102.78/1–1047
Memorandum by the Director of the Office of American Republic Affairs (Briggs) to the Director of the Office of International Trade Policy (Wilcox)64
On the basis of information exchanged between the Department of Agriculture and our Embassy in Lima, as contained in the Embassy’s Airgram A–17 of January 10,65 and Department’s Telegram 14 of [Page 1032] January 9, I am extremely reluctant to go along with the flat refusal incorporated in the Department’s reply66 to A–17 attached.
The minimum wheat requirements for Peru total about 8,000 tons per month. The Embassy reports arrivals expected in December and January totalling 33,000 tons, which should provide Peru with supplies through the early part of April.
The present unstable political situation in Peru requires that the United States, as a matter of self-interest, make every effort to provide Peru with assurances that their wheat requirements will be met by this country if imports from Argentina do not materialize. During the last year Argentina has repeatedly demonstrated its unwillingness to accept responsibility for supplying Peru’s requirements. In the light of this experience, I do not believe this Government is warranted in relying upon Argentina to resume regular shipments to Peru this year, and I can not, in confidence, recommend to the Peruvian Government that it place full reliance upon Argentina as a source of supply.
The efforts of this Government to force Peru to take flour instead of wheat impress me as being contrary to general commercial policy, in that they favor American millers as against Peruvian millers, and as a violation of our repeated promises to sustain Peru’s economy on a basis equal to our own. In addition, the disruption which is bound to take place in the Peruvian milling industry will have a very harmful effect on the Peruvian economy, which is presently in a precarious position, and upon the political situation which is of considerable concern to me at this time.
The price differential of roughly 22% is a matter of vital importance to Peru. As Argentina is not contemplating importing Peruvian coal until mid-1947, when it is reported they will not want more than 3,000 tons at a time, the price of Argentine wheat delivered in Peru may be expected to increase. It appears to me that a spread of 20% or over as between Argentine and United States wheat justifies Peru’s request for assurances of future supplies. I suggest that so long as this price discrepancy exists, or until such time as Peru’s economic position improves, the United States should consider Peru as a legitimate claimant upon our wheat supplies.
The constant refusal of the Department of Agriculture to recognize Peru as a claimant upon our wheat supplies has placed a heavy burden on those officers of my staff concerned with this problem, which confronts us anew every month, or at the most, every three months. More importantly, our past policy has encouraged political instability by keeping Peru in a constant state of uneasiness by withholding assurances that this Government will fill Peruvian wheat requirements.
[Page 1033]For reasons set forth above it appears to me that enlightened self-interest requires the United States to make available for shipment to Peru not later than the 15th of March one boat load of wheat, and that provisions be made for the shipment of minimum requirements during the second quarter of this year. In addition, it is important that Peru be given early and unqualified assurances that the United States is prepared to take such action.