The Secretary of State to the Ambassador in Argentina ( Armour )
33. In our preliminary confidential discussions with Prebisch regarding bases for a trade agreement, it has appeared that Argentina is disposed to grant Spain a substantial credit which would enable Spain, if the British Government were agreeable, to purchase Argentine foodstuffs. In this connection reference has been made to press reports that the British Government has agreed to permit Spain to buy Argentine corn, payment to be made in blocked sterling in London, and also that Argentina has under consideration a direct credit to Spain.
Prebisch has stated that he has no official information regarding the matter, but has long advocated a large credit to Spain on the [Page 390] grounds that it is preferable to put Argentina’s surplus foodstuffs to work, though doing so would involve great risk of nonpayment, than to have them rot in Argentine storage.
It would be appreciated if you would endeavor to ascertain from the British Embassy and the Argentine Government or other sources whether such credit negotiations are in progress and if so what amounts of foodstuffs are involved and what method of payment is contemplated.
The matter is of interest to the Department for various reasons including the question of the effects of blocked sterling and barter deals on Argentina’s ability to give us nondiscriminatory treatment in exchange and quantitative restrictions on imports.