103.9169/4100: Airgram
The Ambassador in Peru (White) to the Secretary of State
[Received June 20—10 a.m.]
A–573. Reference Department’s circular airgram of May 25, 11:15 a.m., 1944,90 and the Embassy’s reply in telegram No. 782 of June 13, 11 a.m., regarding the decentralization roll-back to be announced June 15 and become effective July 1.
The Finance Minister’s written reply of June 1290 expressed full agreement with FEA’s proposal regarding action by the United States and enclosed a copy of a notice the Ministry proposed to publish on June 15 informing the public of the United States roll-back and of the decision of the Council of Ministers to require Peruvian import licenses for all merchandise from all countries of origin, for the reasons enumerated in telegram No. 782 referred to above. The notice is translated as follows:
Ministry of Finance and Commerce
Official Announcement of the Department of Importations
The Ministry of Finance makes known to the import trade that according to information provided by the FEA of the Government of the United States, recommendations for exports from that country will not be necessary for the great majority of articles and that only a limited number of exports will need that prerequisite after July 1, 1944.
In order to facilitate for importers regularity in the embarkation of their orders and in order that the same may adjust themselves to the necessities of national economy, notice is given that the Department of Importations of the Ministry of Finance will require the presentation of applications for every order of merchandise, without exception, and whatever the country or origin, in order to decide upon, after a rapid examination, the respective import license of the Peruvian Government.
Lima, June 14, 1944.
The Director General of Finance.
(As explained in the Embassy’s telegram No. 782 referred to above, the Finance Minister is withholding publication of this announcement for a few days pending receipt of any observations that the [Page 1539] authorities in Washington may wish to make. He has explained, however, that a definite decision has been taken to adopt this form of import control and that only the most unusual circumstances will modify the decision.)
The drastic decision of the local authorities is contrary to what we had been given to understand in numerous previous conversations since roll-back was first discussed, although the Minister, as will be recalled, from the beginning expressed concern over the adverse effects on domestic economy of a possible congestion of orders and arrivals resulting from over-enthusiasm and speculative motives.
In recent weeks more has been heard progressively about the encroachment of newly established import firms, mostly Hebrew, it is said. The Lima Chamber of Commerce has promoted this idea as it applies to commission agents and importers, while the Association of Manufacturers is interested in protecting not only the old but also the new industries fostered by the emergency shortages of merchandise. Finally, the whole scheme fits into the government’s plan for devising a system for selling Peruvian products in markets where Peruvians buy. At the same time it represents an instrument controlling foreign exchange without promulgating legislation specifically for that purpose.
The British payments agreement was an instructive and useful model, which the British have applied inexorably, and which was seconded by our intricate and comprehensive requirements controls and overall merchandise purchasing agreements.
Possibly it may affect the United States more unfavorably than others, owing to our long and short term agreements, under which we have undertaken more or less unconditionally to acquire Peruvian products. Presumably the Peruvian Government will use the import licensing system to encourage continuation of the existing purchasing agreements.
This matter attains special importance when coupled with the recent debt discussions91 during which the exchange shortage was featured so prominently by all the Peruvians who participated formally and informally; and it seems obvious that several of them, whom the Finance Minister consulted on the topic dealt with here, discerned in this roll-back proposal an excellent bargaining instrument,—and also a new source of revenue.
Mr. Wilfredo Pflücker, Chief of the country agency or requirements work, outlined the preliminary deliberations as follows: After discussion it was agreed, as it had been in the past, that the continued issuing of licenses would carry all of the emergency inconveniences over into peace-time trade, that the system would be hard to destroy if once imposed, that the other nations likely would have to adopt [Page 1540] counter-measures in due course, that discrimination among business men on the basis of race is inadvisable, etc. Later he reported that the Minister and his advisers also agreed on those points, in principle, but the impression prevailed that Peru, like all of the great nations and most of the small, of necessity must retain a system of control until the future is seen more clearly.
During the discussion in the Council of Ministers it was decided the opinions of the Chamber of Commerce and Association of Manufacturers, as well as the imperativeness of curtailing the outflow of dollar exchange, must be observed at least during the period of transition and until the coming international conferences determine the norms of post-war intercourse. Both Mr. David Dasso93 and Finance Minister East illustrated by asserting that orders for motor vehicles alone would, if unchecked, consume an appreciable percentage of Peru’s accumulated foreign exchange.
Mr. East was aware of the likelihood of energetic protests from importers, but stated the application of the contemplated system would be moderate and attentive to all serious interests.