Foreign Relations of the United States Diplomatic Papers, 1940, The American Republics, Volume V

835.51/1360: Telegram

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

Buenos Aires, November 12, 1940—7 p.m.
[Received 9:45 p.m.]

537. Embassy’s 436, September 23, 8 p.m., and 453, September 27 [29], 1 p.m.¹⁹ With reference to the fourth numbered paragraph of the latter,²⁰ it is hoped that the Department will realize that since these recommendations were [made] the situation has changed and the Embassy is now of the opinion that the amount of $30,000,000 mentioned is too low. In other words it is presumed that the various departments of our Government, in considering the proposals Prebisch will lay before them, will not feel in any way restricted by the recommendations made some weeks ago and that consideration is being given to the granting of credits on a more substantial scale. This is important as it is believed that, judging from the reaction in Argentina to the reelection of the President and other factors as already reported, the present offers a unique opportunity for constructive action to bring about a more favorable orientation of Argentine attitude and policy. To this end, it would seem desirable to formulate as comprehensive a program of assistance as possible to be placed in effect under assurances from the Argentine Government that discrimination against American interests will cease. (See despatch 1328, October 2, 1940, particularly second enclosure.²¹)

Inasmuch as the essence from our point of view will be the undertaking referred to and since the discussion of such a matter would probably not fall within the province of Dr. Prebisch, the Department may wish to discuss the broader questions of policy with the Argentine Ambassador preparatory to the adoption of a definite plan. It is recommended, in this connection, that consideration be given to inviting Dr. Pinedo to come to Washington to conclude arrangements and give his Government’s official approval to the results accomplished. It is recommended further that the program include ample credits, the purchase of commodities for war stock purposes, and if possible, the announcement of intention to negotiate a trade agreement. If the last is a possibility, it is strongly recommended that the Interdepartmental Committee review the basis proposed last year and that advantage be taken of Dr. Pinedo’s presence in the United States to secure agreement to the general provisions prior to the announcement of intention to negotiate with a view to obviating any failure of the negotiations because of the factors enumerated in the enclosure to despatch No. 1462, October 28, 1940.²²

Armour

19. Neither printed.
20. This paragraph reads: “Mr. Pierson realizes the seriousness of the situation caused by the temporary loss of markets and is accordingly prepared to recommend immediately further credits in the amount of $30,000,000 to be made available in convenient installments over a period of 12 to 18 months with interest at 4% per annum, and to be repaid within 6 years from the date of each advance, with amortization commencing within 2 years. As in the case of the $20,000,000 loan already announced it is understood that the dollar exchange is to be made available exclusively to cover purchases in the United States within categories and amounts approved by the Export-Import bank”. (835.51/1331)
21. Not printed.
22. Not printed. The Consul General at Buenos Aires mentioned five factors contributing to failure of the trade agreement negotiations: (1) feeling of Central Bank specialists that Argentine markets could only be preserved by buying from countries that bought from Argentina; (2) their reluctance to give up their power with respect to exchange and trade; (3) effects of the outbreak of war, especially control by third countries over exchange, Government orders, shipping space, etc.; (4) lack of understanding of American character and conditions, as illustrated by their apparent assumption that the American proposition represented an extreme bargaining position, that requests for haste were attempts at pressure, and that the value of the tariff concessions was greatly exaggerated; and (5) genuine disappointment at the failure of the United States to improve its offer, especially as to imposition of customs quotas on two important products.