Memorandum of Conversation, by John K. Havemeyer of the Office of South American Affairs



  • Uruguayan Exchange Rates with Special Emphasis on the Rates Applied for the Export of Wool Tops.
  • Participants: Ambassador Mora
  • Sr. Bermúdez, Commercial Counselor
  • Deputy Assistant Secretary Mann
  • Mr. Havemeyer

Ambassador Mora said that he had received a cable1 from his Foreign Office which contained a draft decree law which would remove the decree law issued April 5, 1952, banning the export of wool tops. The new draft would provide for the export of wool tops at the rate of 1.519 pesos to the dollar. He asked Mr. Mann what he thought Treasury’s reaction would be to such a proposal. Mr. Mann replied that he believed Treasury would find such a decree law acceptable, but he suggested that the Ambassador make an appointment directly with Under-Secretary Overby of the Treasury to ascertain Treasury’s views with respect to the proposed decree law. The Ambassador read the new decree law in Spanish, and it was noted that in the “whereases” the proposed decree provided agreement with the U.S. laws.

On April 25 officers of the Treasury Department including Messrs. Southard, Fields, Willis, Hebbard, McNeill, deBeers, and Messrs. Corbett and Havemeyer from State attended. The Treasury Department was informed of the proposed Uruguayan decree law which Ambassador Mora intended to discuss with Under-Secretary Overby. Several Treasury representatives thought that this proposal would temporarily solve the wool top problem vis-à-vis U.S. countervailing duties, but at the same time would create new problems with respect to the Uruguayan multiple exchange rates. The primary feeling was that this action by Uruguay would pave the way for other changes in the Uruguayan exchange rate system. It was agreed that such a decree law was a temporary measure for the Uruguayans prior to deciding what to do with their multiple rate structure. Mr. Southard reported that Dr. Paraguana,2 the Uruguayan representative on the IMF, thought this step made no sense for Uruguay, as it does not deal with the overall problem of the monetary exchange rates. Regardless of what was said in the Treasury Department, Paraguana will coach the Uruguayans on this subject. Dr. Paraguana thinks the only way to solve the problem is to consolidate the buying and selling rates. Mr. Southard and Dr. Paraguana [Page 1546] both agreed that an intermediate buying rate between 1.519 and 2.35 would be the most satisfactory for Uruguay but that it was up to the Uruguayans to make the proposals on their rates to the IMF.

It was recognized that Uruguayan revenues depended for a large part on the spread between its buying and selling rates. Mr. Southard said that we had actually two problems, one of working on the Uruguayan exchange rates in the IMF, and two, countervailing duties as interpreted under U.S. law. The encouragement for the enforcement of this law by members of Congress was also emphasized. Mr. Southard said that his testimony before the Senate Finance Committee had given fair warning to those members of Congress interested in the problem that if a higher unitary rate than 1.519 were applied to raw wool exported from Uruguay, larger quantities would move immediately than are presently moving under the 1.519 rate.

Mr. Hebbard reported that all the Uruguayan rates which became effective October 6, 1949, were temporary rates and that at that time Uruguay had agreed to continue to look into the problem in order to further simplify their exchange rate structure. Consensus was that the new Uruguayan decree law would ease the problem now in Congress vis-à-vis Argentina and Uruguay. It was agreed that Mr. Overby advise Ambassador Mora that as a temporary measure the immediate pressure in the U.S. would be removed and that we had no objection to the proposed decree law. In addition he was to remind the Ambassador that as long as multiple rates existed in Uruguay, the U.S. would be faced with the problem of countervailing duties on dutiable commodities exported by Uruguay to the U.S.

The broad policy of the U.S. attitude toward multiple rates, subsidies and bounties was discussed. Mr. Southard requested that his testimony given before the Senate Finance Committee be used as Treasury’s policy and that studies be made of all countries which had multiple rates or subsidies and that a decision be arrived at in order to find which countries fall within the criteria outlined in his testimony. Specifically, Argentina, France, Yugoslavia, Ecuador, Chile, and Venezuela were mentioned. The problem in Ecuador was given more emphasis than the other countries.

(Subsequent to the above meeting Mr. Mann spoke with Mr. Bermúdez by phone and it was learned that Ambassador Mora had decided that he did not wish to have an interview with Under-Secretary Overby prior to his departure for Uruguay on April 29. He intends to spend one week in Uruguay in consultation with officials of his Government with respect to the entire exchange rate structure in Uruguay. Upon his return, if appropriate, he will then request an interview with Mr. Overby. Mr. Havemeyer informed Ambassador Mora of the position taken at the working-level meeting in Treasury with respect to the new proposed decree law.)

  1. Not identified.
  2. Octavio Paraguaná.