823.51/1550

The Ambassador in Peru ( White ) to the Secretary of State

[Extracts]
No. 285

Sir: I have the honor to submit herewith a memorandum53 reviewing the principal topics in the sixth meeting on the dollar debt discussions being carried on by Finance Minister East and Mr. James G. Rogers, representing the Foreign Bondholders Protective Council, which took place on May 8 at 4:30 p.m. in the Central Reserve Bank.

Preceding despatches of the series are cited as follows for convenient reference: Nos. 87, 143, 185 and 240,54 dated April 17, April 24, April 27 and May 5, 1944, respectively.

Despatches Nos. 23953 and 252,55 dated May 5 and May 8, 1944, respectively, pertaining to the Finance Minister’s insistence on renewing the Overall Metals and Minerals Agreement, contain appropriate supplementary information on the subject.

As had been anticipated in the despatches described above, Mr. East concluded his presentation with a proposal to reduce the principal of 92,602,584 dollars to an equal number of soles or, in other words, to pay one sol for one dollar.…

. . . . . . . . . . . . . .

Though some argue that the Peruvians are more friendly with the British, Italians and Japanese than with the Americans, citing in evidence the fact that the Peruvians served the guano loan and paid the British in cash for the Marconi communications system and the Paita dock, which were taken over by the Peruvian Government from the British, that payment in cash was made to the Italians upon expropriation of the Caproni airplane factory, and that payment of the 1940 Japanese claim for damages was effected promptly, I do not believe that this is a correct deduction from Peruvian performances in regard to our various claims. Many reliable American business men of long experience in Peru consider that many, perhaps most, Peruvians feel closer to the United States than to any other non-Latin nation.

It seems more probable to conclude that the Peruvians were attentive to the representations of those nations, because all of the interested persons and officials seemed to be acting harmoniously as though they believed in reciprocity of treatment. In other words, they knew where the governments of those countries stood.

[Page 1579]

Their failure to know the true policy and attitude of the United States is not hard to discover, particularly during the last three or four years. But even in 1936, 1937 and 1938 Peru’s sugar quota was increased after clamorous demonstrations by the Peruvians, without requiring any conditions favorable to the United States except that we did acquire a commercial commodity which could be used. There is no effort at bargaining of the sort which was then and always is expected by the Peruvians.

Is it to be wondered at that Messrs. East and Dasso, to name only two, upon various occasions have manifested evidence of their inability to determine where we stand? Practically all of the following examples have been brought to our attention by Peruvians at one time or another: Messrs. Dasso and East have advised against loans and advances to Peru, but Americans of importance have not only recommended but have insisted that they be accepted; the Commodity Credit Corporation has made efforts to purchase canned fish and the Coordinator’s representative has discouraged the exportation thereof; American property has been expropriated with the support of the Rubber Development Corporation while the Embassy opposed such action; the Embassy, in administering the conservation program of the Foreign Economic Administration, has refused to certify import recommendations for certain merchandise, even when the Peruvian governmental departments have offered to pay cash, and the Lend-Lease authorities have supplied the same material without cost to Peru; the United States Commercial Company, at least toward the beginning, encouraged flax production and the Coordinator’s Food Mission discouraged it; the Embassy pressed for the liquidation of Welsch y Cia. and Radio Internacional, and the Coordinator’s Office issued propaganda through Radio Internacional simultaneously with advertisements by the Proclaimed List firm Welsch y Cia.; officers in Washington insisted upon matching clauses to provide better conditions for mine workers when even the Peruvian Director of Labor considered the program inadvisable; in like manner they insisted upon a labor clause in the Overall Metals and Minerals Agreement as well as in private agreements when the Peruvian Government prohibited the former and discouraged the latter; the Coordinator’s Food Mission has gone on record with the statement the Peruvians “…56 simply are not capable of understanding why we would be niggardly in our support of an undertaking which we initiated.…”; upon different occasions representatives of the United States Government have insisted on spending every cent of an appropriation because, among other considerations, if unused in whole or part it would adversely reflect on those who made the estimate and also [Page 1580] make it more difficult to convince Congress of the need of consecutive appropriations for the purpose.

There are other illustrations of this general category which, together with the foregoing, may be annotated or omitted, depending upon whether we prefer or dislike to contemplate some of the questions which come up in the minds of the Peruvians.

While presumably no permanent injury has been inflicted upon Peruvian-American relations as a result of the foregoing instances of inconsistency, it would appear that these relations have been less smooth and less beneficial to both parties, both at present and in the long run, than they would have been had all of the departments and agencies of the American Government performed with precision as a single unit, without expressing contradictory opinions and policies. These last have confused the Peruvians in recent years and at the same time enabled them to escape their obligations and avoid reciprocity. We can get adequate consideration for the debt problems and other American claims only when the United States is able to unite its interests, demands and favors in a single program, centrally executed.

Respectfully yours,

J. C. White
  1. Not printed.
  2. Despatches 87 and 240 not printed.
  3. Not printed.
  4. Ante, p. 1522.
  5. Omissions indicated in the original despatch.