WEEKLY ECONOMIC SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00926A000600010004-2
• Release Decision: RIPPUB
• Original Classification: R
• Document Page Count: 8
• Document Creation Date: December 15, 2016
• Document Release Date: September 11, 2003
• Sequence Number: 4
• Publication Date: August 26, 1948
• Content Type: REPORT

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1.1E,IJOJAIRgS.A49UST 10, 1.949-1 VV V V V V YEAR. VIII ? No. 391
V 0
THE 'AEfiditAsf"ililiNb- -citisit?..i0 , ?
.
The latent oriels in our airailabilities 'of Belgian- franca, the
develepment of Wh_ch ' we : have been -following in this' survey
during the IaSt ' few weeks, ' and Which had already arisen in
part about a" fortnight ago When. 'the .."BanqUe Nationale de Bel-
gique instructed Belgian banks -to open' credits ler' ekportation
to our, country only against" dePosit Of the full amount 'of the
Operation in that currency, .bnoke out in all' its consequences
last Friday. On that day, the Central Bank took Om very im-
portant steps. V One of them, made known to the public in some
of Saturday's newspapers; cancels' the regulatiorib regarding
automatic, dispatch . of prior-exchange' permits'; established by
Circular No: 987 of .Turie 23.1aet, 'granted f6r. iniports frOin the
Belgian franc area, 'and advises 'that in future all import per-
mit, applications for that area *Will be subjectto prior study.
Therefore, before purchases are'made in that area, it Will
be necessary. to Submit 'an apiPlieetlen in Form 104-:-D and re-
quest the Central Bank's authorization. tb conclude ,the., purcha-
se'. In last Week's issue we had already, announced the proba-
bility of some meastue Of this riatnre ,being taken. In any Case,
although the ' official. announcement was only''Made at the end
of the week, in thenractice ic was already being applied since
about a fortnight ago, preciadly Ade td the measures taken by
,
the Banque Nationale de Belgique.-
? , The other ,measure;-however, which, was made known tO all
iunking institutions on -Friday'afternobn last, is still more im-
portant. It is established' therein_ that; - vv
All credits. opened .and prior payments in Belgian Francs
are subject to the Central Bank's ,authorization. In the case, of
prior 'coverages, the Central Bank should be informed, on form
2358, of the corresponding number of for 78 -whereby the ope-
ning of the credit was authorized, Applications for prior co-
verage already submitted to the Central Bank's consideration,
will lia,Ve to be submitted again individually, also on form 78 in
each ease, indicating the date on which 'the respective credit
was ebtablished. ' - . .: ? '.., ' , '
But .most important. of all Is, tb,at, the Central Bank's Prior
authorization must beThrequested eon ,form. 1723), Oen in the
Case of . tranfers based,' on LiquipATEp OttsTova CLEIARAN
OB ,CBRTIPIO.ATZ.S.` i'il-ileh it ,4,11-itp,u4ed -to efrect Or valich
Will. -he hquidatedi a* film 'the date, 91 the measur,e,' The ex;
change rate , at WhiCh the .respective ' custOnwelearance , certifi-
cate was liqUidated. and Its _equivalent in,.0n..rrilist -alp be
stated on, sUch applications. ' , ' ' ' , -, .
, The amount of the customs clearance, certifle,at'eS liqUiclatecl
en a spot basis, and filen that- of and future sales,. eentr,a'
ctS,
pending transfer abroad, must be, recorded on, forrn l,791:
:It is regrettable that the Central Bank should prefer to
continue, surrounding itself by an impenetrable hermeti*, despf;
te having to adept: these measures, instead of acquainting at
least the persona involved of all the facts regarding:the present
situation, in 13elgian, francs; the reasons 12,,ehteice the present dis:.
tilting measures Egia, the poliby that,. if Intends to . folio* in
future in this connection,. Some, statement in this citgectAri I?
all the more, necessary inasmuch as this is ,already the second
ease wherein, measures of this' kind are tejsen in: cannectibn
with a certain currency (the other caee was,'?ef course that, of
the US) and also the second time' that a conflict seexs to
have arisen . with a country with which We have clearing' and
overdraft agreements concluded in due cdurse _ between the res-
pective Central. 'Banks ..(the first. was naturally, the Case of
Switzerland; which has not yet been settled).
