633.116/107
The Minister in Uruguay (Dawson) to
the Secretary of State
No. 157
Montevideo, May 13, 1938.
[Received May
23.]
Sir: I have the honor to refer to the
Department’s instruction No. 10 of March 23, 1938 (no file number),
enclosing a draft memorandum in which it was suggested that the
Uruguayan Government make known to our Government certain information
regarding foreign exchange transactions. As reported in my despatches
No. 106 of April 8 and No. 147 of May 6,64 I handed the memorandum on April 7 to the
Minister of Foreign Affairs and was informed on May 5, when I reminded
him of the matter, that the Bank of the Republic would transmit its
reply in a day or two.
The Legation received at noon today a memorandum from the Foreign Office,
dated May 12, containing the Bank’s reply. I enclose copies of the
memorandum and a translation which has had to be prepared in great haste
in order to be forwarded by today’s air pouch.
As will be observed, the reply is wholly unsatisfactory in that the Bank
has confined itself to what is virtually a restatement of the Uruguayan
position. No figures whatever have been furnished or promised. However,
after asserting that its statistics are prepared with the greatest care,
the Bank does say:
The Government of the United States, through its Legation, has at
its disposal all the elements and antecedents concerning the
matter, for the purpose of verifying the figures recorded as
well as checking (controlar) future
movements.
The Legation might very properly address to the Foreign Office a note
pointing out the unsatisfactory nature of the Bank’s reply and renewing
the request for the information desired by the Department. In view,
however, of our experience thus far with correspondence to which the
Bank of the Republic has been a party, I doubt the advisability of
handling the matter in this way. I am inclined to believe that the best
course would be for me to tell the Minister of Foreign
[Page 949]
Affairs verbally that the Bank’s reply is
very disappointing in that it contains none of the information
requested. I should at the same time refer to the Bank’s statement
quoted above and say that I hope that it may be interpreted as meaning
that the Bank is prepared to make information available to the Legation.
I should request the Minister’s authorization to pursue the matter
further with the Bank’s officials and if, as I anticipate, he interposed
no objection, I should seek an interview with the President of the Bank
and endeavor to arrange to have one of my assistants visit the
institution for the purpose of collecting at first hand as much as
possible of the information requested in the Department’s
memorandum.
However, in view of all the circumstances and as the Department is
understood to be discussing the whole situation with the Uruguayan
Minister in Washington, I deem it advisable to await its instructions
before taking any further action. In case it approves the course
suggested above, it may desire to send me a brief telegraphic
instruction to this effect.
Respectfully yours,
[Enclosure—Translation]
The Uruguayan Ministry for
Foreign Affairs to the American
Legation
Note Verbale
The Ministry of Foreign Affairs has the honor to acknowledge the
receipt of the Memorandum of the Legation of the United States of
America of April 7 last concerning the present situation of the
trade of Uruguay with the United States of North America, which was
duly submitted to the Bank of the Republic for consideration, the
Bank having replied in the following terms:
“The Government of Uruguay shares the principles maintained
in commercial matters by the Government of the United States
of North America and believes, as it does, that the most
efficacious and effective means of intensifying the currents
of interchange is to be obtained through a policy of
absolute freedom in the movement of merchandise, free from
any system of control as respects the fixing of import
quotas for merchandise or products and as respects
discrimination. The initiative as regards the application of
such principles must come, naturally, from those countries
which are in a position to impose norms on international
commerce, and not from Uruguay, a country with a small
territory and limited range of production, which must
necessarily adapt itself to the demands of the countries
which purchase its products. It was precisely because of
this circumstance, and faced with the danger of losing its
outlet markets, that Uruguay found itself compelled to sign
commercial and payment agreements on a bilateral basis.
However, in these agreements there are not
[Page 950]
established any
discriminations or import quotas. The clause concerning
‘most-favored-nation treatment under equal conditions’
stipulated in these agreements implies full freedom of
commerce, the extension of which depends naturally upon the
volume of purchases which the signatory countries make in
Uruguay under the operation of such agreements. The
countries which sell their products to Uruguay, whether or
not they have signed agreements, do not suffer the least
discrimination as respects their merchandise if the quota at
their disposal permits their importation without
restrictions. If, on the other hand, the quota were a small
one and did not permit importation to the extent of the
volume of their sales, Uruguay reserves the right to
exercise discrimination, authorizing the importation of
those products which it considers advisable or which cannot
be acquired in countries having available an ample quota.
Uruguay has exhausted all its efforts in favor of trade with
the United States. The considerable unfavorable balance
shown by the balance of payments demonstrates eloquently the
intentions of Uruguay in this regard. It has allocated to
the United States controlled exchange produced by other
countries, in order that its products might be cleared under
conditions as favorable as those for the products of
countries which usually buy from us. It granted the United
States extraordinary quotas under favorable conditions,
without imposing restrictions, to the extent that even the
importation of automobiles was covered with controlled
exchange. It offered the United States to disregard the
unfavorable balance in the balance of payments and to apply
immediately to imports of its (American) goods the exchange
which it (the United States) might create through its
purchases. Finally, it (Uruguay) proposed a special
arrangement consisting in the use of Hallgarten bonds65 to
clear merchandise in the customs, without finding a
favorable response on the part of American merchants.
However, except for the good intentions expressed on every
occasion, the Government of the United States has not
contributed materially any solution to the problem and
merely demands payment for the products of that country
without taking into account the vertiginous decline in its
purchases from Uruguay. With respect to the question raised
in the last part of the Memorandum of the Legation, it must
be stated that the discrepancy noted between the statistics
of the Bank and the customs statistics is easily explained.
The statistics of the Bank are based on the value of
exchange purchased for exports and exchange sold for imports
and other purposes. This means that there are taken into
account the true factors which represent the products
exchanged. Customs statistics, on the other hand, cannot
even approximately show the same exactness. The value which
the customs assign to export and import products is
determined by the official valuation (aforo) according to the tariffs, and it may be
understood from this that they cannot even remotely be taken
as an index to establish the true measure of interchange.
The Bank of the Republic exercises the greatest care in the
preparation of its statistics as well as in matters
pertaining to the destination of exports and other details
which serve
[Page 951]
as a
basis in compiling data. The Government of the United
States, through its Legation, has at its disposal all the
elements and antecedents concerning the matter, for the
purpose of verifying the figures recorded as well as
checking (controlar) future
movements. Finally, it should be stated that the Bank of the
Republic, in concert with the public authorities, is
studying at this time the problem involved in the
accumulation of merchandise in the customs. The solutions
which may be reached will benefit equally the United States
and other countries whose situation with Uruguay in the
commercial field is not as disadvantageous as that of the
United States.”
Montevideo, May 12, 1938.
