611.3531/1533: Telegram

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

229. Embassy’s telegram No. 219, June 14, 4 p.m.4 Last Friday afternoon Dr. Raul Prebisch, the general manager of the Central Bank, informed a member of my staff that he had discussed Argentina’s problems in detail with Dr. Groppo, present Minister of Finance, and Dr. Pinedo, ex-Minister of Finance, and as a result wished the United States Government to be informed in strict confidence through this unofficial channel that Argentina’s political and economic situation is rapidly becoming so precarious that it is hoped the following suggestions would be considered. The suggestions are reported herein as given and should not be taken as having the Embassy’s tacit approval. The member of the Embassy staff expressed no opinion to Dr. Prebisch with respect to the latter’s suggestions. The Embassy’s views and specific recommendations were set forth in air mail dispatch [Page 464]No. 793 of June 14 and are being summarized in a telegram to follow today.

Prebisch stated that the Argentine Government would greatly appreciate it if the United States Government would immediately send someone incognito to Buenos Aires to discuss Argentina’s trade and financial problems with President Ortiz and the members of his Cabinet. He said it is believed that such an official would receive a far more accurate picture of the situation than could be given by an Argentine official proceeding to Washington. The suggestion that someone not connected with the diplomatic mission be designated was due, he said, to the desire for no publicity.

He gave as indications of Argentina’s straitened circumstances the facts that several large Argentine power plants are being forced to use domestic corn for fuel and that a decree has been issued restricting the use of artificial heat and light.

He asserted that as a result of European developments, Argentina faces two alternatives: Either progressively to restrict imports or to engage in large-scale borrowing. Both, he said, present grave danger. The first invites serious political disturbances in view of propaganda with reference to the German-Argentina clearing agreement (the Germans, he stated, are offering merchandise for delivery in October) while the second obviously involves major credit risks.

Accordingly, he said, the Argentine Government would gratefully welcome an indication that the United States Government would be disposed to consider (first) financing a substantial part of Argentina’s imports of American merchandise through the Export-Import Bank, (second) furnishing an additional loan to assist Argentina in meeting the service on its public external debt and other official foreign payments, and (third) purchasing large amounts of Argentina’s exportable products possibly for war stocks or relief purposes so as to provide Argentina with exchange for imports of goods not covered by Export-Import Bank credits and of goods not obtainable in the United States. Such help, he claimed, would give immediate relief and have a very beneficial psychological effect upon the Argentine people who are disturbed by intelligent Nazi-Fascist propaganda.

Unfortunately, he added, there are serious political aspects of the present Argentine emergency but he went on to say with parenthetical reference to President Vargas’ speech, the Argentine Government is now probably better disposed towards the United States and sees more nearly eye to eye with the United States with respect to the European situation than any other American Republic; and he cannot conceive of a better opportunity than the present for exploratory conversations designed to evolve a lasting solution of existing political and financial and trade problems.

Armour
  1. Not printed.