833.5151/313
The Consul General at Montevideo (Reed) to the Secretary of State
[Received June 3.]
Sir: I have the honor to report the results of two further interviews with officials of the Bank of the Republic of Uruguay in regard to the position of American commerce under the Uruguayan import quota law21 which became effective January 1, 1935. Although information had already been obtained as to the quotas assigned to the United States and other nations for the second quarter of 1935, it was of an unofficial character, as no reply had been received to my written inquiry on this subject, which also requested the Bank’s figures of exports to the United States during the first quarter, on which the quota for the second quarter was to be based. In the meantime various complaints had been received from importers of American goods, some that they were unable to obtain import permits, and others that they were suffering because foreign competitors were securing permission to import with the assistance of free controlled exchange (allotted officially), which gave such competitors a price advantage of about 15% over importers of American goods not obtaining official allotments of exchange, but purchasing it at free market rates. In particular, importers of American lumber complained that they could not compete with Russian lumber because of this situation.
An interview was therefore arranged with the President of the Bank of the Republic. A general discussion took place in regard to the position of American business, and the quotas allotted, and advantage was taken of the occasion to inform the President of the Bank of the rapid increase in the value of Uruguayan exports to the United States, and the fact that the United States now occupies a position of importance among Uruguay’s customers, being third in rank. He did not seem to be aware of these facts and spoke as if the United States sold to Uruguay but bought little or nothing. The President of the Bank did not have at his disposition any concrete data in regard to the American quotas or the procedure being followed, but arranged an interview for the following day for me with the head of the Bank’s Department of Exchange, instructing him to prepare and furnish me with the data desired. The latter is an official who has occupied a position of great responsibility since the imposition of exchange control in Uruguay, over four years ago, serving at first as chairman [Page 968] of the Honorary Exchange Control Commission, and is now on the Honorary Commission on Imports and Exchange. His position is probably more influential than that of any official concerned with this class of work, since, in his function as head of the Exchange Section of the Bank, he passes upon applications for imports to be paid for by free exchange, and his decision governs the subsequent action of the Honorary Commission on Imports and Exchange in deciding whether import permits not accompanied by requests for controlled exchanges should be granted or refused.
This official, Señor Silveira Zorzi, was already personally known to the writer, but had not been interviewed recently, it having been desired to refrain from appearing to exercise any pressure on behalf of any special interests, and questions of principle having been taken up in writing in letters addressed to the General Manager of the Bank or through diplomatic channels, by the Legation.
In the course of the interview with Señor Silveira Zorzi, the latter furnished all the information desired. He stated that the quota for the United States for the second quarter of the year had been fixed at nearly 15,000,000 French francs, as compared with 8,000,000 for the first quarter of the year, and that the figure of 5,000,000 francs which I had obtained unofficially, was for goods, as distinct from debt services, (thus confirming the verbal information from other sources previously reported). He also added that this quota was based on Uruguayan exports to the United States during the first quarter of the year, as compiled from the bills of exchange purchased by the Bank of the Republic, which showed a total of nearly 18,000,000 French francs. It was gratifying to note that the Bank’s figures checked very closely with the declared export statistics compiled by this Consulate General, which for the same period showed U. S. $1,353,000.
Señor Silveira Zorzi assured me that if the increased exports to the United States continued, it would be possible to furnish free controlled exchange for additional classes of American goods, which up to the present were being paid for at free exchange rates. This statement was utilized to bring up the position of American lumber in comparison with that of Russian lumber, mentioned above. Señor Silveira Zorzi admitted that Russian lumber had been contracted for in a large quantity, at free controlled rates, but explained that this was the result of a commercial agreement between Uruguay and Russia which had just been signed and would shortly be given publicity, under which Russia undertook to purchase Uruguayan goods to a value of £300,000, particularly hides. He added however, that he would see to it that American lumber was henceforth given free controlled exchange. [Page 969] I assured him that I had not come to intervene on the behalf of any one particular class of goods, but that, having heard how the lumber situation was affected by the class of exchange allotted, I was interested in learning the principles followed by the Bank in deciding for the allotment of free controlled or free exchange for certain commodities. He stated that free controlled exchange was in general allotted for essential commodities, but that when the quota of such exchange for a country was exhausted, additional quantities from that country had to be paid for by free exchange.
He took occasion to assure me of his sympathetic attitude towards the United States, and his willingness to discuss with me any doubtful points which might arise in the administration of the import quotas and exchange control.
Respectfully yours,
- Law of November 9, 1934, for economic and financial readjustment; became effective on January 1, 1935, pursuant to a decree of December 18, 1934. A Spanish copy and a translation of the law are in Department’s files under 833.5151/251.↩