' These ineaspres'In4y, 'be, cprite understandable and might be
Censidered, justified insofer?,as.' they. affect credits t,q be :oPenfcl
in future. If a
, it 4 4.,... et, as, it SeerneiWbe,?that' we rip lon ?
p
i
have availabilitiek:Vt' elgian francs atft, ,t, we refrain :1r
creating them'' e' hei-t1 .nitgli sale of ..otir, ,pi,..6ducts to Belgium a .,
prices -which that'Poini ry wohld lie. indlineW'teaceept; or throtigh
the sale of gold,_ the natural,soneqne,nce it a' limitation in the
Placing of orders for Belt,lan products and, ebriserinently, the'
submittence of ,all,nely 'Orders te the Central Barik's_ prior 'study
which., it may be 'presumed, Will balance any future 'Purchases
with the amount of .Belgian francs ?stillavilable. Accepting
our exchange control S-Vstem, which 'ha* -"betlil inherited to a
large extent by Our present Central Bank, those measures appear,
logical within the framework of the system." " '-'-
But such reasoning cannot be applied to cases where cre-
dits have already been opened and, less- still, to those in which
ROPIEOAO INTELECIN'AL. No. 268.043
have said a fewonaonths ago in connection with the T..T$S crisis,
is applicable to the present case, Once a credit' has been opened
o'n -the bast of the pertinent Prior-exchange permit and, fur-
thermore, once' the goods financed unaer such credits have arri-
ved in the country, there is a Central Bank, commitment to
meet _those undertakings. Otherwise, what other meaning could,
the granting of prior exchange permits have, excepting the
obligat'on to provide - the deVisen in queston: and that such
devisen have been reserved for the purppse of meeting these
Obligations, at their maturity? If this were not the case, the
prior-exchange permit has no meaning and could very well be
replaced by a mere -entry' for statistical purposes. In that case,
importers and/or banks would be forced to procure for them-
selves the devisen 'they need to comply with the strict obliga-
tions enforced by the opening of credits, or run the risk of
suffering the consequences if they did not meet such commit-
ments. ? - . '
SIMILARITY WITH ITV, SITUATION .
? The. Central Bank's communication to the banks with re-
gard to the Belgian francs is, in part, an almost textual para-
phrase of the circular issued. by the Bank at the time of the
U$S crisis. The text of that communipation, dated May 14,, 1943,
was reproduced in our No. 379. 'Among other instructions the
Central Bank also informed then that: ,
, .."it,has been deckled that the foreign transfers which
It is desired to make by virtue of customs clearance cer-
tificates liquidated or which may, be liquidated as from
this date, will require this Bank's prior authorization."
And again in ite ,circular dated May 19, it repeats the -same
cencepts. (see No. 389 for the full text):
"When ,it is desired to make a transfer abroad of
funds corresponding to certificates liquidated ` against
cash, as, well as of those corresponding to liquidation- Of
futures Contracts your bank must request, before putting
such Operations through, this .Bank"a authorization,. on
form No. on, a 'copy of which is attached". ? '
' The similaritY is ominous.
It is indeed feared that the present situation with regard to
Belgian francs is not different to that of the Up: In any event,
the fact that eVehlransferi based oh on-atoms certificates which
have been or are to, be liquidated, are rialimger effected automa-
tically, as they should be, but remain subject te..a. new authori-
zation by the Central, Bank. Means a break with usual custOMS
in international banking and reveals. that there exists a sittiatiOn
similar to that which arose In May ;With regard to the 1)1S.
What has hapPened is nothing but a natural development of
the situation which the Central 18ank should have foreseen. The
truth is that we have ovedrawn, our Belgian franc accounts, just
as we did in the case of the 'Op. And the measures to solve the
situation haute again been taken only after, the fact - in spite
of the complicated control system established - and not foreseeing
natural precautionary measures which would have avoided the
development of a -very .disagreabIe situation.
'In this _connection, we must beg our readers' indulgence if
We quote, in the' followingparagraphs, the opinion we had already
expressed, before on this situation, We do po MerelY tO ihoW that
pure log.c 'indicated , that it could be easily foreseen that this, si:
Illation would arise, even without having at our dispoeal the Cen-
tral Bank's enermous, statistical and econonlio mechanism and
without having the '.Central Bank's detailed knowledge of the fade
on the basis of OD.i.ipt,orm ,for prior-exchange permiti.
We had already stated in No. 383 of June 15, that is, before
the recent meaeures Sith ,regard to devisen, were taken (on ?Tune
P3).,, when comb...11413-4, One of Olt cm", ilankis weekly ba-
lance-sheets: ' ' '? -
1.. "Tlia.,it4.01,y ?deeline notice4/e4 the account "Cur.7
- rendes,' with Obld Guarantee:, ,to, . ch Is, added now
T
that retceirded, ip, ,":0ther CurrericAgh?), not unnteresting;
it seent,thatihise variations, are, , a certain degree?
the expre,ssfon and, consequen0 of the displacement
which?..wece being prepared in the-vorientaton of 'our
foreign_trade. namely, the repleeenient of the USA by
countries-with clearing agree r ents, as sources of supply.
