635.4131/6–1049: Telegram

The Ambassador in Argentina (Bruce) to the Secretary of State


525. Press here carried article this morning State Department protest to Great Britain on account Anglo-Argentine trade agreement. Democracia states protest made to Britain because she has become satellite whereas Peron has preserved Argentine independence. Our position at Embassy is to be noncommittal and refuse comment on controversial matters that are none of our business.

Presume State Department understands Anglo-Argentine agreement engineered by junior staff ECA who used US taxpayer’s dollars in attempt force down Argentine prices meat and engineered pork purchase from US at much higher price than Argentine pork, with idea of forcing Argentina to sign agreement. Also refused put any dollars up in course of agreement thereby making aid entirely dependent on British production.

Argentine negotiators themselves in conference Ray, myself and other leading US business executives here stated Argentina had need [Page 507] for and desired US products but had been prevented from getting them. Barro, ardent nationalist and generally considered unfriendly to US made comment “Who would swap US Ford for British Austin?”

Minister Economy Ares in conversation with Ray two days ago lamented fact Anglo-Argentine agreement makes it necessary turn to Great Britain for so many manufactured products. He cited particularly automobiles, tractors, other agricultural machinery and machine tools being products Argentina would prefer import from US. Ares explained Argentina could only sell its fresh meat to England and there were only two possibilities: (1) Accept British products in payment, or (2) sterling convertibility into dollars. Ares pointed out our failure make ECA dollar purchases or help England with convertibility ruled out second possibility. This Embassy has long foreseen and lamented consequences barter deal between Great Britain and Argentina but in view dollar shortage and ECA opposition assumed that Washington considered it a calculated risk.

State Department unquestionably realizes controversy now developing between State Department and ECA.…

Embassy here 100 percent accord attitude State Department, but afraid its case locking stable door after ECA let horse be stolen.1

  1. Under date of July 28, Mr. Atwood sent to Ambassador Bruce a letter reviewing at some length the Department’s position during the Anglo-Argentine discussions. A portion of the letter read as follows:

    “Deeply appreciative of the British dollar position and the significance of British recovery to this country’s security, I cannot forebear pointing out that the UK has in this instance been almost completely responsible for the inability of Argentina to earn dollars in European trade. The UK refused dollars to Argentina; the UK did not request dollars from ECA; and after the discussions with Mr. Webb, the UK neither incorporated dollars in the agreement nor evinced willingness even to discuss the means with officials of the Department or of Commerce. The British appear to have sought an agreement of five year’s duration. Recognizing that in the end the UK might have proved herself unable to expend dollars in Argentina, the fact remains that the UK did not review the various possibilities with us in advance of signature and, so far as we know, did not attempt to reduce the duration of the agreement to the period made absolutely necessary by the dollar shortage. Now the world knows that Britain can purchase all the meat she can get with sterling and Argentina has agreed to accept sterling for all British purchases in Argentina—not for a year but for five years. Unless the British prove to be incapable of meeting their obligations under the agreement, particularly with respect to the supply of oil, and the agreement falls through, I regard the agreement as the most serious blow to American business interests in Argentina since the negotiation of the Roca-Runciman Agreement in 1933. We now anticipate that Britain will proceed to negotiate somewhat similar bilateral agreements with Uruguay and Brazil, and I have little real hope that in the long run US business interests will come out any better in these countries than in Argentina.” (635.4131/7–2849)