811.20 Defense (M) Argentina/47: Telegram

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

930. In view of recommendations in your 1230 of October 311 and Williams’ letter to Bridgman2 of October 24, the Federal Loan Agency is willing, if it is necessary to do so to obtain approval of the overall agreement, to offer to purchase 30 million bushels of flaxseed during the year 1942 on the following conditions. First, as to 20 million bushels, the Loan Agency will purchase such amount of such 20 million bushels as shall not be purchased by the private trade in this country, the underwriting price to be agreed upon by Defense Supplies Corporation and the Argentine Government and one-half of the 20 million bushels to be transported in Argentine vessels. Second, the [Page 382] balance of 10 million bushels will be purchased by Defense Supplies to the extent that it is not acquired by the private trade in this country, the price to be the same as that for the 20 million bushels and one-half of this 10 million bushels to be transported in Argentine ships, but as to this 10 million bushels, the agreement of Defense Supplies Corporation is conditioned on the obligation of the Argentine Government to provide storage facilities on a reasonable basis. Indications are that storage facilities for flaxseed in this country will be difficult if not impossible to obtain. If the Argentine Government finds itself unable to agree to furnish this storage space, you are requested to telegraph (a) what storage facilities there are in Argentina in terms of millions of bushels; (b) whether there are sufficient crushing facilities in Argentina to convert all or part of the 10 million bushels into linseed oil; and (c) whether it would be possible to store the oil so crushed or any part of it. The third condition of the Defense Supplies Corporation is that the Argentine Government in consideration of this underwriting agreement by Defense Supplies shall agree to prohibit during the year 1942 the export of flaxseed except to the United States and the British Empire (including, in cases where either have made purchases on behalf of a third party, such designations for direct shipments as they nominate); and also to the other American republics having systems of export control approved by the Government of the United States.

  1. Not printed.
  2. G. Temple Bridgman, vice president of the Metals Reserve Company.