.,Sh,,ould ,this be the case, and if_ at the same time ex-
ijortation ; not ,revived to its former levels, the conse-
quences will also_;be a drainage of our availabilities in
currenciet other than U$S"
?tlie goods have, already -been introduced (i. e for winch customs When the Circulars of June 23, 194& were made knoWn, we
clearance. certificates haye _already._ been lseuecl) Everything Ve Inanecliately pointed out what, has already become a fact insofar
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it.; the Belgian franc is concerned, as a consequence of the granting
of automatic prior-exchange 'permits. In our No.. 381i ,of June 29,
1948, we arrived at the ecanelusion; with regard o Circular 987,
after stating that greater emphasis was given through same to
imports fron countries with. which we have signed blearing agree-
ments, that:
"While this is a natural developmer and the fait
Halt greater importance is given to the balancing of
our trade with theee countries is .Welcerna, two consa-
euences arising therefrom should not be :everlooked; the
first is the possibility that as permits wee granted auto-
matically for some imports from those cteintries, our
credit balances with same might become d-ebit balances,
especially if the ptirellases made' by thoieeeountries di-
; .
Thiel is exactlY what has happened. Deprived of the possibi-
lity-Of buying the elements necessary for our industrialization
in the USA -- iron and: Steel, other raw materials ,Dr semifinished
products, machineries, .etc, ? it seems that the stream of pur-
chasers, increased artificially by the prevailing inflation, has
fumed towards the Belgian market. It thus happens that in the
short space of one month an account that faveured.us in the
amount of m$n 110 millions has become unfavou,iable4 The pre-
sent exact amount of the account is not known; p, Thetis the Cen-
tral Bank knows it. It is estimated in sources w eich we believe
ere; in a position to calculate it .with certain accerancy, that the
amount actually' overdrawn .is about 3.000 million Belgian Francs,
rn$n, 300 millions. If this were the real figure, It means to say
that not only has Belgium covered the overdraft it was granted,
of m$n 110 millions, but that on our side, we have made full use
et a similar concession of m$n 110 millions, foresee ,i in the agree-
ment signed with the Banque' Nationale de Belgique, and :placed
orders in that; Country for about m$n -.80 million,. more. We do
uot know if purchases have really attained such a high figure.
But what now seems certain Is that not only has we made full
use of the overdraft but also, that we have dram in excess of
same on the accOunt between bath countries. He ice the precau-
tionary measures taken by the Banque Nationale de Belgique.
FUTURE PROSPECTS FOR OUR INTERNATIONAL CREDIT.
We already stated last week that these measures were a di-
rest consequence of our defaulting on credits grt, elect us by the
USA. From this viewpoint, the Central Bank's in w measures are
still more regrettable. They put, an end to a pe;iod which with
all its faultsewas a great one for the country; it eras the time in
which our country won Its high reputation in the 'world of credit.
We again beg anr authorities to do everything po;sible to recover
that reputatipn as soon as possible. Credit is ,lestroyed much
Inure easily then it is reestablished. Credit, a word derived ety-
inulogica,lly from `ereciere', means that others behove or trust in
ihe ,word engaged, that commitments, undertaken will be paid on
I heir maturity and under the conditions agreed upon. If that
trust is destroyed, credit ceases. Everyone will c1( mend then full
sash payment before accepting orders for goods and even before
:hipping same. International trade would never have been pe:r-
tested and ?Its full development would hate been impossible
without this international instrument of credit. if this trust has
already been destroyed in two cases, how Can we demand that we
be Considered worthy of credit or trust in any other case? The
immediate consequence, therefore, of these deplorr ble measuree* AS
that our international credit has been destroyed. It means that
the countries ,with which we have not .signed clew Mg agreements,
will cease to grant us reredits to cover orders which we have 'placed
;end will demand full payment before accepting ;heir execution.
Et means that the countries with which we haw made clearing
agreements will wait anxiously until the amouitt agreed upon
has been attained and, will cut credit' immedietele? provided they
do not seek other .means to demand payment beft ee the accounts
are overdrawn (as is the case, for instance, with Brazil, as we re-
ported last Week).
It is not possible that such a state of affairs an subsist. We
consciously leave aside any considerations of a tentimente1 na-
ture, of the greatest importance for the country for which the
high international esteem which its binding word deserves should
carry great weight. But even considering the quistion 'from the
level of practical objectives, the present situation is extrem.e:ly
embarrassing.
