Foreign Relations of the United States, 1950, The United Nations; The Western Hemisphere, Volume II

835.311/11–2450

Memorandum of Conversation,¹ by the Chargé in Argentina (Mallory)²

restricted

Buenos Aires, November 17, 1950.

Last evening I called on Dr. Roberto Ares, Minister of Economy. The call was for the purpose of discussing matters relating to American-owned frigorificos in Argentina.

I told the Minister that I did not wish to discuss the many details involved in the packers problems since they were on the technical side and could be more properly discussed and understood by the packers and Dr. Taboada. I said, however, that I wanted to talk to him on the broader question of principle. The question of principle was implicated in the letter which Ambassador Griffis had addressed to the Minister and which I noted the Minister had before him. The Ambassador’s letter directly or indirectly referred to a number of specific problems confronting the industry. It was in response to the Ambassador’s letter and to a telegram which I had received from the Ambassador that I had decided to see His Excellency. I recalled to his mind that early in 1949 there had been suggested the idea of a “stabilization plan” made necessary because of governmental action which forcibly put the packers in a position of losing substantial sums of money. It not being possible to work out the plan at that time, a subsidy arrangement had been entered into under which losses incurred by the packers would be reimbursed by the Government. This system continued in effect until February 1950 at which time the Government indicated that a subsidy system was no longer desirable and proposed to withdraw deficit payments. I also recalled to the Minister that in March at a meeting in the office of the Minister of Hacienda, Dr. Cereijo, at which members of the Economic Council, representatives of the packers, Ambassador Griffis and myself were present, that it was agreed that the subsidy payment system would continue on a temporary basis and until such time as an audit of the books of the packers could be made and a stabilization plan formulated and put into effect. This continued for some months through various phases and finally at the end of August all payments were to cease and readjustments in prices having taken care of the export market and³ supposed freedom of the domestic market was to permit operation without loss.

I told the Minister that everyone had been very happy with such an approach to the problem but that unfortunately the stabilization plan had not been implemented in all respects leaving the packers in a difficult position. I made reference to the fact that the removal of wholesale selling prices on beef in greater Buenos Aires was not followed by similar action in the Province of Buenos Aires, Moreover, in place of wholesale ceiling a retail ceiling had been imposed in greater Buenos Aires which caused losses because the packers were unable to obtain sufficient margin between the price they had to pay for livestock and the price at which meat had to be sold. I mentioned, too, the fact that sales of hides and tallow to IAPI were obligatory at fixed prices, whereas the small country butchers were able to sell on an open market at higher prices and thus bid up the price of livestock.

The Minister said that with respect to the certain specific items such as the question of hides he was making arrangements for the necessary changes because he felt there was an injustice at present. He said he was also working with the authorities of the provincial government of Buenos Aires in La Plata and hoped to obtain some relief. With respect to the general position of the packers, the Minister spoke directly and very decisively saying that he thought they were continually complaining for no good reason and that he was convinced that they were not losing money. He was not disposed to enter into discussions concerning a floor or subsidy arrangement⁴ but said that with respect to the discussion of specific details, he wished to have a meeting and thereupon fixed on Tuesday at 5:00 p. m. for the representatives of the packers to meet in the office of the under-secretary,⁵ Dr. Campos, together with Drs. Taboada and Schachert.

The Minister said that he had recently, in an effort to promote the sales of Argentine products, had a representative cover all of Europe (he was referring to the trip of Schachert, Head of IAPI). He said that investigations there had shown that the American packers were not aggressive in making sales; that they had weak, ineffective European organizations or representations with the exception of Sansinena, an Argentine government-controlled packing plant. He said that when the Argentine Government wanted to have sales of meat made they had to go to some more aggressive salesmen such as the houses doing international trade in grains. The grain exporters had been able to sell meat at such diverse places as Italy and Peru at prices of 380 to 400 dollars per ton, whereas the best the packers seemed to be able to do were offers of 280 to 300 dollars per ton. He felt that if the managers were to return to their head offices in the U.S. where he said people were very much alive and good salesmen that they might get a rude shock. He implied that they had been taking it easy and whenever there was a slight difficulty went either to the American Embassy or to his office for help. He repeated the thought that he was by no means convinced that they were losing money.

Finally, the Minister said as would be noted from his defense of the private packing plants in a presentation which he made before the Argentine Congress, he believed that the private industry should continue and that they should be on a basis where under sound management they would be able to cover their costs and make a reasonable profit. He said that with respect to the several problems relating to prices that at the meeting he trusted that they could be worked out.

1. Copy transmitted to the Department as enclosure 1 in despatch No. 748, November 24, 1950, from Buenos Aires.
2. Ambassador Griffis had arrived in the United States for consultations on September 24, 1950. In telegram 235, October 13, 1950, addressed to Mr. Mallory (in Buenos Aires) personally, the Department indicated that the Ambassador had by that date resigned or was certain to resign. (123 Griffis, Stanton) The resignation was made public on November 17, 1950, in a White House press release that included both the Ambassador’s letter of resignation and the President’s reply.
3. Apparent misphrasing.
4. In despatch No. 678, November 8, 1950, from Buenos Aires, the Embassy had indicated that the American-owned packing companies were once again asking for subsidies and had inquired of the Department as to whether the Embassy should endorse the request. The despatch concluded: “Perhaps the basic policy consideration is whether efforts should begin now to settle the packers’ problems on a long-range basis, or whether temporary measures should be sought, as before, hoping that developments now unforeseen will some day provide a favorable solution. The packers insist on the latter course, which, in the Embassy’s opinion, threatens to continue indefinitely the pattern of crises and unstable settlements characteristic of the last few years.” (835.311/11–850)
5. Of Economy.