Dr. Saavedra Lamas went over some of the ground reported in my despatch
No. 3 of September 9,15
and spoke of President Roosevelt’s
[Page 654]
interest in the conclusion of a reciprocal
agreement. He went to his desk and brought back a memorandum which he
said was a Spanish translation of an interview granted by the President
to Mr. J. H. Drumm, Manager of the National City Bank of New York.
The interest shown by the Argentine Government in this conversation is
manifest in the fact that President Justo showed great impatience to
receive it when it was offered to him by the Sub Manager in this city of
the Bank named (see my despatch No. 5 of September 15.16) A copy of Mr. Drumm’s
interview is attached hereto, and it seems evident from Dr. Saavedra
Lamas’ comments that the remarks of the President as quoted by Mr. Drumm
have greatly encouraged the Argentine Government.
In this connection, I have the honor to report a talk I had today with
Dr. Carlos A. Pueyrredon, a Deputy, and a member of the Argentine
mission which recently went to Italy to effect the trade agreement with
the Italian Government. Dr. Pueyrredon came home earlier than the other
members of the mission in order to be present at the sessions of the
Argentine Congress. He expressed himself at length and with extreme
emphasis concerning what he insisted was an unfounded or unjustified
exclusion of Argentine beef on the ground of the existence of
foot-and-mouth disease, urging very earnestly that the quarantine
provision was merely a pretext since chilled beef could not transport
the germ of the disease! I asked him if this could be scientifically
demonstrated. With added earnestness he urged that it could and further
expressed a belief, which seems to be on the minds of many Argentines
with whom I have talked, that a small quantity of beef, equivalent to 2
per cent, of the American consumption, might be supplied from Argentina
with resulting advantage to both countries. I may add here that Mme.
Pueyrredon is a sister of Dr. Carlos Saavedra Lamas.
[Enclosure]
Résumé Prepared by Mr. James H. Drumm of
Interview With President Roosevelt on August 15,
1933
Two weeks ago, at the request of Mr. Phillips, Acting Secretary of
State, I went over to Washington and gave him a complete résumé on
conditions prevailing in the Argentine at the present time and
especially the problem confronting American business. I presented
him with a very clear picture of our exchange problems and the
difficulty in obtaining exchange from the Control Board due to the
fact that we were not buying any products from the Argentine and
thereby not
[Page 655]
creating
exchange. I carefully explained to the Acting Secretary of State
that it would be absolutely impossible to work out any unfreezing
arrangement of American balances blocked in the Argentine at the
present time, which I estimated to be from 90,000,000 to 100,000,000
pesos, unless the unfreezing arrangement could be accompanied by a
reciprocal agreement. He quite agreed with me in this respect and
suggested that I spend a half hour with Mr. Caffery, Assistant
Secretary of State in charge of Latin America. I went over the
problem again with Mr. Caffery and advised him that I would be only
too glad to furnish complete statistics or any other information
they might desire in order that they might have a clear
understanding of the Argentine situation. Mr. Caffery promised to
call on me again sometime about the first of September.
Mr. and Mrs. Bliss17 invited me
to lunch at their home in Washington to meet the Assistant Secretary
of Agriculture, Mr. Tugwell, one of the well-known members of the
“Brain Trust”. Mr. Tugwell appeared to be quite interested in my
expose of agricultural and trade conditions prevailing in the
Argentine at the present time and especially the problem of an
interchange of products between the two countries.
When I came back from Washington I went to Newport for a two weeks
stay with some friends but received a telegram on Saturday, August
12, from Mr. Early, Secretary to President Koosevelt, stating that
the President had definitely fixed an appointment for me at 11:30,
August 15. I cut my vacation short and promptly returned from
Newport and went over to Washington on Monday night. I had an early
morning breakfast at the Mayflower Hotel with Dr. John Lee Coulter,
member of the Tariff Commission, and discussed with him the
possibilities for various Argentine products coming into the United
States, especially from a tariff point of view, and gained some very
valuable information. I might say here that the Tariff Board has
been very considerate in giving me information that has been very
helpful in my presentation of the Argentine problem.
I arrived at the White House at 11:15 and President Roosevelt
received me at about 11:45. I emerged, after a very lengthy
conversation, from the President’s office at 12:45, thereby having
practically a full hour with him. The President was very cordial in
his reception and immediately put me at my ease by asking me how
things were going in Buenos Aires. He then asked me to give him a
close-up picture of the entire set-up and problem confronting
American business, both from an American standpoint and an Argentine
standpoint. In opening my remarks, I pointed out to the President
that at the present time I estimated that American concerns had on
deposit in Argentine
[Page 656]
banks
approximately 100,000,000 pesos in blocked funds. I then pointed out
to him that it was absolutely impossible to work out an unfreezing
arrangement similar to the one that had been recently effected in
Brazil,18 owing
to the fact that we did not create any dollar exchange through
purchase of Argentine products. He then asked me why the old
triangle was not working. I told him that in normal years the
triangle undoubtedly worked to the entire satisfaction of everybody.
