740.00112A European War, 1939/15861

The Chargé in Argentina (Reed) to the Secretary of State

No. 6001

Sir: Referring to the Department’s telegrams no. 877 of June 15, 6 p.m. and no. 1094 of July 22, 8 p.m., and the Embassy’s telegram no. 1469 of July 29, 11 p.m.,94 in regard to credits to be extended to certain Argentine banks by the Export-Import Bank of Washington covering uninsurable risks and concerning also the desire of the Department that these institutions furnish assurances of cooperation with war-time financial measures of the United States, I have the honor to report that following the receipt of the Department’s telegram under reference the Embassy requested the institutions included in the Embassy’s telegram no. 645 of April 10, 3 p.m.,95 excluding the local branches of the two American Banks, to execute a form embodying the four points contained in the Department’s telegram no. 827 of June 8, 11 p.m. A copy and English translation of the form are enclosed herewith.95

All of these institutions have now either signed the form or furnished assurances of cooperation in some other form. Shaw, Strupp and Company, Ernesto Tornquist and Company, the Banco Holandés Unido, the Banco Polaco P.K.O., the Société Générale, and the Argentaría S. A. de Finanzas have returned the form after signing it or have supplied a statement embodying in more or less the same terms the substance of the form.

The Banco Francés del Río de la Plata has informed the Embassy that it is not at this time interested in the credit facilities in question, but it has nevertheless voluntarily furnished a statement, a translation of which is enclosed herewith.95

The Banco de Italia y Río de la Plata has been reluctant to execute the undertaking desired as it has considered this to be inconsistent with the control exercised by the Central Bank, including the bank’s recent Circular No. 293 of July 4, which prohibits banks from furnishing certain information to institutions other than the Central Bank. However, the Banco de Italia y Río de la Plata has been especially cooperative with the British Embassy for some months as this Embassy has reported in its despatches nos. 4050 of February 3, 1942, and 4211 of February 24, 1942.96 Señor Doretti, the General Manager of the institution, called at this Embassy several weeks ago and explained that his bank was willing to cooperate in every way [Page 492]with this mission, and he has subsequently furnished a letter dated July 10, 1942, signed by himself and the President of the bank, a copy and translation of which are enclosed.98 Inasmuch as it is understood that the Banco de Italia y Río de la Plata is in practice complying with all of the points mentioned in the form, it is recommended that the statement of this bank be accepted for purposes of the Export-Import Bank credits.

Concerning the Banco de la Provincia, the Embassy has discussed this matter a number of times with Señor Alberto Tintoré, head of the Foreign Department of the bank (reference is made also to the conversations on April 7 and April 9 reported in the Embassy’s despatch no. 4710 of April 11 last). The Banco de la Provincia has consistently taken the position that while it has not been granting any new credits to firms and individuals on the Proclaimed List, it cannot, as a semi-official bank (one-half of its stock is owned by the Province of Buenos Aires, and it is the fiscal agent of the Province) give the desired assurances concerning the immediate elimination of existing credits and overdrafts. Sr. Tintoré has also volunteered the information in a spirit of frankness that there were instances, although they were few, in which his bank was obliged to advance credit to the Province which the latter might, in turn, make available to firms on the Proclaimed List for such purposes as public works, but that this was a matter over which the Bank had no control.

As to the furnishing of figures of outstanding credit accounts with firms on the Proclaimed List, the Bank was apparently prepared to supply the total figures both now and a year ago, but on August 1, the Central Bank informed the Embassy that it would consider this inconsistent with the Central Bank’s own control over Argentine banks. The matter was discussed yesterday with Dr. Prebisch, the General Manager of the Central Bank, who indicated that he would have the figures for Proclaimed List accounts of the Banco de la Provincia furnished the Embassy through the Central Bank (as well as figures for certain other banks irrespective of the Export-Import Bank credits (as was reported in the Embassy’s despatch no. 6000 of August 5, 194299). As soon as the Embassy receives these figures, which it is understood will be supplied within the next few days, it will transmit them to the Department by telegraph.

With respect to the approval of the undertaking of the Banco de la Provincia by its board of directors, it appears that it will not be possible to obtain this under existing conditions. As the Department is aware, the President of the Bank, Dr. Sánchez Sorondo, is sympathetic towards the totalitarian countries and is not friendly towards the United States, and if Dr. D’Olivera, the General Manager, should [Page 493]permit the matter to be aired at a meeting of the board, there is little doubt that it could cause serious complications, including impairment of Dr. D’Olivera’s cooperation with our Government. Dr. D’Olivera takes the position that he has full authority to sign the declarations and that therefore nothing would be gained by presenting the subject to the board. It has also been emphasized, and Dr. Prebisch confirmed this yesterday, that the President of the Banco de la Provincia has very little power in the administration of the Bank, and in support of this statement there have been cited the Bank’s statutes, which do in fact, appear to give the President only limited powers. It is reported that Dr. Sánchez Sorondo spends but very little time at the Bank, and then only to attend meetings.

In regard to the desired commitment that the Bank consult with the Embassy before making any remittance to Axis countries or to neutral countries if for the benefit of Axis interests, Dr. Prebisch had previously requested that the Embassy not ask for such an undertaking in the future as the Central Bank considered that this would conflict with its own control, especially by virtue of the powers conferred by the decrees of June 15 and June 17.

Although the signed undertaking (copy and translation enclosed herewith)1 of the Banco de la Provincia, even if the promised figures show a material decrease in all credit accounts with Proclaimed List firms and individuals, falls short of the commitments requested in the Department’s telegram no. 827 of June 8, 11 p.m., it is believed that it is as satisfactory as can be obtained under present conditions. Moreover, it is feared that if this bank should not now be placed upon the approved list of the Export-Import Bank, there would be a serious danger not only that the Banco de la Provincia would feel less inclined to pursue a cooperative policy but also that the Central Bank, which has manifested special interest in having the former included, would feel offended in the matter. Further although less important factors in the case are the facts that the Banco de la Provincia is the second largest bank in the country, that it is considered an exceptionally well managed institution, and that it has just received much favorable publicity here on the occasion of the renewal of its contract with the Province until 1986. It is, therefore, recommended that if the figures to be submitted are not, in the circumstances, definitely unsatisfactory, the Banco de la Provincia be at least tentatively included in the list of the Export-Import Bank, but with the understanding that the Embassy be furnished through the Central Bank with figures of Proclaimed List credit accounts every six months.

Respectfully yours,

Edward L. Reed
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