Foreign Relations of the United States, 1949, The United Nations; The Western Hemisphere, Volume II

835.5151/10–449

Memorandum of Conversation, by the Director of the Office of East Coast Affairs (Tewksbury)

restricted

[Washington,] October 4, 1949.

Participants:	Dr. José Julio Brignoli—Argentine Delegate to Joint US-Argentine Committee of Commercial Studies
	Sr. Julio C. Rodriguez Arias—Adviser to Dr. Brignoli
	Sr. Antonio F. Cafiero—Adviser to Dr. Brignoli
	Mr. Corliss—FN1
	Mr. de Beers—Treasury Department
	Mr. Hill Houston—Department of Commerce
	Mr. Atwood—RPA2
	Mr. Tewksbury—RPA

Following a meeting of the Finance Subcommittee of the US-Argentine Committee of Commerical Studies, Dr. Brignoli and the group mentioned called to discuss the progress being made in the joint discussions. Dr. Brignoli stated that he considered that the discussions were proceeding in a highly satisfactory manner and that he was much pleased with the progress which had been made.

The conversation then turned to the recent devaluation of the Argentine peso,³ and Dr. Brignoli expressed the opinion that the devaluation measures would facilitate the efforts of the Joint Committee in expanding Argentine exports to the United States. He stated that the more favorable export exchange rates would place Argentine products on a more competitive basis and should assist in expanding sales in this country.

I inquired whether the devaluation of the peso would in any way affect payments on outstanding accounts, and Dr. Brignoli explained that, under the exchange measures in effect prior to the devaluation, importers had been able to insure themselves against fluctuations in exchange. It was possible for any importer to provide guarantee through his local bank and the Central Bank of exchange at the rate in effect at the time of importation, and thus, when the exchange is available for paying past due accounts covering imports, this will be provided at the former rate.

I inquired whether this would likewise apply in the case of payments for services such as dollar remittances due on cable messages, transportation, etc. Dr. Brignoli replied that this was not provided for and that the rate applicable would be the new rate of nine pesos. I remarked that this might well involve very substantial losses to a number of companies, particularly in the case of some of the transportation companies. I pointed out that the fares established by the airplane and steamship companies were based on the dollar cost of the transportation and figured at the current rate of exchange. The transportation companies have not been permitted to remit funds as received for months and as a result substantial holdings have accumulated, and I explained that, if the funds must now be transferred on the basis of an exchange rate of nine pesos to the dollar, losses would be in some cases very substantial. Dr. Brignoli agreed that the inability of the transportation companies to transfer their funds was in no way their fault and that injustices might result from the devaluation measures. I explained to Dr. Brignoli that we were almost certain to receive inquiries from companies faced with these lossess and inquired as to the steps to be taken by them to protect their interests. While Dr. Brignoli did not make any specific commitment, he indicated that careful consideration would be given to cases where losses would result and suggested that interested companies file complete statements with substantiating data as to the amounts involved and the circumstances surrounding the accumulation of peso funds to the National Economic Council. He said that each case would have to be considered separately and explained that he had already arranged an appointment with Mr. Vidal of the Panagra Company to discuss their problem.

The balance of the discussion was of a general character, and Dr. Brignoli gave the definite impression that he is pleased at the attentions which he has received and the progress being made.

Howard H. Tewksbury

1. James C. Corliss, Assistant Chief of the Division of Financial Affairs.
2. Rollin S. Atwood, Officer in Charge of River Plate Affairs.
3. On September 19, the Argentine Central Bank had suspended exchange operations following the United Kingdom’s devaluation of the pound sterling; on October 1, the Central Bank announced a new set of exchange rates for the peso for various categories of imports and exports. On October 3, the free market rate went from 4.80 pesos to the dollar to 9 pesos to the dollar.