740.00112A European War 1939/8424

Memorandum of Conversation, by the Second Secretary of Embassy in Argentina (Gantenbein)37

Dr. Grumbach38 asked me to call at the Central Bank yesterday, which I did, and after briefly discussing another matter which was relatively unimportant (reported in the Embassy’s despatch No. 4272 of today’s date39), he led the conversation to the recent conference at Rio de Janeiro and the conversations that I had had on February 9 and 20 with Dr. Prebisch (as reported in the Embassy’s despatches No. 4116 of February 10, 1942,40 and No. 4199 of February 20, 194241), including the operations of the Banco de la Nación. (I gathered that Dr. Prebisch may have asked Dr. Grumbach to discuss these matters with the Embassy.)

As it was evident that Dr. Grumbach was seeking my comments and had nothing in particular to say himself on the subject, I took occasion to state that earlier in the day the Ambassador had informed me that he was becoming increasingly disturbed regarding reports that the Banco de la Nación was not pursuing policies consistent with those of the United States. I said that I had previously discussed these reports with Dr. Prebisch and that the Embassy earnestly felt that unless some remedy could be found for the situation that appears to exist, the authorities in Washington might deem it necessary to give consideration to the placing of the Banco de la Nación on the Proclaimed List, regrettable as this would be.

[Page 459]

Dr. Grumbach said that, of course, every step should be taken to avoid this, that he inquired what our policy was with respect to the relations of banks with black-listed firms and individuals. I said that the same principles applied to banks as applied to the other concerns, viz., that if banks maintained relations with firms on the Proclaimed List, they made themselves subject to being placed on the list also. I said that it was useless to obtain commitments from such institutions as the Banco de Avellaneda that they would sever relations with black-listed firms when the latter could receive facilities at other banks, including the largest and most important bank in the country, namely, the Banco de la Nación. Thus far, I told Dr. Grumbach, the authorities in Washington had apparently been somewhat lenient in regard to banks, probably because of the far-reaching implications involved, but exigencies of the war were requiring that a more drastic policy be pursued. I said that there was no intention to interfere in any way in the internal affairs of Argentina or to “penalize” banks or other concerns having relations with black-listed firms, but that our Government felt perfectly justified in saying to its own nationals that they must refrain from maintaining relations with concerns outside of the United States if the latter concerns were giving aid to the enemy. Dr. Grumbach said that he understood our view of this, but that having just returned from a vacation of some weeks, he had not realized that the application of our policy with respect to banks had become tightened to this extent.

Referring to Resolution V of the recent conference at Rio de Janeiro, I said that, speaking off the record, I could say that Argentina’s failure to take any action during the month that had elapsed since the end of the conference had caused a distinctly unfavorable impression in the United States and that it was to be feared that unless some action were taken promptly, this impression would become even worse. After referring to the reports here day before yesterday of a critical article by Mr. Turner Catledge of the Chicago Sun, I said that I feared that unfavorable comments of that kind would become increasingly conspicuous in the United States if Argentina did not adopt measures pursuant to its commitments at the Rio de Janeiro conference. At this point, I handed Dr. Grumbach a copy of the far-reaching financial and economic decree issued by Ecuador on February 9, 1942, and said that if a country like Ecuador could adopt such measures, it should be far easier for a country with a highly-developed financial structure and machinery, such as Argentina has, to do likewise. (I handed him an additional copy which I said might be of interest to Dr. Prebisch.)

Dr. Grumbach then mentioned the political situation here as a factor, to which I replied that I was afraid that that would not serve [Page 460]to decrease the feeling of impatience in the United States, for it was felt in our country that this war had reached a point where internal politics of countries should be accorded secondary consideration.

Dr. Grumbach made no further comments, but as I left he remarked how busy he was being kept by such matters as priorities, and I gathered the impression that perhaps the Central Bank was beginning to perceive a relationship between priorities, allocations and United States purchases of Argentine products, and the position being maintained by Argentina concerning the Axis countries, and that it might be seeking to ascertain the minimum in the way of financial and economic cooperation that the United States would consider satisfactory.

  1. Copy transmitted to the Department by the Ambassador in Argentina in his despatch No. 4279, February 28; received March 10.
  2. Edgardo Grumbach, head of the Foreign Exchange Department of the Central Bank.
  3. Not printed.
  4. See footnote 31, p. 453.
  5. See footnote 34, p. 455.