We believe that the entire situation should be studied by the
highest authorities,"litining our parlialilentP*e have abstaintd
so far from giving 1496'14inbh irriportancOili'tbie -pvt. But it irinst
now be admitted that he 'question of ti vas.plshh devisen must
be investigated by' the ' Vest authoritieS; :The ;it isappearance' of
neatly all our '1.11$3:haltli' s. and the Undertaking of a very high
debt with the USA*;': '%`tated at about WS .450 to 500 millions,
has been explained, alleging the need for buying equipment for
the development of,Q1ir economy. HoWeVer, in tl.,e preambles of
Decree No. 22.239 of July 27, 1948, published in the "Bolet*
,elar of August 6, ite is stated in referenCe to the author4.
granted to YPF to buy 40.000 tons of pipe from an Italian L.
"That the Direccian General de Yacimientos Pe-
troliferos Fiscales is meeting serious difficulties in its
normal development, dire to the lack of specific mate-
rials for its industry, particularly with regard to dif-
ferent types of tubing (drill-pipe, casing, line-pipe, etc.),
of which it has SUch a reduced stock that it is not
enough to coVer its immediate needs; That such dif-
ficulties arise mainly from the restrictions imposed on
imports due,tp, the lack of free currencies, from the
abnormal situation of the US industry, which is the
main supplier of this material and that same is sub-
ject to export Foil..."
The purchase, therefOre, is caused not only by the situation
ruling in the US industry, but also by the difficulties that "arise
mainly from the restrictions imposed on imports due to the lack
of free currencies". If one of our most important and basic State
industries has been unable to obtain in the past the devisen ne-
cessary for its normal development, the time has come to investi-
gate thoroughly the use that has been made of such devisen and
to ascertain whether exchange permits have really been granted
according to the relative importance of industries within our
national economy as a whole.
To this must be added a total reform of our sales' policy ?
and, unfortunately, there still is no sign that the importance of
same has been understood. A few brief examples will suffice: We
have achieved the total destruction of world markets for our lin-
seed oil. While the USA and Canada now have exportable linseed
surpluses, in spite of the fact that previously the former imported
from Argentina 60% of its total_ drying-oil requirements an the
form of seed, we have insisted on payment of the prices fixed on
a certain occasion. Canada recently sold linseed-oil at a price
equivalent to m$n 1.83 per kilo FOB, and linseed at the equiva-
lent of m$n 77 per 100 kilos FOB (to Holland); in the meantime,
we insist on the old price of m$n 2.'23, even though IAPI is buying
the oil at m$n 0.99 from the industrialist. We do not intend to
undertake now a discussion of our price-policy; nevertheless, it
may be wondered whether it is a good policy to adhere to prices
fixed at very high levels which yield our competitors very good
profits but which exclude us from the markets. We have retained
our maize in the belief that other countries would have to buy
here. In the meantime, South Africa is exporting maize, and
the USA will also be able to do likewise, as will also other coun-
tries, while the price has dropped by one third, from m$n 31.50
to 19,60 per 100 kilos (for December delivery) in the Chicago
market. The same is valid for many other of our export goods.
Our May export 'figures (latest available, although we already are
In the month of August) show that our shipments have dropped
considerably (see further on) . And at the same time our exports
are preferably directed to countries which possibly pay us high
nominal prices against the use of credits, but which restrict their
exports to Argentina. The case of Spain is typical. During the
first 5 months of 1948 we exported to Spain goods valued at
rn$n 181.9 millions, against 95,9 millions during the same period
of 1947. Instead, imports from that source declined to m$n 18,1
millions during the first 5 months of 1943, from 22.2 millions
during the same period of 1947. The development of our exports
to that country is of course to be welcomed; but would it not be
important that we receive in exchange some of the goods we need
so urgently? And is it not necessary that we develop our trading
with other countries, especially with countries that can create for
us usable foreign exchange, in order that we may again import?
Even if it were only for this reason we must adapt ourselves to
the changes that have taken place in world conditions and in
world prices.)Official statistics show that during the first 5 months
of 1948 we hive imported from countries using free currencies,
63.1% of our total _purchases, against .58.4% during the same
period of 1947, and that we exported to same only 18.2% of our
total shipments, against 29.8%, in the respective periods.,
We can only reiterate what we have often stated here in the
last weeks; To carry out the large program we have drawn for
the better fulfillment of the country's development, to guarantee
our industry's procurement of the materials and machineries it
needs, there is nothing more important than to reestablish the
sources of generation of foreign currencies which will enable us
to accrue again the funds we require and, tp rebuild abroad the
e ifice of our credit. The first demandsAV reorganization of
,0 r export policy., *dond the consolida 16n or at least the
ebnclusion of an srangernent concerning the loans we have for-
ced other cotmtriet to grant us. '
In the face of the telgian franc crisis, Which has so obviously
broken out, no nO argliMents are needed to underline how ur-
gent it is to take ?steps in this direction. What is needed now is
rapid and decisive action.
