833.5151/269
The Chargé in Uruguay (Dominian) to the Secretary of State
[Received January 14.]
Sir: Referring to the Legation’s despatch No. 903 of today’s date relative to my representations about the attitude of certain exchange officials, I have the honor to report further that this morning’s conversation with the Minister for Foreign Affairs led to our reviewing Uruguay’s general international economic position, in the course of which he told me that a number of agreements had been perfected in 1934 between the Bank of the Republic and the national banks of various countries. The Legation’s despatch No. 807 of October 25, 1934,14 referred to the agreement between the Reichsbank and the Banco de la Republica. Similar agreements, the Minister for Foreign Affairs stated, had been entered into between the Banco de la Republica and the banks of France, Belgium, Sweden, and Spain. With the latter country a treaty had been signed today. He then expressed himself as being in favor of a banking agreement between the Bank of the Republic and a representative American bank which, [Page 960] he said, would operate as a preliminary accord pending the conclusion of a commercial treaty in due time.
Voicing his views on such agreements, he said that it was going to be more than ever the policy of Uruguay to buy from the countries which bought Uruguayan products. He added that this policy was forced upon Uruguay by the countries which enjoyed favorable trade balances with Uruguay and that conservation of the natural resources of his country required such a policy on the part of his Government.
He went on to say that the banking agreements made during 1934 by Uruguay had been based generally on the return to the countries of origin of 60% of the exchange derived from them. That 10% was applied to frozen credits and 30% was devoted to financial transfers which Uruguay deemed convenient and which included exchange payments to countries from which Uruguay purchased certain necessary commodities but which did not buy Uruguayan products. His suggestion was that a banking agreement on the above bases should be negotiated between the Bank of the Republic and an American bank. He added that he thought that this type of banking agreement would eliminate a good deal of the vexations caused by the difficulties encountered by American firms in applying for dollar exchange.
I told him that I would give further thought to his suggestion and inquired whether the disposal of exchange according to the percentages indicated by him which I have reported in the preceding paragraph, had been agreed upon by all countries from which foreign exchange flowed into Uruguay. My inquiry was based on complaints previously made by the Minister to the effect that the European countries with which Uruguay had concluded banking agreements insisted on the return of all exchange emanating from them.
He admitted then that Germany and Spain had absolutely insisted on the return, in the form of Uruguayan purchases, of all German and Spanish exchange. As to the other countries, he said that at least 10% was available for Uruguay to dispose in the manner in which the Uruguayan exchange authorities deemed appropriate.
It may be gathered from the above that there has been no change in the commercial policy initiated during 1934 by Uruguay and consistently followed since then. The basic aim of this policy consists in preventing international trade balances from being unfavorable to Uruguay. It has led to the declaration repeatedly made by members of the Uruguayan Government that importations into Uruguay would be made from countries which are customers of Uruguay.
Respectfully yours,
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