835.10/3–1750
The Ambassador in Argentina (Griffis) to the Department of State
No. 456
Subject: United States-Argentine Credit Relationships
Herewith are transmitted: (1) copy of Mr. Norden’s1 memorandum of proposals for settlement of Argentine dollar indebtedness and regularization of import financing; (2) and (3) comments by officers of the two largest American bank creditors, i.e., First National Bank of Boston and the National City Bank of New York; (4) memorandum prepared by Mr. Aslag H. Eskesen, representative of the General Electric Company in the Argentine.2
The discussion presented herewith has no reference to any self-liquidating loans for specific public purposes which might be considered by United States lending agencies, but refers only to the current effort to rehabilitate Argentine-United States financial and currency relationships. Stripped of much of the technical and banking [Page 706] verbiage, these reports represent the considered opinion of this Embassy that any plan, whether through the Export-Import Bank or otherwise, prepared for the purpose of recreating the flow of trade between Argentina and the United States should recognize the following basic principles:
- (1)
- Under no circumstances should there be a direct government-to-government or government agency-to-government agency loan or credit between the two countries.
- (2)
- The arrearages of dollar indebtedness should be funded as well as should the frozen pesos representing profits and accumulations of various sorts by the American companies in Argentina. This should be in the form of notes of the Argentine Government or its agency banks. It is believed that these notes would find ready market at some level and the risk already incurred by the American companies would continue to be carried by the American companies.
- (3)
- If the Export-Import Bank or any other appropriate government agency can assist in the financial reconstruction or Argentina, a revolving credit should be created, whether by the Export-Import Bank alone or by the Export-Import Bank together with a group of American banking institutions, to make appropriate advances to American manufacturers who desire to sell in Argentina, goods having direct favorable impact on the agricultural or industrial productivity of Argentina. Just what percentage of the risk in such a credit which should be borne by the American manufacturers, must be decided by the lending agency.
It is the opinion of this Embassy that any suggestions by the Department or others looking towards a direct uncontrolled loan to the Argentine Government would be met by a storm of protest by American newspapers and even by American manufacturers and bankers unless a substantial part of this loan were earmarked as a “bailing out” operation. We cannot advocate such a “bail out”.
We believe that the American manufacturer and banker himself will know and continue to know more about the dangers inherent in accepting risks in Argentina than the State Department or the lending agency can know, and would under the above plan suggested, wherein they become co-underwriters, use the utmost caution in the risks accepted.
You are fully familiar with the general economic situation which prevails here and the figures which demonstrate production difficulties, a rising population, a fairly complete dollar shortage, a tendency to inflation and a wide variety of peso rates. The economic judgment on the entire matter must, of course, be made by the lending agency. From the point of view, however, of hemispheric solidarity and the effort to tie Argentina to the United States orbit of defense, the Embassy is of the considered opinion that every reasonable and safe effort should be made looking towards a solution of the economic problems.
[Page 707]The Department has full knowledge also, we believe, of this Embassy’s strong feeling that any financial measures taken for the benefit of the general economy of the Argentine presupposes acts, not promises, to alleviate at least most of the top priority difficulties confronting certain American interests here, including frigoríficos, refiners and distributors of petroleum, airlines, and others.