835.51B861/119: Telegram

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

192. Embassy’s telegram 190, August 27, 3 p.m. Provincial Minister of Finance has postponed today’s meeting with Dye until tomorrow alleging urgent business at La Plata. Bemberg representative states that Minister feels he could not make the offer suggested by the Foreign Bondholders Protective Council.

Embassy has been informed that Bemberg’s representative in New York cabled Bemberg here August 23 recommending that Minister of Finance of Province cable to Bondholders Council as follows:

“Regret to advise you that suggestions as to service dollar bonds do not furnish basis for further discussion.”

He recommends that after sending such cable Minister of Finance follow one of two courses: first, to stand on present position and to ask respective fiscal agents whether they are prepared to act as fiscal agents on basis of Province’s last offer, or, second, make final offer. He recommends the second course. This offer could be communicated confidentially to him to permit ascertaining on what new base he can obtain the acceptance of the Council and fiscal agents, or if the Province is prepared to make final counter offer and stand on it whether or not acceptable to Council, then suggests new final offer be sent direct to Council. If latter procedure followed he recommends that offer would be more likely of acceptance if amortization begins only after 6 years as in British plan and that saving thus effected be added to the interest possibly thereby permitting 4½% for 6 and 6½% loans and 4½% for 7 and 7½% loans, possibly amortization on 7½% loan could be made 1%, other loans remaining at ¾%. He states that it is not necessary to include sterling optional payment as this charge was not included in his last offer nor disclosed to Council.

In view of delay in Dye’s meetings with Provincial Minister of Finance, Embassy is taking up matter this afternoon with Foreign Office pointing out views of Council as in discrimination against American bondholders in favor of other creditors and stressing desirability of avoiding any unilateral action on the part of Provincial authorities.