840.51 Frozen Credits/7398

Memorandum of Conversation, by the Second Secretary of Embassy in Argentina (Gantenbein)89

Mr. Hughes90 and Mr. Gantenbein called on Dr. Prebisch by appointment today in regard to various matters concerning foreign funds control and related matters. It was pointed out to Dr. Prebisch that several months ago the Embassy had informed the Central Bank that it had been instructed to discuss with the banks interested in obtaining certain credits from the Export-Import Bank their relations with the firms on the Proclaimed List and that after inquiring whether the Central Bank would be disposed to obtain the desired information, the Embassy was informed that it was preferred that it discuss the matter directly with the interested banks. It was noted that several weeks ago he, Dr. Prebisch, had expressed disapproval of a sentence in the standardized form which the Embassy was asking the banks to sign in the matter* on the theory that this was tantamount to assuming powers of control that had been given to the Central Bank by various measures (including the decrees of June 15 and 17, 1942); that the Embassy had not subsequently discussed such a commitment with those banks which had not already subscribed to it; that on August 1, Dr. Louro91 had informed the Embassy of his (Dr. Prebisch’s) disapproval of the Embassy’s action in requesting of the Banco de la Provincia, by instruction, information concerning its outstanding credit accounts with firms on the Proclaimed List now and a year ago; and that the Embassy was in a quandary as to how to obtain this information. Dr. Prebisch said that the Central Bank was placed in a delicate position in the matter and that while he and his Bank had every wish to be cooperative, this “interference” by the Embassy was creating an unfavorable impression.

Dr. Prebisch was told that, as had been said on previous occasions, the Embassy had not the slightest intention or desire to interfere in the banking affairs of Argentina; that it did not see any semblance whatsoever of interference in asking for this information from a bank that had applied for a credit in the United States, especially in view of the fact that the Central Bank had expressly asked the Embassy to discuss the matter directly with the banks; but that if the Central [Page 490]Bank took the position that it did not now wish the Embassy to seek the information, it would be appreciated if the Central Bank would furnish the data itself.

Dr. Prebisch said that he would endeavor to obtain the information, and when asked whether he would also obtain figures relating to the Banco de la Nación, the Banco Español del Rio de la Plata, and the Banco Popular Argentina, irrespective of the Export-Import Bank credits, he replied that he would try to obtain these also, although he added that in all cases he could furnish only the global figures and not the amounts according to the names of the firms receiving the credits.

At this point, Dr. Prebisch asked whether the United States Government took the position that no credits should be granted to firms on the Proclaimed List, even if the national economy would be thereby prejudiced. He was told in reply that it would seem that the best solution for all parties in such cases would be the appointment of interventors who would see to it that the firms in question did not apply resources to Axis uses, and that under such circumstances there would not seem to be the same objection to the granting of credit facilities by Argentine banks. Dr. Prebisch indicated that he was in sympathy with this position and that it was his intention to proceed along the lines of the reorganization in the Martini & Rossi and Pirelli cases. In this connection, he said that the interventors in the initial thirteen firms, as well as the special inspectors in the two German banks (the Embassy’s Despatch no. 5790 of July 21, 194293) had already commenced their work.

When asked whether there were any recent developments regarding the two draft laws covering the expropriation and management of certain enterprises which were to have been submitted to Congress some weeks ago (the Embassy’s Despatch no. 5598 of July 1, 1942,93 page 3), Dr. Prebisch replied in the negative, (insofar as he knew).

Dr. Prebisch’s attention was then invited to the dollar-currency control in Argentina, more specifically to the fact that while the Central Bank had given assurances that the dollar-currency market would be closed, with the exception of purchases and sales of up to $100 for travelers traveling to and from the United States, various exchange houses were continuing to quote dollar notes and that in fact a student departing for the United States was known to have purchased $700 in currency from such an establishment yesterday. Dr. Prebisch promised to look into this matter at once and indicated that such transactions would be stopped immediately.

J. W. G[antenbein]
  1. Copy transmitted to the Department by the Ambassador in his despatch No. 6000, August 5; received August 17.
  2. Thomas L. Hughes, Commercial Attaché.
  3. Namely, the commitment that the banks would consult with the Embassy before making remittances to Axis-occupied or controlled countries or to any European neutral country if any person in any Axis-occupied or controlled country had an interest, giving the Embassy the full details of the contemplated transaction. [Footnote in the original.]
  4. Alfredo Louro, official of the Banco Central.
  5. Not printed.
  6. Not printed.