NEWS & COMMENTS
NEW DECLINE IN CLEARING CURRENCIES rendes which amounted to m$n 73.3 millions in the last week
The Central Bank's balance-sheet as at July 31, 1048, shows of the month and to 151.5 millions for the whole month. It is
iiew and not IneOnsiderable decline in 'Clearing agreement my- probable that the decline corresponds mostly to Belgian francs.
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point-we have commented Upon extensively :under?,this issue's currencies and Under. the Oeld aCcOlilit, were rather
mslgnlfiqant
,The Financial 'Situation". The fluetuations recordZd in other as the following table shows; Millions of m$n),:
Gold:
?, In ',the. 'country
" ? 'abroad
? Total Gold
- Other Currencies
?23.7.48 -.2, 30.0.48 -
, ' 32:7/30.13. 31.7/24,7
542.8 ? 542.6 '863.7 ? --' ' ---21.1
71.4 78.0. , 56,9 - 0.6 - - 4.20.5
690.0 620.6- .620.6 -......., ,0_6?.
292.0, ? 278.9 295.8 4- 13.1 - 3.8
Suli-Tetal 812.6 899.5
916.4
Currencia witla Gold Guarlintee 1 /1,2 0 1.670.1
"
+ 12.5
-- 73.3
? ,?
-- 4.4,
TOTAL 2.624.6 2.685.4 2.786.5 --'60.8.-161,9
RELATIVELY SMALL MOVEMENTS IN THE INTERNAL
MONETARY SPHERE
The 'movements which have taken place in the internal mo-
netary sphere during the month of June were rather restricted.
Although the limitation on credits ruling during the first half
of the month could not be maintained, the subsequent expansion,
which in' itself was not unimportant, was much lower? than that'
recorded during June when the ?Central Bank's Rediscounts k
Advanoes expanded by almost nan 1.000 milliens. Althotigh the
knpbrtaneb -of this policy in the progres,s of inflation, has apq30.-'
rently at last been recognised, nevertheless, it appears to be im-
possible to restrict completely this expansionist ineve,ment., '
The larger decline in the circulation of Mortgage Bonds, which
was especially noticeable during the last week of, July, shows
the pliblic'd 9i interest in inVestment in these' bonds. At 'the
same tile it is a sign .of such investors' increasing need' Of new,
funds to continue with their ordinary business: These bonds have
been used mainly as a temporary investment instrument of funds
not required immediately for the development of business. l'he,
continuous decline In the circulation of such bands shows the_
increasing ,need of -financing means. The amount circulating 16
now very small and is clear evidence that these bonds were never,
able to replace the old mortgage bonds very extensively, the latter
having been at one.lime the most outstanding form of invest-
ment in the country. At the beginneng of our banking reform.,
it .as hoped, that the ,latter qould be replaced to a large extent
by the, new Mortgage Bond's isstied' by the Central Bank.
The fluctuations in the pertinent accounts are shown below
(in millions of ni$n): ?
81,7.48 28.7,48
Rediscounts & Advances 12.001.2 - 11.944,1
Collateral Security Banking Loans 3.172.0 3.184:1
Advances on. Mortgage Bonds . 2.151.2 2448,8
30.6.48
11.834.6
3.143,6
2.050,2
DIFFBREINCE:
31.7123.7 31.7110 6
+ 58.1 167 4
4. 15.4
2.4 '101.0
Monetary Circulation'
Denosito In other banks ior ac-
count Central Barik 14.26'7.1
3111.3
6.076:5 '
Mortgage Bonds
5.977.6
14.206.3
azi:7
5.955.1 + 98.7
-14.184.7 + 8.8
327.7 - 9.4
+ 121.4
4- 824,
- 25.4
FULL LIBERTY FOR CAPITAL MOVEMENTS IN URUGUAY
On AUgU?t 4 the Eaneo dp la Republica Oriental del Vrt144aY.
took' a long awaited ;step; it liberated the entry of capitals to
Uruguay from, all bureaucratic measures. This ?measure had aiready-
been predicted by. H. E. the Finance Minister of the, neighbouring
country, Si. Escr. Ledo Arroyo Torres, during an interview granted
to this survey reproduced in our No. 384, when he declared. the
"Irrevocable . position of allowing absolute liberty to the entry and,
departure of capitals" and that the declaration which the Banco
de la, Repnblica still demanded at that dine was really "a simple
declaration for statistical purposes". The new measure taken by
the Bank shows that. it is a reform in the dispositions in. force,
to adjust them preciaely, to this purpose, as formerly they might,
haYe.led to believe that other purposes were also contemplated.
