833.5151/578: Telegram

The Consul General at Buenos Aires (Burdett) to the Secretary of State

It is learned that the Government’s chief financial advisors are discussing the imminent advisability of abolishing exchange control and returning to a free market. The exchange position of the Government is strong and announcement of such change will obviously come without warning.

Reasons prompting this discussion are: (1) Large prospective investments in Argentina which are delayed because of reluctance to bring in funds that would be impossible to remove under present exchange restrictions, (2) sudden American demand for Argentine grain and consequent creation of further dollar exchange, (3) prospective conversion of Argentine dollar debt, (4) a timely gesture of voluntary relinquishment of a profitable, but unpopular source of income.

Removal of exchange control would terminate the grain regulatory board. This entity was declared by the Government to be only a temporary expedient and a time when grain prices are at their present high level would be a propitious one in which to abolish it.