Foreign Relations of the United States, 1955–1957, American Republics: Central and South America, Volume VII

181. Memorandum of a Conversation, Department of State, Washington, March 15, 1955¹

Washington, March 15, 1955

SUBJECT

• US-Argentine Economic Relations:
• 1) Eximbank Steel Credit
• 2) Surplus Cottonseed Oil
• 3) Problems of Meatpackers and American & Foreign Power Co. in Argentina

PARTICIPANTS

• Argentine Ambassador Hipolito J. Paz
• Assistant Secretary Holland
• OSA—James F. O’Connor, Jr.

Ambassador Paz said that he wished to express appreciation for all Mr. Holland had done in connection with the favorable Eximbank decision on financing assistance for the Argentine steel project [the Eximbank announced establishment of a $60 million line of credit on March 10.]² He went on to say that he had despatched a letter to Peron on March 11 on this matter in which he indicated the personal contribution made by Mr. Holland to its successful termination, and that he wanted to convey his Government’s gratitude in anticipatory fashion.

The Ambassador then referred to the Argentine desire to purchase US surplus cottonseed oil [Argentina wants 70,000–100,000 tons, 20,000 of which is for shipment by the end of March, to meet a drought-caused shortage, and negotiations and internal US discussions are proceeding], on which he said the Argentine Economic Counselor, Dr. Bunge, had been dealing with the State Department, and indicated that any push which the Department could give this matter would be welcome. Mr. Holland stated his understanding that this matter was moving along and Mr. O’Connor commented that dealing with necessary details was unavoidably time consuming.³

Mr. Holland then said that he wished to bring up some problems on the other side and stated that settlement of the difficulties being experienced in Argentina by the U.S. meatpackers and by the American & Foreign Power Company would represent a substantial advance in economic relations.⁴ He went on to say that he had fortunately been able to respond affirmatively and helpfully to President Peron’s recent letters on the stalling of petroleum negotiations with Standard of California and on the Eximbank steel credit,⁵ but that he needed the assistance which would be provided by solution of such unsolved issues as these in order to be able to continue to meet the US domestic political problem posed by hostility to U.S. economic cooperation with Argentina by certain economic interests while long-standing problems like those of the meatpackers and the American & Foreign Power Company continued unsolved. Mr. Holland said that this seemed a particularly propitious time to allay this hostility by constructive action. He reminded Ambassador Paz that he had been subjected to severe criticism in connection with the Eximbank assistance to the Argentine steel project and that, while he was in no wise disturbed by this criticism, since the U.S. Government had embarked on a firm policy of cooperation with Argentina, that policy could continue to be implemented more easily with the disappearance of such complicating economic issues as those referred to.

Referring specifically to the American & Foreign Power problem, Mr. Holland said that he had been visited recently by officials of that company to advise him once again of their unsatisfactory situation in Argentina, and that he had told them that he would not support any effort on their part to seek to impose an unwarrantedly favorable settlement of their problems on the Argentine Government, but that he would work to the utmost to support a fair, mutually satisfactory resolution of outstanding differences.

Ambassador Paz commented that the American & Foreign Power problem existed on two levels; there was no doubt that that corporation had a legitimate grievance which should be dealt with, but that beyond this difficulties arose in working out a specific solution. The Ambassador also adverted to the bureaucratic obstacles present in dealing with the details of solution.

Ambassador Paz displayed general agreement with Mr. Holland’s remarks on the value of achieving solution of the problems which the latter had mentioned in the interest of over-all relations, and offered his cooperation. He said that if he could be supplied by the State Department with a memorandum on these two matters which would provide him with something to go on, he would write directly to Peron urging steps toward solution. The Ambassador also offered to meet once again with officials of American & Foreign Power in the interest of trying to develop some approach which might prove useful in Buenos Aires, and said that he would get in touch with American & Foreign Power to this end after the present meeting.

Mr. O’Connor said that while the Department was of course informed of the current general status of the two problems mentioned, he could not be sure that it was in possession of all the most recent details; but that he would in any event provide a memorandum for the Ambassador’s use.⁶

1. Source: Department of State, Central Files, 835.10/3–1555. Limited Official Use. Drafted by O’Connor on March 16.
2. These and following brackets are in the source text.
3. On April 25 the United States and Argentina signed an agreement authorizing the sale to Argentina, through private American traders, of 20,000 metric tons of surplus cottonseed oil. The agreement, which provided for the sale of commodities valued at approximately $5.8 million, was concluded under Public Law 480, the Agricultural Trade Development and Assistance Act of 1954, approved on July 10, 1954. (68 Stat. 454) The agreement was signed on behalf of Argentina by Gabriel Galvez, Chargé of the Argentine Embassy in the United States and on behalf of the United States by Samuel C. Waugh, Assistant Secretary of State for Economic Affairs; for text, see 6 UST 1085. Documentation regarding the negotiation of the agreement is in Department of State, Central File 411.3541.
4. Representatives of the three American meatpacking firms located in Argentina, Compañía Swift de la Plata, Wilson and Company, and Armour and Company, had complained to Ambassador Nufer of the difficulties which their companies were having with the Argentine Government agencies which regulated their operations. In despatch 664 from Buenos Aires, January 28, the Embassy summarized these problems as follows: “The packers claim that they are not permitted to earn adequate returns on their Argentine operations because of an inadequate margin between prices of steers which they purchase and the selling price on fresh beef sold for local consumption, and because of various other governmental acts and regulations. One of the decrees in question was to have authorized adjustments in the operating margin. This decree, however, was not acted upon.” (Ibid., 835.311/1–2855)
5. Not found in Department of State files.
6. On March 28, Paz met again with Holland and O’Connor to discuss the problems of the meatpackers and American & Foreign Power. A memorandum of that conversation by O’Connor reads in part as follows: “Mr. Holland commented that he had no special axe to grind nor any specific solutions to propose in connection with these difficulties of American business interests in Argentina, but was motivated solely by a desire to see any complicating factors in US-Argentine economic relations removed.” (Department of State, Central Files, 835.10/3–2855)