611.3531/1539: Telegram

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

249. Department’s 122, June 22, 6 p.m., and Embassy’s telegram 245, June 22, 1 p.m.9 At the request of Doctor Groppo, Minister of Finance, I called at the Ministry at 7:30 Saturday night for an informal talk. The Minister spoke for about an hour but the substance of his remarks was that without something of a concrete nature from the United States to change the trend of Argentine public opinion, it will be difficult for the Government here to resist the increasing sentiment in favor of accepting German offers and give wholehearted support to American plans for the economic phase of the defense program.

He commented favorably upon the credit of $20,000,000 arranged through the Export-Import Bank and said that in announcing it the most would be made of the opportunity to sway public opinion in our favor, but intimated that nothing short of an immediate purchase of Argentine products would have the desired effect on public opinion. He said such a purchase including a certain amount of canned meat at this crucial time would have greater value than the purchase of ten times as much later on. The cartel idea he thought might have its advantages for the future, but considered it too indefinite and complicated to be of immediate use politically in stopping the German offensive. He said that what the Argentine people need is something they can understand, which would enable the Government here to back the program and allow them time to study the cartel idea and convince the public of its desirability.

Whereas the alternatives were rather crudely put the Minister’s estimate of the local political aspects of the problem agrees with information received from other sources and he is of course in a position to speak authoritatively with regard to the attitude that may be expected of himself and his subordinates. The impression has been gained that the Minister of Finance and the Central Bank group really contemplate making no commitments until they see whether Great Britain can be defended and British naval supremacy maintained, [Page 469]and that in the meantime they wish to obtain as much from the United States as they can without prejudicing their future freedom of action should it suit their purpose to trade with Germany. It is believed, however, that they are correct in stating that the actual purchase of Argentine products by the United States at this juncture could be a determining factor. The public would react to such action as to nothing else and the President who is believed to be sincerely pro-Ally would, it is believed, go much further in cooperation with us than would the Minister of Finance if left to himself.

There is no failure on our part to feel keenly how ill it befits Dr. Groppo or the Central Bank group to ignore their responsibility for past failure to respond to American offers and to confront us with what amounts to a choice between cooperation on their terms or the alternative, but it should be remembered that Argentine public opinion was deliberately misled here with respect to the causes of the failure of the trade agreement negotiations,10 and that the prejudice resulting therefrom works to our disadvantage. Thus we are again at a point where our policies can suffer a defeat, but with far more important and far-reaching results. We not only have immediate policies at stake but there is the question of future trade and the safety of the extensive investments in this country which together with the loans now being made [would?] be seriously jeopardized if this country embarks on barter trade on an extensive scale.

In the circumstances it is believed that immediate action should be taken, despite certain unsavory features, to do whatever is necessary to place the friendly President in a strong position and enable him to make a definite decision in favor of American cooperation. To this end, it is recommended that definite action, as proposed along the lines suggested in the Embassy’s telegram of June 17, 4 p.m., be taken forthwith, but with safeguards not only stipulating satisfactory terms in the way of rates of exchange and assurances of wholehearted support in advance, but arrangements for purchases to be continued only upon complete compliance with the understanding reached. No opportunity should be given this country to accept favors and later upset the American economic and defense programs and make extensive barter friendly to Germany. It is my belief that in the absence of action of the nature suggested it will be difficult to secure necessary cooperation by Argentina and its smaller neighbors and may even lead to a break in American solidarity.

Armour