833.51/599
The Chargé in Uruguay (Dominian) to the Secretary of State
[Received July 23.]
Sir: Confirming my telegrams No. 47 and 48 of July 12, 6 pm. and July 13, 2 pm., respectively, in which, complying with the Department’s telegraphic instructions contained in its telegram No. 31, of July 10, 6 pm., I reported the result of my discussions with the Foreign Minister about recent press items published in London to the effect that American interests in Uruguay were being jeopardized by the foreign exchange negotiations now being conducted between Great Britain and Uruguay, as a result of British insistence, with threat of compulsory action, that Uruguay allocate the greater part of its sterling exchange in settlement exclusively of all British exchange requirements thus seriously prejudicing payment of American and other foreign obligations of Uruguay, I have the honor to report, in amplification of both of my above quoted telegrams, that I had the opportunity of talking to the Minister of Foreign Affairs yesterday evening and this morning. In both interviews his conversation indicated considerable anxiety as to Uruguayan ability to resist British pressure now being exerted to compel allocation to Great Britain of all sterling exchange.
The attitude of the Foreign Minister reflects general sentiment in this country and is based primarily, as far as I am able to ascertain, on the exceedingly precarious economic condition in which Uruguay would be placed at once in case of the slightest cessation of its meat exports to Great Britain. It is evident that the fear of a possible curtailment in these meat exports to Great Britain dominates the mind of the Foreign Minister to an extent which he appears unable to hide.
Complying with the Department’s telegraphic instructions, I recalled in the course of my discussion with him that the existing [Page 653] arrangement regarding interest service of a flat 3½% basis on Uruguayan dollar bonds undoubtedly favored British holders as the British share of these bonds was originally issued at 3½% interest whereas American holders had to suffer cuts in interest yield which in some instances amounted to 50%. I also referred to the Roca Agreement13a between Argentina and Great Britain in which Argentina had made reservations for exchange funds necessary to effect payment of service on Argentina’s public external debts in countries other than Great Britain.
Minister Arteaga was familiar with the Roca Agreement and stated that he considered it as fair. Moreover he thought that Uruguay was acting along similar lines. In my interview this morning, as reported in telegram No. 48 of the above two telegrams, he stated that he hoped that it would be possible to retain 10% of sterling exchange for the exchange requirements of other countries than Great Britain. This, he stated, in addition to the exchange acquired through sale of Uruguayan exports to countries other than Great Britain would suffice for distribution of exchange to American and other interests in a manner which would not be discriminatory against them as compared to the amounts paid to Great Britain.
I spoke to him then on my reliance on his own sense of fairness and expressed our confidence that the Uruguayan Government would strongly resist any effort which might be made to have it discriminate against American interests. To this he replied that his Government’s endeavor to retain a 10% balance of sterling exchange was evidence of Uruguayan desire to avoid discrimination and said that he would try to maintain insistence on the retention of the 10% balance as long as it could be done without prejudice to Uruguayan interests.
Respectfully yours,
- League of Nations Treaty Series, vol. cxliii, p. 67.↩