835.51B861/118: Telegram

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

190. Department’s 118, August 23, 11 a.m. As Provincial Legislature last June gave Executive authorities of Province full financial authority to refund entire public debt no further debt legislation is necessary. For political effects in view of elections next November in the Province the Provincial Executive desires to report a successful refunding of public debt prior to adjournment of Provincial Legislature, the exact date of which is uncertain. I understand the latest offer of Provincial Minister of Finance to American bondholders to be as follows: 4, 4½, 4½, and 4¾ interest on 6, 6½, 7, and 7½ percent bonds respectively with ¾ percent sinking fund starting 1939. Bernberg’s [Bemberg] representative also advises that Bondholders Protective Council would recommend the acceptance of interest rates averaging one percent more on all bonds than Minister’s offer given above. Therefore the difference between the two parties amounts essentially to about $700,000 interest per annum. Dye has arranged an informal meeting with Provincial Minister of Finance tomorrow to discuss question. He will emphasize the importance of continuing negotiations and of avoiding any unilateral decision. Bernberg [Bemberg] believes that in case his final offer not accepted by the Council the Minister of Finance will make a direct offer to the bondholders through an independent bank. Present agricultural outlook not satisfactory and unless rain comes in Spring the Province may have a difficult time meeting its obligations. Embassy will cable further following tomorrow’s conference.