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  4. Document 433

610.0031/37

Memorandum by the Assistant Secretary of State (Berle) to the Under Secretary of State (Welles)

[Washington,] May 24, 1940.

Mr. Welles: Should the result of the present fighting be German domination of Europe, we must expect that German dominated trade delegations will appear in various Latin American countries very soon, for the purpose of working out barter arrangements.

If these barter arrangements are consummated, country by country, the German bloc will be able to put such pressure on any one country as virtually to compel it to accept any terms offered, economic and perhaps also political.

The obvious answer to this is an immediate agreement between the twenty-one republics that commercial negotiations shall be carried on not by individual countries but by all of them in bloc. It will be recalled that this proposal was made by Colombia at the Lima Conference,1 and that this project was referred to the Pan American Union for study.

I suggest, accordingly, that the Inter-American Economic Committee2 take up a proposal for a joint agreement as to any trade arrangements with Germany, Italy, or Russia—or, possibly, with any countries outside the American hemisphere.

I suggest that, immediately, plans are drawn by which the necessary amounts of money are made available for the time being to purchase certain amounts of exports from countries which live on such exports, these commodities to be pooled and stored, and handled much as we handle our own surplus commodities. In this last regard I am inclined to think legislation may be necessary, and I believe that we should promptly ask the Inter-Departmental Committee on Economic [Page 354] Policy to take charge of drafting such legislation. Included in the powers of the pool should be the power to use the commodities for relief, for preparedness, or for other purposes.

The set-up should obviously be for a limited period of time: say two years.

A. A. Berle, Jr.
  1. See Foreign Relations, 1938, vol. v, pp. 1 ff. For text of Colombian proposal, see Department of State, Report of the Delegation of the United States of America to the Eighth International Conference of American States, Lima, Peru, December 9–27, 1938 (Washington, Government Printing Office, 1941), p. 159.↩
  2. The Inter-American Financial and Economic Advisory Committee; see bracketed note, p. 345.↩