Wooing the Argentine

Aristocrat turned Socialist, Federico Pinedo, Finance Minister in the new Argentine Cabinet, combines progressive economic views with smart financial moves. When he was Finance Minister once before (1933), Pinedo created the Central Bank and the present Foreign Exchange Control, topped off these with a brilliant maneuver: he alchemized a British loan from credit figures on the books of British banks into actual gold metal, shipped the metal to Argentina, turned it into pesos and marked up a profit of millions of pesos in the national treasury.

Faced with knottier problems in war-torn 1940, Pinedo last month announced that his exchange control had temporarily suspended all applications for outgoing U. S. dollar-exchange permits--in effect a blockade of all U. S. products coming into Argentina. Later it was blandly announced that this was not a blockade, but a sort of bookkeeper's holiday to allow experts to study "the dollar situation." For Argentina, the dollar situation was serious. Her exports to Belgium, The Netherlands and France have stopped, and her sales to Great Britain no longer produce any foreign exchange, because sterling exports are blocked. With her imports of U. S. machinery, automobiles, newsprint and oil on the increase and no foreign exchange to pay for them, Argentina had reached the point of shipping chunks of her gold reserves to New York. By suspending dollar-exchange permits, Pinedo said in effect: "It's your move now."

Last week the embargo on dollars was lifted. The U. S. had apparently moved. In Washington it was reported that the U. S. and Argentina were negotiating a reciprocal agreement on foreign exchange. And Warren Lee Pierson, president of the United States Export-Import Bank, was in Buenos Aires. Mr. Pierson's bank last week received $500,000,000 additional lending capital when President Roosevelt signed a bill designed to enable South American countries to build up their own industries, including armaments for hemisphere defense. When it's raining dollars, any banker, even an aristocrat like Pinedo, instinctively will turn his umbrella upside down.

More Woo. Having reached at least the start of an understanding on trade with the U. S., Argentina also prepared last week to thrash out its problems with Great Britain. Owner of vast Argentine holdings, Great Britain is also Argentina's best single customer, hopes to remain so if for no other reason than to keep excess Argentine goods from Nazi Europe. Last week Britain announced that a diplomatic trade mission would tour the South American countries next month under 74-year-old Marquis Willingdon, former Viceroy of India, onetime cricket champion, reputedly the suavest and most able trouble shooter in the Empire. The British stressed the fact that their mission had been planned with collaboration and approval of the U. S.

>> Diplomatically the mission's main job will be to counteract intensive Nazi propaganda. To do so it hopes to arrange for large stocks of British goods to be sent for "spot sale," avoiding shipping delays and countering Nazi claims that Britain, faced with inevitable defeat, cannot guarantee delivery of goods abroad.

>> Financially, there was the revolutionary question of colonial-economy Argentina granting credits to banker-economy Great Britain. Blaming the U. S. cash-&-carry war policy for eating up her ready cash, Britain recently asked Argentina to send her foodstuffs on the cuff--reportedly -L-43,000,000 worth. As partial payment Britain offered British-held Argentine bonds. But there was also an intriguing possibility: that the British lOUs might be discounted by Argentina in the U. S., turned into U. S. dollars. Argentina would thus get dollars needed to pay for U. S. imports while the U. S.--accepting the lOUs because British credit is well cushioned here--would be financing the whole deal, in effect making a roundabout loan to Great Britain.

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