Circular. No. 53/25 of that Bank's Foreign Trade Department,'
reproduced hereunder, does not require further explanations.. '
REF: Control of entry of capitals through the free market.
For the pertinent purposes, we beg to inform you that this
Bank has decided, by virtue of the faculties conferred on it
the Law of May. 19, 1931, on control of foreign exchange opera-
tions, to abolish the dispoSitions contained in our Circular. ef:
June 1,, 1944, referring to the entry of capitals. ? ?
Consequently, Banks and Banking HouseS are empowered td,
expedite freely the purchase of foreign exchange by the free,
market, without any prior procedure through this Bank, except
when they are currencies of countries with which we have clearing
agreements -(England, France and Belgium), in which cases .11;
is necessary to apply for the corresponding authorization, in.
accordance with the regulations in' force.
For-Statistical purposes only it will be necessary that -Banks
and Banking Houses 'report to this Bank the purchases made
of 'foreign exchange, In the forms applicable to that purpose. .
With regard to the. deposits in Urugnayan Pesos, stock ex-
change securities and title deeds which at- this date are credited,
to accounts "Subject to Control", they may be considered as, frepc1
without further procedures". ? .
,
NEW NEGOTIATIONS WITH URUGUAY ON
PAYMENTS AGREEMENT - ' ' ?
"In Nos '385 and' 387 we reported at lenght on the negotiations
presently AinderWay netween Uruguay and our country for the'
conclusion of 'a payments agreement. In the second of' the above-
mentioned' issues we` expressed our opinion in the direction that-
the differences which still' existed between both countries were
rather- of a formal nature, and this opinion has been confirmed
by the trend Of subsequent negotiations. The Uruguayan draft
of the agreement provides for the establishment of an m$n ac-
count 'In the Central Bank. In 'the meantime, a counterproposal
was made by our 'Central Bank, suggesting that all acocunts
should be carried in o$u instead of in Argentine m$11. The revised
Uruguayan project provided for a gold -guarantee for our m$n;
the counter proposal. suggests therefore a gold guarantee- for .the
o$ri, in which Currency the accounts would' be carried, 'for, account
of the Bancd'RepUblica. Both Counterproposals,- however, -have
been rejected'by th t" institution...because the re in..Thmuay,-.,.
ari 'Pe:Sos 'Is- not cO ' Item ttoribiabassev tautioboiliwk-
in Uruguay, -and because ,the gold guarantee would' create a
responsability Of -awn Magnitude for the Banco de la R Oublics,
that it does not -believe it, 'could, assume it. ,
Therefore, a completely new proposal has been submitted,
based, naturally, on the previous projects, in. which our Central
Bank has again suggested certain changes in minor points and
which are, in our opinion, merely of a. formal nature so that, in
principle, they should be acceptable for the Banco de la Republica,
The new project again establishes as principle the use of
the m$n for all payments, under an account to be established in
our Central Bank, which may be effected directly between both-
central banks or through authorized banks in Uruguay or in our.
country.
In principle, it is once more 'established that the refund of
the balance cannot be demanded unless the total of same exceeds.
1 million m$n. Should this figure be exceeded, the debtor Institute
must reimburse the surpluses in full or partially in lots of rriSn
0.5 millions, through conversion into free currencies to be fixed?
by joint agreement between both banks. Our Central Bank has
suggested a slight change in this point, namely, that all surpluses
may' transformed transformed but not ,necessarily in lots of ro$n 0.5 millions.
Furthermore, it is proposed, that such deliveries be deferred
in any event until the end of each full year of duration of this
agreement. On the other hand, the debtor may amortize the
total amount at any time, and here our Central Bank has sug-
iested. that this option shotild also be used for conversion tc
`
free currencies at any time. Similarly, if the total amount exceeds
m$n 15 millions, delivery of the surplus devisen may be demandeu.
at any time, even if the full year has not expired. The previous'
proposal fixed the limit at, raSn 30 millions. Our Central Bank
proposed that in the event the amount of m$n 15 millions was,
not enough for the development of operations, that it could be'
enlarged. The interest rate to be paid quarterly on the amount
of the balance, is also maintained as in former proposals at 33%,,
as well as, the provisions-referring to the ,use of gold payments
instead of devisen, and td the fixation of exchange rates for, the,
different operations according to the nature of same. The possi-
bility_ of paying freight-rates of Argentine or Uruguyan ships in
Argentine m$n, is also contemplated, although only when trans-
portation is made In both countriee' ships. It is also established
that goods bought from third countries may be paid under this
account only when both banks approve in each individual case.
