835.24/763½
Memorandum by the Executive Secretary, Board of Economic Operations (Collado)91
Critical Materials Supply of Argentina
With reference to the questions raised by the Secretary yesterday afternoon as to the supply of critical materials to Argentina the following observations are submitted:
1. Allocations to Argentina Arbitrarily Reduced. The allocations to Argentina since last February have arbitrarily been cut substantially. In the case of iron and steel, for example, the allocations in long tons approved by the Requirements Committee of the War Production Board have been cut as follows:
| Allocations Based on Bare Bones Requirements | Allocations Made by the Department | |
| 2nd Quarter | 78,000 | 41,574 |
| 3rd Quarter | 42,304 | 40,599 |
| October | 17,854 | 8,928 |
| 4th Quarter | 66,441 | outstanding |
2. Licensing Restricted. The commodity licensing officers at BEW are under instructions not to license for export to Argentina any article or material which can be construed to be of military use, except such as are clearly intended for the maintenance of existing facilities. They are also under instructions not to license for Argentina any oil [Page 366] well drilling equipment or maintenance supplies for the oil companies of Argentina. And they have been directed to support subsidiaries or affiliates of American firms and Argentine industries such as the meat packers which contribute to the United Nations’ war effort, but not to an extent of jeopardizing our own supply. As a result licenses approved for Argentina have decreased from $11,332,652 in January to $5,975,876 in July.
3. Shipments Smaller than Reduced Allocations. Actual shipments of critical materials have been less than the reduced allocations. This has been effected not only through restrictions on licensing but also through restrictions on priority ratings at WPB. In the case of iron and steel, for example, Argentina’s half rations for July were 13,533 tons, but according to preliminary reports obtained by the Maritime Commission from various sources at the ports, only 1,486 tons were shipped in that month. For August the allocation was also 13,533 tons; shipments to August 20, 1,883 tons.
4. Character of Argentina’s Imports from the United States. From the same sources it is apparent that Argentina is at present obtaining from the United States principally coal and newsprint:
| U. S. Exports to Argentina in Tons | ||
| Commodity | July | August 1–20 |
| Coal | 20,121 | 12,100 |
| Newsprint | 486 | 7,754 |
| Iron and Steel | 1,486 | 1,883 |
| Others | 23,660 | 4,307 |
| Total | 45,753 | 26,044 |
5. Argentina’s Imports from Other Sources. Our Embassy at Buenos Aires advises that Argentina’s imports from other sources have been chiefly:
- (a)
- Germany
- Powder factory equipment consigned to the Argentine Ministry of War under a British export permit and drugs shipped via Japan and Chile. Ratio increase over 1941—2:1.
- (b)
- Spain
- In order of value, foodstuffs, beverages, paper and manufactures thereof, chemicals, pharmaceuticals and related products, wood and manufactures thereof, machinery, and iron and steel. Ratio increase—3:1.
- (c)
- Portugal
- Cork and some foodstuffs, beverages and herbs. Ratio increase—2:1.
- (d)
- Sweden
- Woodpulp, paper, newsprint, hardware, cutlery and small iron and steel manufactures in general; also some electrical equipment and motors. Ratio of increase—8:1. (See separate memorandum).
- (e)
- Brazil
- Textiles and lesser amounts of iron and steel and manufactures, coal, industrial chemicals and drugs, wood, fresh fruits, vegetables and tobacco. Ratio of increase—2:1.
- (f)
- Colombia
- Petroleum and petroleum derivatives with a few herbal products. Ratio of increase—2:1.
- (g)
- Chile
- Copper, nitrates and less important articles. Ratio of increase—2:1.
- (h)
- Mexico
- Relatively small, but ratio of increase—4:1.
- (i)
- Venezuela
- Fuel oil and lesser quantities of coffee and plywood. Ratio of increase 6:1.
- (j)
- United Kingdom
- Coal, soda ash, caustic soda, copper sulphate, naphthalene, cresylic acid, rayon yarn and textiles. Slight increase.
- (k)
- Canada
- Newsprint. Slight decrease.
- (l)
- India
- Jute, burlap and manufactures, tea, spices and other colonial products. Ratio of increase—2:1.
6. Possibility of Reducing Iron and Steel Supply. Iron and steel supply is Argentina’s vital weakness in the absence of any source other than the United States which might ship in sizable quantities.
Since the beginning of this year there has been a marked increase in Argentina’s imports of these products from Spain and it appears that Spain has undertaken specifically, as one of the conditions of the Spanish-Argentine trade agreement to furnish 30,000 tons of iron and steel in the first year.
Argentina’s requests for iron and steel in 1943 total 385,000 tons. Our Embassy regards 93,000 tons as the indispensable minimum requirement. Argentine expects to get 30,000 tons from Spain and small quantities from Sweden and Brazil. Presumably, then, we could cut our share in Argentina’s supply to 60,000 tons, or to 5,000 tons a month as against 13,000 tons a month in the present quarter.
7. Effect on our Shipping Negotiations. We have been negotiating with the Argentines for the provision of a monthly northbound tonnage to us of 40,000 tons. We might make up the southbound tonnage on a breakdown somewhat as follows:
| Commodity | Tons |
| Coal | 16,000 |
| Newsprint | 7,500 |
| Paper and manufactures | 5,000 |
| Iron and steel | 5,000 |
| Tinplate | 4,000 |
| Wood and manufactures | 1,500 |
| Chemicals | 1,000 |
| Total | 40,000 |
With such a breakdown we would fill the southbound tonnage with materials we can spare plus those materials which we would want our war industries in Argentina to obtain.
- Addressed to the Secretary of State and the Assistant Secretary of State (Acheson).↩