611.2331/83
The Ambassador in Peru (Steinhardt) to the Secretary of State
[Received December 11.]
Sir: I have the honor to refer to my despatch No. 142 of December 1, 1937, and to report that in the course of a further talk with Dr. Concha this afternoon, he advised me that having discussed the subject [Page 832] with President Benavides, he was now prepared to explore the possibilities of a trade agreement between the United States and Peru. I judged from the nature of Dr. Concha’s comments that he is prepared to proceed at once.
I venture the suggestion that the negotiations be commenced and pressed as expeditiously as possible because of the rapidity with which expediency causes changes in governmental policy here. Should the price of cotton continue to decline—or even remain where it is for a period of months—or should the Peruvian Government encounter difficulties in marketing its basic crops in markets other than the United States, it is quite possible that sufficient pressure might be brought to bear upon the Peruvian Government by other governments to cause it to abandon—by necessity—a contemplated trade agreement with the United States.
It is my judgment that the present relatively satisfactory business conditions in Peru resulting from a good export business at reasonable prices during the past eighteen months, will continue only for a few months longer and that some months from now a substantial business recession will take place. If the contemplated trade agreement has not been concluded before a business recession becomes apparent to the general public, the chances of negotiating any such agreement will be materially diminished. Furthermore, government revenues, which are derived from both import and export duties, will probably commence to decline within the next few weeks. As the budget is now being prepared on the assumption that revenues in 1938 will equal those of 1937—which I doubt will be the case—the Government will be less inclined to make concessions in a trade agreement once the amount of the decline becomes apparent.
For these and other reasons akin to the foregoing, it seems to me fairly obvious that the more rapid the negotiations can be concluded, the better the terms will be for the United States.
Respectfully yours,