740.00112A European War 1939/11741
The Argentine Ministry for Foreign Affairs to the American Embassy in Argentina54
The Ministry of Foreign Affairs and Worship has the honor to address the Embassy of the United States of America acknowledging receipt of its memoranda, dated April 9 last,55 relative to remittances made to France by the Cervecería Argentina Quilmes and the Banco Hipotecario Franco-Argentino by way of financial services authorized by the Central Bank and in payment of debts contracted with certain Argentine banks by the “Inag”, Fábricas Reunidas de Utiles Sanitarios.
In reply, the Ministry of Foreign Affairs and Worship takes pleasure in indicating to the Embassy of the United States of America that on this occasion the Argentine Government wishes to submit the following explanations:
The remittances made to France for purposes of financial services could not be effected by using the francs which the Central Bank has [Page 468]in the Bank of France in the payments account between Argentina and France for the reason that the amounts available are small and it has been considered advisable to hold these exclusively for taking care of other payments of small amounts. Consequently, for making remittances of financial services to France without employing the aforementioned francs there were three different possibilities:
- to give free exchange (Swiss francs, escudos), which in affecting our exchange reserves involved the possibility that those reserves would not be utilized in the final analysis for the purposes for which they were intended;
- to give francs, which could have been done by making use of the credit in the Bank of France, in accordance with the terms of the existing agreement. It was not judged advisable to contract debts of this character for providing financial services; and
- to authorize the transfer in accordance with the procedure with which we can now make transfers to Germany, Italy and countries with compensation accounts.
This last form of procedure is very simple and does not involve any movement of exchange. It is the one which was chosen for authorizing the services of the Cervecería Argentina Quilmes and the Banco Hipotecario Franco-Argentino. It consists of the following: the Argentine bank which desires to make the transfer seeks a French bank which is willing to sell it francs for this purpose and to receive their equivalent in local currency. This equivalent in local currency in favor of the French bank is blocked and may not be used in any case for purchasing free exchange. Only the Central Bank may grant authorization for employing the funds for purely internal expenditures, in accordance with the following purposes;
- payments of expenses for cables and postage, imposts, taxes and bank commissions;
- current expenses in connection with real estate located in the country which is owned by the holder of the account;
- payments to navigation companies and captains of steamships for meeting steamship expenses in Argentine ports;
- payments to insurance companies resident in the country provided that they pertain to the fulfilment of reassurance contracts;
- payments of taxes and expenses of trade marks or patents registered in the country in the name of owners established in France;
- payments of remittances of a personal character (pensions, retirement benefits or family assistance) to residents in Argentina and travel expenses;
- payments for subscriptions, notices and publications to or in local newspapers and magazines;
- payments of income on securities issued by the French Government provided that the holders of the securities are domiciled in Argentina and acquired them before June 26, 1940; and
- purchase of Argentine bonds or securities which are deposited in the country in the name of the owners of the funds.
With respect to the other operation mentioned by the Embassy it deals with the following: the Central Bank authorized that funds blocked in the account of the “Deutsche Ueberseeische”, of Berlin be transferred to the firm “Inag” for increasing its capital and amortizing at the same time a debt in the Banco Alemán. This operation is doubly advantageous for Argentina: first, because “Inag” is developing industrial enterprises of great utility for the country: it manufactures X-ray apparatus and dental and surgical instruments; and secondly, because it conforms with the policy being pursued by the Central Bank in endeavoring to have firms of foreign origin which have obligations with the local banks in amounts which are very large in proportion to their capital in the country amortize these debts by degrees.
Therefore, in the operation itself there is nothing which can benefit foreign countries. On the other hand, the adoption of measures of control, however strict these may be, is not aimed at prejudicing legitimate interests, but on the contrary, should guarantee the development of activities useful for the country and place them under protection from acts or interventions capable of adversely affecting the national interests.
There being thus explained the operations mentioned, the Argentine Government rejects the statement of that Embassy which indicates that the aforementioned transfers constitute a serious violation of Resolution V, of the Rio de Janeiro Conference. It should be recalled that in that conference the Argentine Delegation made clear that it was in accord with the need of taking measures of economic and financial control of all internal or external activities of firms or enterprises which might adversely affect, in one way or another, the welfare of the Republics of this continent or the continental solidarity or defense, and therefore it does not consider justified the opinion that there should be included in the obligation contracted at Rio de Janeiro financial operations conducted in the form and for the purposes outlined above.
Consequently, the Argentine Government must necessarily assume that only an incomplete knowledge of the facts has permitted the Government of the United States to furnish that Embassy with necessary instructions for the sending of the memoranda which are herewith replied to.
The Ministry of Foreign Affairs and Worship avails itself of this opportunity to present its compliments to the Embassy of the United States of America.