A special article again establishes both banks' obligation to en-,
deavour to balance the account as much as possible, either sti-
mulating purchases or the tourist trade. Our Central Bank desires
that this disposition should 'be Complemented by the possibility
of agreeing on special exchange rates. The duration of the agree-
ment is fixed at one year, but it will be tacitly extended for a
further year unless denounced with three months ,prior notice.
Finally, it seems that the 13an,co de in Repablica's original
demand for a gold guarantee on the value of the balance, has not_
been maintained.
Evidently, thefl dIffpreneeS hat still persist are now very, Un-
01402444104 ,Ing on this important prejeet,..
,
1,0
rol ?
9 0 "
Approved For Release 2003/12/01 : CIA-RDP80-00926A000600010004-2
VINLAND AGAIN ONLY BUYER IN HIDES MARIKET
The voluxne of activities in the hides Market lent week was
again small. The only operation ef eny importune was that
:oncluded once more with Finland, which on this ociasioir bought
11.500 good cattle hides at, ria$ra 227 per- 100 kilos. The U.K. jiae
withdrawn from our market, at least tenaporarny, alleging that
,wesent prices are too high, This ns possibly connected with the
etuation in the US hides markets which showed SUMO signs of.
.11,kness last week.
OTHER FINNISH PURCHASE'S
Finland has also been .active in other markets, and was al-
most.the only country to operate.. The oontraet eigenid with Fin-
land referred only to tallow' purchases, of whech it bought 500
lis 'atteS 591 per ton in 'drums and/or kegs'. However, the
Purchase of forages is being negotiated, a point Inch we had
already indicated' as 'a Finnish objective before the trade agree-
ment was signed. The operation involves about 45.001 tons of oil-
seed cakes and about 35.000 tons of inillfeed. The pi ce has been
the main obetaele in Mit last line: Finland offers a, price about
TO% lower than that paid recently by Denmark. So far, the offer
eas not been accepted.
BARTER OPERATION WITH INDIA BELIEVED To
INVOLVE IMPORTANT QUANTITIES
Trade circles believe that the barter operation dpf grains for
lute which has been arranged' with India, may indtive quite :im-
portant quantities and a -figure of about 360.000 teas has been
mentioned. However, we have still not been able to ertablish what
:xind of grains and what proportions are involved in this business.
NEW CHANGES IN WOOL TRADING
Although When been established-in principle that wool shoula
be sold in flittire only against payment in U$S, an exception has
been made in trading with Reiland ? with which country we
have conclude& a trade and poyments agreement, LI effect, pay-
silent in Dutch Guilders will be accepted for wool exported to
that count*. e
PRINCIPLES OF THE REGULATION ON THE MAIZE CROP
The regulations applying to IAPI's purchases e'? this year's
maize crop- have been issued at a very late date. When maize
was not subject to purchase by the official mon poly, it wee
customary for buying to begin already as from the 1st. of May
,d every year, when the largest part had already be ii harvested.
Last year a scale of fixed bonuses Was establish* 41, increasing
the bonuses for every .month the purchases were eitferred. That
acale started to operate at. least after June 30, 1947. This year
important change has again been introduced A scale of,
bonuses is also established, but, it does not come into force untie
the date the sale has been made and it is provided thet no bonuses
will be paid during the first 30 days following the date of the
eontract. Inasmuch as the regulation was only published on
August 8, and as at least 8 days if not more will lapse. before,
actual signing of contracts is commenced, it nV4tals that no
bentises will be paid before September 14, at the (axle:5n Thus,
elle increase of the internal maize price. Which hee been fixed
et men 14 on railroad ear dock-basin; should be compared to
that ruling on Septereiber last year; when ill$n 13.35 per 100 kilos
Was paid, intending bonuses, etc.
The new regulations stipulate that after the contract is signed,
the first 30 days are fret. If acceptahce is postponed finther still,
a bonus of in$ri 0.07 per ton and per day is pantie during the
first 60 days arid thereafter men 0.09 per tot and per day, during
ale next 90 days. subsequently, in5n 0.115 per ton and per day
will be payable. Thies, assuming a contract is cOnclueed on August
15 and the aceeptance .is postponed until January 4, 1949, a price
oe men. 14.87 per 100 kilos en railroad car d'ock-'basin is then
'Payable, which may be compared to m$n 14.15 payeble under si-
milar conditions on January last.
Tnasmuch as the delay in issuing these regulations is attri-
butable solely to 'API, it would be only equitable that payments
Ile made as from an earlier date,. for Instance, Mag 1 Or 15 last.
Prices are understood for shelled maize, baggel and stored.
For bulk sales, a rebate will be made in, the amount of m$n 0.75
per 100 kilos.
1Vliddlexhen buyers will receive na$n 0.45 and bro'zers m$n 0.14
per 100 _kilos as .full cornpePsation.
