823.131/2–2454
The Deputy Assistant Secretary of State for Inter-American Affairs (Woodward) to the Acting Regional Director for Latin American Operations, Foreign Operations Administration (Hardesty)
Dear Mr. Hardesty: In response to your oral inquiry, I am pleased to report to you that the Department of State has been informed by the International Monetary Fund that it entered into a stand-by credit arrangement with the Peruvian Government on February 17, 1954 that will enable it to draw up to $12,500,000 as support for stabilization of the Peruvian Sol. At the same time, the Treasury Department of the United States Government signed an agreement1 with the Peruvian Ambassador by which $12,500,000 of the Stabilization Fund of the Treasury Department is earmarked for stabilization of the Peruvian Sol. Likewise, the Department has learned that the Chase National Bank has signed an agreement with the Peruvian Government by which a stand-by credit of $5,000,000 has been opened for possible use in stabilization of the Peruvian Sol.
In response to your further inquiry with respect to discussions with the Peruvian Ambassador concerning a possible transaction by which the Peruvian Government might purchase wheat from this Government, the Peruvian Ambassador has indicated to officers of this Department that (1) his Government does not wish a gift of wheat but that it would be interested in purchasing wheat (2) in Peruvian currency which would not be convertible into United States dollars, and (3) at a price which would provide the wheat to Peru as though it were purchasing the wheat at the market price but at a rate of 15 soles to the United States dollar—in other words, since the present rate of the sol is approximately 20 to the dollar, at a discount of approximately 25% from the world market price. The Ambassador indicated, moreover, (4) that the wheat thus purchased would be the normal requirements of Peru for wheat and would not be a quantity beyond those regularly purchased through the regular channels of trade.
The Peruvian Ambassador has been informed that there is no authorization in present United States legislation for the sale of wheat by the United States Government in foreign currency that is not freely convertible into United States currency. It was predicted to him that it [Page 1514] would seem unlikely, in the event there should in the future be such authorization, that there would be provision for the sale of wheat for foreign currency at a substantial discount below the world market price. Moreover, it was mentioned to the Ambassador that it seemed probable that the Government of the United States, in any arrangements for the sale abroad of United States wheat surpluses held by the United States Government, would not wish to provide the normal and regular needs of countries that may be in such economic and financial condition as to be able to purchase those normal needs through the regular channels of trade.
The Department of State is in accord with the view of the Foreign Operations Administration, as mentioned orally by you, that there does not at present appear to be basis for a surplus wheat transaction with Peru in connection with the stabilization problem.
Sincerely yours,
- A copy of the referenced Agreement is attached to a memorandum by Assistant Secretary of the Treasury Overby to the Secretary of State, dated Mar. 11, 1954, not printed (823.10/3–1154). For additional information about the Agreement, see Annual Report of the Secretary of the Treasury on the State of the Finances for the Fiscal Year Ended June 30, 1954 (Washington, 1955), p. 58.↩