840.51 Frozen Credits/8477: Telegram
The Ambassador in Argentina (Armour) to the Secretary of State
[Received November 25—10 p.m.]
2382. My 2368, November 24, midnight.30 This afternoon the Central Bank outlined its position with reference to action reported in Department’s 1775, November 20, 9 p.m.30 Central Bank stated that it felt only two avenues were open to the Treasury Department, (1) either to consider Argentina as a neutral country and apply the controls in that manner, or (2) to consider Argentina as a member of the hemisphere block and have confidence in the controls exercised by the Central Bank. The bank recognized that Argentina actually fell in neither of these categories. In his [its?] judgment it could not totally cut off financial relations with the Axis until political relations had been broken by the Government, but felt that it had made an honest attempt to cooperate in the implementation of the Washington Resolutions and that it had not fallen far short of compliance with those Resolutions. It admitted that it had been unable to go as far as [Page 508] the Treasury might desire, but felt that the cooperation given the United States by the Central Bank was far from neutral and even hazardous considering Government’s position.
It stated that the action taken by the Treasury Department against the Banco de la Provincia and the Banco de la Nación was a very grave step since, if the action had been taken as a result of remittances by those banks, the Treasury Department should have penalized the Central Bank which was the responsible party rather than the institutions themselves. Furthermore should any remittances have been made by the banks without the approval of the Central Bank the matter then became one for action by the Central Bank rather than by the Treasury Department. The Central Bank stated that it must request information of the Treasury Department as to the concrete reasons for having taken the action since, unless it could tell the local banks exactly why the action had been taken, its moral authority would be completely undermined.
The offer made yesterday by Prebisch to study the entire situation with officers of the Embassy was re-emphasized and the bank stated that it would give every facility for a thorough joint survey. It is willing clearly to define the extent to which it can go so that the Treasury Department will know exactly what is possible, but it feels that the Treasury Department will have to work either with or against the bank.
The Embassy feels that at the present moment neither the Treasury nor the Department is in possession of sufficient facts to determine definitely whether the cooperation of the Central Bank is of greater value than the sum total of remittances which take place and it feels that it would be extremely unwise for any drastic action to be taken by the Treasury Department until the facts are established. The Embassy is not requesting an indefinite stay of action on the part of the Treasury, but it does request a reasonable time in which to go to the bottom of the entire question of financial controls.
The bank is ready to start discussions and it requests an immediate reply with regard to the specific charges against the Banco de la Provincia and the Banco de la Nación. The Embassy wishes to warn the Department that the conversations which have taken place were completely without protocol and hence the information given herein regarding the attitude of the Central Bank should not be discussed in any way with the Argentine Embassy in Washington and must otherwise be kept confidential.
A reply to the Central Bank’s request and an authorization to enter into discussions with the bank would be appreciated by Saturday at the latest.