by Electric
Bond and Share to buy up its local 8 per cent debentures, effecting
an important saving in interest. It probably should include also
18,000,000 pesos of bank deposits belonging to the Telephone
Company, which appear to be destined, according to the local
representative for investment in Chile, in lieu of new capital from
abroad, to carry out expansion in accordance with the company’s
contract. Thus of 157,000,000 pesos of “frozen credits” reported to
the Commercial Attaché office in response to his questionnaire, our
inquiries would indicate that 18,000,000 pesos have been liquidated
and at least 68,000,000 pesos cannot or will not be liquidated,
leaving a total of about 72,000,000 pesos, which at the current
export draft rate is less than $3,000,000. What portion of this was
blocked prior to July, 1931, and therefore in equity entitled to the
official rate, and what part since that time, when the importer was
taking his chances, I am not able to determine. In addition, there
are some $4,000,000 of frozen credits in the form of unpaid drafts,
receivables, merchandise or other items requiring
[Page 48]
payment by the debtor in dollars. All
these, presumably, are in a different category, representing sums
not yet collected from the debtor (local importers, etc.). What
portion of these debts may still be good, and at what rates the
debtors should now be required to provide exchange present difficult
problems. But in general, it seems clear that the total amount of
collectible or transferable credits is substantially smaller than
had previously been supposed. In particular, it should be pointed
out that of the total estimated frozen credits (Feb. 21, 1934), only
53,800,000 pesos is represented by deposits in banks, and that from
this amount there must be deducted at least 31,000,000 pesos of
which 18,000,000 has already been liquidated this year at the export
draft rate and 13,000,000 represents the Telephone Company’s deposit
at that time. These deductions would leave about 22,000,000 pesos,
or less than a million dollars at the current export draft rate (or
$1,333,000 at the rate of 16.55 to 1).
IV.
Throughout a long interview the Finance Minister discussed freely his
present policy, but consistently refused to consider any better rate
for frozen credits except in connection with a compensation treaty.
I am satisfied that except in response to pressure in the form of
some genuine threat to Chile’s markets in the United States he
cannot be induced to alter this position.
His present policy with respect to exchange is to maintain the export
draft rate at 25 to 1, equally for all countries, as to current
trade, and to liquidate frozen credits at this rate, except as to
the compensation countries. He has induced the British to furnish
him a complete list of their frozen credits and has liquidated all
but £40,000 of the British credits willing to accept this rate. He
realizes fully, and pointed out in some detail, that some of the
American frozen credits do not properly belong in that category. He
has made two general offers to liquidate our frozen credits at the
export draft rate, and is convinced that he will in time succeed in
clearing up the problem by this method. He asked us if the Embassy
is able and willing to furnish a true list of frozen credits. He
dislikes compensation treaties and is convinced that they have
worked to the injury of the foreign countries which insisted on
them, and have resulted in a scarcity of exchange to finance their
exports. He points out that Germany has not renewed the treaty which
expired on June 30, 1934. He insists that the compensation countries
themselves provide the differential in favor of their frozen credits
in the high price for nitrate which prevails in these countries as
compared with the price in England and the United States.
[Page 49]
V.
My conclusion is that preferential treatment for frozen credits,
whether we mean by that treatment equal to that accorded to France
and other compensation countries or merely a preferential rate as
compared with current trade, cannot be secured except by a
compensation treaty or by some other form of definite commercial
pressure; and that in view of the relatively small size of the
genuine frozen credits now remaining and the complicated status and
character of these credits, making difficult the calculation of an
equitable preferential rate, it would be unwise and impolitic to
pursue such a course, since by it we would jeopardize the genuine
good will which now exists, and might impair a trade position which
appears to be distinctly favorable. If the Department should take
this view, there would remain the question whether it wished,
possibly after discussion with the American interests at home and in
Chile, to acquiesce in the Minister’s request for a list of American
frozen credits, to be provided through the Embassy, as the British
have done, or would consider that such a list should be provided by
the private interests concerned.
If this policy were pursued with respect to frozen credits, the
broader question would be whether it is still advantageous to
negotiate a general agreement respecting current trade. My present
view, which as yet is merely tentative, is that in view of the fact
that we are now receiving without agreement as good treatment on
current trade as could be had by means of an agreement, there is
little to be gained by a procedure which would involve a formal
relinquishment of our contention for the principle of
most-favored-nation treatment with respect to frozen credits. I
should therefore be inclined to favor the fourth of the alternatives
outlined in section I of the present memorandum.
