835.24/9–2244
Memorandum by the Special Adviser on Supply and Resources (Taft)17
1. Export Controls
On September 9 the Department sent a letter to the Foreign Economic Administration18 setting forth a more restrictive policy on exports to the Argentine. The FEA was requested to restrict export licenses on all commodities rather than just scarce commodities as in the past. We will still send items needed for the health and safety of the Argentine people and those needed in connection with the United Nations war effort. Copies of this new policy were distributed to all licensing officers in FEA this week, and the policy is now in effect.
[Page 423]2. Reduction of Imports
a. The War Shipping Administration has agreed to withdraw all tonnage under its control beginning October 1, with the exception of a small Norwegian vessel which was nominated for early October loading prior to our request.
This means that northbound cargo will be carried only on Argentine vessels and possibly an occasional returning tanker that has gone down with petroleum. The Flota Mercante is likely to load the most profitable cargoes rather than conform to our shipping priority list. Our only control under the circumstances is through General Imports Order M–63.
b. We have attempted to persuade the Norwegians to procure 20,000 tons of rye in the United States rather than in the Argentine. They have politely but firmly pointed to the difference in price and to their short exchange position. The forthcoming Belgian meat purchases are the subject of our memorandum to Carl Spaeth19 of September 20.20
Although these measures respecting imports and exports should succeed in their purpose of reducing the amount of this country’s business with the Argentine prior to VE–Day, I think we should give some consideration to the situation that will exist after controls are relaxed across the board following the collapse of Germany. For example, the export controls of FEA have been based largely on scarcity and presumably will be abandoned as surplus supplies replace scarcities. The Argentine would then have to be singled out for special administrative treatment if exports to that country are to be restricted. Even in this event there is no certainty that they would not receive an increasing tonnage of American goods, for if there is a free flow to all other American republics it is unrealistic to believe that a large and increasing quantity of transshipment will not occur.
It is planned that a progressive relaxation shall take place in our administrative imports controls as the shipping situation eases. Again Argentina must be singled out for special administrative treatment if imports from that country are to be denied. Shipping will be plentiful and even if Argentine products do not come to U.S. ports directly, it is unrealistic to believe they will not come by transshipment through other American republics if we are not exercising an import control over the whole Hemisphere.
We may want to discuss the economics of our Argentine policy in Phase II at greater length after we have given it further thought.