811.20 Defense (M) Peru/1124
The Ambassador in Peru (White) to the Secretary of State
[Received May 16.]
Sir: In forwarding herewith despatch No. 239 of May 5, 1944,56 regarding Finance Minister East’s reiterated request that prompt [Page 1523] attention be given to the question of renewing the Overall Metals and Minerals agreement, I have the honor again to express my feeling that, in extending the existing or concluding new agreements which provide economic advantages of great importance to Peru, I should not fail to associate them with the various obligations of this country to the United States, in order that the Department have available all useful considerations.
In view of the Department’s telegram No. 361 dated April 6, 1944, pertaining to the undesirability of using the amendment to the rotenone agreement as a negotiating instrument, I shall withhold further recommendations pending receipt and examination by the Department of despatches Nos. 87, 143, 185 and 240, dated April 17, April 24, April 27 and May 557 respectively, covering the current dollar debt negotiations, which contain ample evidence the Peruvians continue, as in past years, to keep straight business and the good neighbor policy in entirely separate compartments, not associating one with the other.
This point, brought out vividly in despatch No. 240 dated May 5, 1944, referred to above, again was given practical application in connection with the amendment to the rotenone agreement which was signed on May 6. It had been our plan to inform the Peruvians that a voluntary price increase had been offered for another year to Brazil and other nations which had reciprocated, and that authorization had been received to extend the same advantages to Peru providing mutual advantages could be agreed upon. As it worked out, we found ourselves “negotiating” with the Peruvians to cause them to look with favor upon and accept our voluntary offer to pay them about $100,000 more than the prices they had agreed to sell for, which in turn were roughly double the prices they received in open competition before the war, and which were sufficient to cause rapid expansion in the rotenone industry. The Peruvians always proceed rationally on the theory there is no harm in asking the question. If the answer is in the affirmative they are gratified and feel no counterbalancing obligation has been incurred. If in the negative, nothing has been lost. If conditional, they are willing to negotiate in a perfectly friendly although business-like and unsentimental manner.
Respectfully yours,