However, in abnormal times the triangle has not worked because Great
Britain and other European countries have taken the precaution to
see that their currencies are earmarked for their own importers. I
carefully explained to the President that prior to the Ottawa
Conference and the recent Anglo-Argentine Agreement, we had been
able to arbitrage sterling, French francs, Swiss francs, guilders
and other currencies into dollars, but since the Control Commission
has been operating, European countries have insisted that their
currencies be held at the disposition of their importers. I advised
him that the recent Anglo-Argentine Agreement ensured Great Britain
of approximately 30% of all Argentine exchange. In other words,
Great Britain bought approximately 30% of all Argentine exports. I
then explained to him that following Great Britain’s lead, France,
Germany, Spain, Italy, and other European countries insisted on
similar treatment and that, therefore, there is a very limited
amount of currencies available for arbitraging the dollars. For this
reason, it is absolutely impossible to unfreeze blocked pesos into
dollars, and, furthermore, it is impossible to even come anywhere
near taking care of the current requirements of American exporters
to the Argentine. I took occasion to point out that many American
exporters were forced to restrict their shipments to the Argentine
owing to the fact that they already have more funds tied up in pesos
than they wished to carry in the Argentine. He immediately
understood that naturally we were losing many sales of American
products even though the Argentines were desirous of buying these
products. I carefully emphasized all the various points in this
picture and made it so clear to the President by examples, such as
the automobile industry, agricultural machinery, and many other
lines, that he could not fail to realize the seriousness of our
present predicament. It is wonderful the way he absorbs information
and the many intelligent questions that he puts to one in order to
get the picture clearly in his mind. He has a wonderful memory and
appeared to be quite familiar with general conditions all through
Central and South America.
Following my first presentation, as indicated in the above paragraph,
I then explained to the President the excessive carrying charge
[Page 657]
on the bonded indebtedness
in the Argentine externally and internally. The President asked me
more or less the service charge on dollar bonds and I advised him
approximately US $20,000,000, and approximately the equivalent of US
$17,000,000 on the sterling bonds. I took occasion to point out to
the President that the Argentine had continued to pay her interest
service in full, as well as her amortization payments on all of her
external indebtedness, but at a tremendous sacrifice. I informed
President Roosevelt that President Justo was most desirous of
continuing the foreign service in full and thereby preserve the
credit prestige of the Argentine. I also took occasion to point out
to the President that the Argentine was one of the outstanding
nations of the world in living up to their obligations and that in
view of the fact that the Argentine at a tremendous sacrifice had
continued to pay their interest to American bondholders, we ought to
use our utmost ingenuity in working out a reciprocal trade agreement
whereby the Argentine could place her products in this market and
thereby create the necessary exchange to make dollars.
The President indicated that he was most sympathetic and asked me to
get right down to business and name the products that I figured
could be brought in for discussion for a trade agreement. I
mentioned linseed first and suggested that we could protect our
American producers of flax from the Dakotas by allowing them say 50%
of the American market and setting aside the balance of 50% of the
American market for the Argentine on a no-duty basis. I carefully
explained to the President that I believed if the Dakota producers
of flax sent their product to the interior crushers that the
Argentine could send their flax to the United States Coast crushers.
By such a procedure the Dakota growers could avoid the carrying
charges to the Coast and still be assured of 100% distribution of
their product. The President said he was very much interested in
this suggestion and thought that something might be worked out on
linseed. I then followed up with the suggestion that the United
States eliminate the duty on casein. The President thought something
might be done on this also. We then discussed mutton and I pointed
out to the President that under the Ottawa Agreement, Argentine lamb
and mutton imports into the United Kingdom for the quarter ending
March 31, 1933 had been cut 10% under the 1931 imports, and a 5%
additional reduction would follow for each succeeding quarter until
a 35% reduction is reached. I told him that this meant a loss to the
Argentine sheep raiser of approximately 55,000,000 pounds reduction
in their exports. I pointed out that if the United States imported
the equivalent of one-half of this loss we would be importing all
the lamb and mutton coming from the South Coast, from a zone which
is absolutely free from foot-and-mouth disease. I told him that such
a quota would only represent about
[Page 658]
⅕ of a pound per United States inhabitant for
the yearly consumption is 6⅘ pounds. I informed the President that
we were not producing enough mutton in the United States and that I
understood we were forced to import from countries like Australia
who have already been protected by the Ottawa Agreement. I admitted
to the President that this would be a delicate matter to handle in
view of the fact that our Hoof-and-Mouth Disease Act prohibits all
meat from the Argentine. However, I suggested that if he could have
the law interpreted to read “Zone” rather than “Country”, he could
treat with Patagonia as a zone separated from the Argentine. I
advised the President that I considered Patagonia as separate from
the Argentine as Alaska is from the United States, and I told him
that if the position were reversed and the Argentine had a law
similar to ours prohibiting United States meat from going into the
Argentine because of hoof-and-mouth disease that it would be
absolutely ridiculous to say that meat emanating from Alaska, where
no hoof-and-mouth disease existed, could not come in. The President
thought this point was well taken and he intimated that he would
promptly ask the Attorney General of the United States if the law
might not be interpreted on a zone basis rather than a country
basis.
