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

No. 1343

Sir: I have the honor to enclose memoranda28 of conversations with Mr. R. C. Wells of the Standard Oil Company of New Jersey and Mr. C. R. Wylie of Ultramar, regarding the relations of the private oil companies here with the Argentine Government and the Yacimientos Petrolíferos Fiscales.

Mr. Wells stated to me that his company and others had for some time rather anticipated the coming into effect of measures the result of which might ultimately prove to be government supervision and control of the oil business in Argentina through the YPF. The decree of July 20, 1936, he considers to be the culmination of a campaign by the YPF to restrict competition by private entities.

While this situation, as reported by the Embassy from time to time, may gradually curtail the business and large profits of private companies in Argentina, I cannot but see in this a development in accordance with the supervised economy program of the Argentine Government already visible in other fields of private enterprise. On the other hand, I feel that the attitude of the present Government, at least, with any manifestation by it of nationalistic spirit, is as yet tempered by consideration for the country’s economic development and welfare. Any change in the position of the private oil companies will, I think, be gradual rather than sudden. The proposed marketing arrangement under the decree of July 20, for example, provides for a gradual increase by the YPF up to 1941 from its present position of roughly 30 per cent, of the oil business to some figure around 40 or 50 per cent, with a view to controlling the market. Heretofore the Standard Oil Company has been in a dominant position and is, of course, loath to lose any ground.

Respectfully yours,

Alexander W. Weddell
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