The Chargé in Uruguay ( Dominian ) to the Secretary of State
[Received August 20.]
Sir: I have the honor to refer to my despatch No. 687 of August 1, 1934,7 which indicated that the question of exports of Uruguayan [Page 645] meat would figure largely in any treaty negotiations carried on with Uruguay.
At various times in the course of the exchange discussions8 of the past fifteen days I had noted the recurrence of a statement made by Uruguayan officials to the effect that the importation into the United States of 30,000 tons of Uruguayan meat per year in addition to the amount already imported would solve present exchange difficulties. The Uruguayan officials appeared to think that sufficient dollar exchange would then be available in Uruguay to permit payment of obligations on the country’s external debt bonds held under American ownership and provide for trade requirements in the amount necessitated for the transactions now taking place.
The relatively restricted quantity of additional meat which the official supervisors of the Uruguayan export trade would be pleased to place in the United States may seem to be worth considering in order that the position of advantage which American trade is gradually acquiring in Uruguay should not be hampered by any difficulties due to scarcity of dollar exchange.
The information available to the Legation seems to indicate that the average cost per ton of Uruguayan export meat is $110.00. Accordingly, an amount of approximately $3,300,000 in additional dollar exchange would enter Uruguay yearly in case exports to the United States would be increased by the 30,000 tons suggested in Montevideo.
According to the estimates of the Director of the Bank of the Republic, where foreign exchange operations are controlled, the present yearly requirement of dollar exchange amounts to over 12,300,000 pesos, distributed in the following manner on the basis of 1933 figures:
|Pesos Paid in 1933|
|Interest and amortization on five year gold bonds||1,316,000|
|Service on other bonds||6,190,000|
The value of United States imports from Uruguay for the year 1933, according to the official United States statistics compiled by the Department of Commerce, attained $3,772,861.00. This figure represents dollars which have not been adjusted for depreciation of the dollar from its former gold parity during 1933. In view of the existence of various rates of exchange, known as official, gray and free, it is impossible to convert with any accuracy into dollars the peso amount of the distribution table submitted in the previous paragraph. It would seem, however, that the 4,800,000 pesos estimated for trade requirements at the Bank of the Republic correspond to $3,772,861.[Page 646]
The Department is aware through reports from the Legation and the Consulate General that whereas in 1933 exports from the United States to Uruguay conferred the fourth place to the United States in the list of exporting countries to Uruguay, the first six months of 1934 indicate that American exports now give the United States the third place on the same list.
According to Uruguayan statistics our exports to Uruguay during the first half of 1934 amounted to 4,663,901 pesos, while our imports for that period were valued at 4,071,663 pesos. In the first six months of 1933, the United States sold 2,532,622 pesos worth of goods to Uruguay and bought 1,909,123 pesos worth of Uruguayan goods. These figures indicate that while the volume of trade between United States and Uruguay is growing, Uruguay’s unfavorable balance is declining. The figures for the first half of 1934 indicate that this unfavorable balance is now 6.8% in its relation to the total trade whereas in 1933 the percentage was 14%.
With the restrictions now being introduced by the Uruguayan Government, particularly with regard to the bill now before the Uruguayan Congress embodying the Government’s decision to forbid the importation of products for which an import license had not previously been obtained, the prospect for a continued advance in the position which American trade is acquiring seems less favorable. The question, hence, arises as to whether the importation of 30,000 tons of meat yearly, as suggested in Uruguay, is of sufficient interest to the American export trade to Uruguay.
My personal impression is that the tonnage suggested in Uruguayan official circles is a maximum figure probably to be set forth eventually for negotiation purposes. For the sake of precision I may add here that the term official circles in this instance refers to the Commercial Section of the Ministry of Foreign Affairs and the office of the Director of the Bank of the Republic which supervises foreign exchange transactions.
In the conversations which I have had on recent occasions with Uruguayan officials, I have made it a point to lay stress on the present situation in the agricultural regions of the United States in order to impress them with the difficulties existing in the way of any increase in agricultural importations to the United States.
With regard to the scarcity of dollar exchange to which Uruguayan officials allude when talking about payment of interest and amortization services on bonds held under American ownership, I have always pointed out that maintenance of debt service payments was an obligation assumed by the borrowers and that commitments of this particular type should be met irrespective of the amount of exchange available from the particular country to which debt service payments [Page 647] were to be made. I have expressed, as my personal opinion, that surpluses of foreign exchange from countries with which Uruguay had a favorable trade balance could be utilized for interest and amortization service on Uruguayan bonds held abroad to the greater advantage of Uruguayan credit.