Following the discussion on mutton I pointed out to the President
that we had a very high tariff on Argentine tinned corned beef
amounting to 60 per pound. I informed him that I had recently
ascertained that we did not produce enough tinned corned beef in the
United States to anywhere near meet the demand of the consuming
public. Pie said that he would look into this possibility. Following
these remarks the President asked me about Argentine fruit and I
told him that we were already exporting grapes to the United States
and that shipments had been increasing in recent years, but that
said grapes only came up here in the off season when our grape
producers were unable to supply the product. I pointed out to the
President that there was a small duty of 10% a box which did not
amount to anything as far as revenue for the United States was
concerned but it was a source of annoyance to Argentine exporters. I
suggested that this duty be waived entirely. Following the
discussion on grapes I pointed out to the President that Argentina
was the fifth ranking country in the world in the production of wine
and that owing to the depression in the last four years, she had
accumulated large stocks of wine at Mendoza and San Juan which,
naturally, she was anxious to export. I took the opportunity of
pointing out that undoubtedly Prohibition would terminate by the end
of the year and that I noted since my arrival in the States that
both France and Italy had already sent representatives to the United
States to organize selling agencies, distribution service, and also
propaganda for their wine. In connection
[Page 659]
with the propaganda I informed the President
that I had noted that France is going to put on an educational
program to educate the Americans to drink wine with their meals, in
other words, a table wine. I took the opportunity of pointing out
that a defaulting country, such as France, should put on some other
kind of an educational program by paying their just debts to the
United States, and that the Argentine was not in that class and,
therefore, should be given some consideration. This could be
accomplished by placing the wine imports to this country on a quota
basis, setting a quota for France, Italy, Argentina and Chile. The
President asked me if the wine was good and I informed him that it
was a very good table wine but naturally in the better class wines
the Argentine would be unable to compete with France and Italy. The
President appeared very much interested in this suggestion and said
that he would give the matter immediate study.
At this juncture of the conversation I advised the President that I
had taken up a good deal of his time and felt that I should be on my
way but he requested me to prolong my visit and he interrupted the
conversation by showing me some pictures that were taken of him
during his recent holiday at Hyde Park and also some pictures that
had been sent to him from the Reforestation Camps.
In summing up all the possibilities that I had mentioned, the
President appeared anxious to know how near we could balance our
trade if he could obtain action along the lines suggested by me. I
advised him that this was rather a hard question to answer but that
quite possibly it might be sufficient. He asked me if I could
suggest any other means of effecting a satisfactory trade balance
with the Argentine. I then suggested that in view of the fact that
our European friends had taken the precaution to see that the rule
of the old triangle did not work during these years of depression,
we might be able to effect some triangular reciprocal trade
agreements that would hold water. In this respect I advised him that
I understood that he intended to open up discussions with the
Scandinavian countries in the near future, particularly Sweden who
happened to be in first place. I suggested that in the case of
Sweden or any other Scandinavian country, he might be able to bring
Argentina in on the same discussions and form a triangle. We, the
United States, could arrange to reduce duties on certain imports
coming from Sweden provided Sweden would extend a preferential
tariff to Argentina, thereby forming a triangle and holding the
exchange within the triangle. We are very big importers from the
Scandinavian countries and Great Britain and her Colonies are heavy
sellers to the Scandinavian countries. Such a triangle would enable
us to force a tremendous reduction of buying from Great Britain and
her Colonies by the Scandinavian
[Page 660]
countries and probably open up that market for
Argentina on certain products, such as wheat, corn and barley. I
also suggested that I understood that discussions would be carried
on with Portugal and possibly Spain and Italy in the near future. A
similar triangle could be formed between Portugal, Argentina and the
United States whereby we could reduce duties substantially on olive
oil and cork and other products provided Portugal or Spain or Italy
would give Argentina a preferential tariff on Argentine products.
The President seemed to be greatly interested in this suggestion and
said that it offered very wide possibilities. In fact he said it was
the first suggestion that had been made regarding triangular
reciprocal trade agreements and that he would put this suggestion in
the hands of Secretary Hull immediately upon the Secretary’s return
from vacation.
In closing my conversation with the President I pointed out that for
years everybody has discouraged the suggestion or possibility of a
trade agreement between Argentina and the United States but I felt
that if the matter were given intelligent study and consideration we
could conclude a satisfactory agreement which would go a long way
toward balancing our trade. I also pointed out that we had never
been able to make one indication or give any concrete evidence of
our desire to cooperate with the Argentine and become a buyer
instead of a seller.
The President talked with me on other subjects which will not be
necessary to include in this memorandum and he has requested his
secretary to introduce me to some of his other men in Washington. In
closing the President asked me when I intended to return to the
Argentine and I told him about the end of September or the first of
October. He then requested that I drop down to Washington again and
see him before my departure to the Argentine.
