The Secretary of State to the Ambassador in Uruguay ( Dawson )

No. 617

Sir: With reference to your despatch No. 1008 of May 20, 194239 reporting that the Uruguayan Government is seeking funds for deficit financing you state that you will endeavor to keep the Department informed of the situation and that a thorough study of the Uruguayan Government’s fiscal position is to be prepared in the near future.

While it is evident from reports on file that the fiscal position of Uruguay has deteriorated somewhat during the past two years, it is not readily apparent why the Uruguayan Government should no longer be in a position to raise funds for deficit financing locally with the assistance of the Banco de la República, or why additional dollar credits should be required at a time when the Uruguayan exchange position is unusually strong. According to recent advice, money is plentiful in Uruguay.

It is requested that in addition to setting forth the nature and causes of the present crisis, you indicate in your report the trend of government finances in the light of current shipping developments and furnish further details regarding the program of public works mentioned in the Embassy’s telegram No. 270 of April 9, 1942 and any other measures under consideration by the Uruguayan Government [Page 721] designed to relieve the economic situation. The financial position of the autonomous State enterprises should be indicated in so far as it may have a bearing on the Government’s fiscal problem. The Department also desires to know the identity of the Argentine banking group or groups with whom the Uruguayan Government has been conducting negotiations.

As previously stated, the Department would be glad to take under consideration any measures of cooperation suggested by the Uruguayan Government.

Very truly yours,

For the Secretary of State:
A. A. Berle, Jr.
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