ND DEFINITE SOLUTION YET FOR SUGAR INDUSTRY'S
PROBLEMS ?'
In spite of the fact that the sugar harvest is to full swing,
no definite solution has been proposed yet for the problems af-
fecting this industry., The _conditions applied last yt,ir have been
revalidated temporarily, maintaining the sugar-eane price at the
level of m$n 28, aad freezing wages and the subsidiee paid to the
industry, (although the cane-growers have alrealy been granted
sredits to pay their workers, on these terme, the' ithistry so far
has only received promises, albeit these are quite definite). Ne-
vertheless, it should be evident that this is merely a transitory
eilution: The old commission' appointed to study osts, formed
mainly. by Central Bank functionaires,. is at this noment :stu-
dying production costs in the sugar dietricts, in orier to submit
definite proposals tb the Economic Council. On this basis, and
perhaps after negotiations heeve been held with the interested
However, several factora will tend -to show an nee, ise n cos a. ens ine
pproved Ron)FteleasT200f12/111111:1144
parties, the final- solution,' foA
Tele esme-greevere have bad to pay higher wages to their workers
for the cultivation of this year's crop, namely,. the 25% wage in-
crease agreed upon last year and which was applied to this year's
carte erop. Furthermore, the workers are becoming more insistent
in ?their demands for, a ,new wage iterease, and have submitted
their request for a 50% increase. It is quite clear that the wages
paid in the sugar industry are under the standard wages actual-
ly paid in 'Tucuman for other tasks. The pay of the average su-
gar worker amounts to mina 7.20 per day, whereas other activi-
ties pay m$n lel and more.
` We still believe that it would have been preferable to settle
the whole question before harvesting commenced. We do not
overloog the fact that, naturally, the present method may have
some advantages, considered from the viewpoint of immediate
effecteecOrice the 'harvest is in full swing, final settlements might
be lower than if they had been made before harvesting commen-
ced, and workers have so far remained calm, with some well-
known exceptions. Howeeer, we do not think it possible that the
industry, cane-growers and workers continue to work indefinitely
on a year to year basis. Some solution must be found, at least in
principle, which will give this industry some peace and an assu-
rance of uninterrupted work. We continue to believe that such a
settlement may be found only by allowing sugar prices to rise.
We have already shown, on a previous occasion, that such in-
creases will not be onerous for customer budgets. On the other
heed, the change in world conditions under many aspects, and
the development of national finances, would demand a general
reduction in all the subsidies paid. Thus, if it is not intended
to increase prices immediately to the level of full costs, a scale
cif Increases should be prepared, distributing same over two or
three years, so that prices may be increased gradually during
that time until they cover all production costs. In our opinion,
an arrangement of this kind is the only settlement possible for
that Industry, on the long run.
SUSTAINED INCREASES IN WORLDSUGAR PRICES
The rise in quotations of the "World" sugar price in New
York, i. e. of the price of raw euger FOB Cuba, for consumption
outside the USA. continued throughdut last week. Up to the end
of the week spot price improved a further ten points to U$S 0.044
per lb. against 0.043 at the end of the preceding week, while
March 1948 contracts improved to 3.90 against 3.86.
The main factors in this rise were the indications arising
from the negotiations between the US Department of Agricultu-
re's sugar branch and the Cuban sugar interests, on purchases
to be made for the US Army's requirements. These negotiations
were postponed at the end of last week so that the Cubans could
-make consultations in their country, and will be renewed to-day.
A special influence is exerted by the fact that the USA's domestic
beet-sugar production will be Much lower than estimated pre-
viously, namely, about 18% below the 1947 crop which amounted
to 1.884.000 tons. On the other side, the continental US cane
sugar crop is estimated to be about 14% higher than the 1947
crop, which amounted to 375.000 tons. Under these circumstan-
ces, the US negotiators dealing with Cuba want to be assured
that additional quantities will be made available to the USA. in
case of need, Out 'of the free Cuban quota for the world mar-
kets. It seems that in exchange for a Cuban guarantee of this
kind, the US is prepared to guarantee the absorption of enough
Cuban sugar to' prevent arty troublesome surplus from appearing
between January le 1949 and the time when the new crop be-
comes available. This, in turn would indicate that there would
list no need for 'Cuba to curtail sugar production in 1949, as it
originally intended to do. The volume of the US Army's purcha-
see will depend on the importance of the general guarantee to be
granted to Cuba. Therefore, it scent that the new purchases of
the US Army might be smaller than was originally intended,
when the purchase of between 350.000 and 400.000 tons was un-
der discussion, (As reported previously, the Army had already
boueht over 1 million tone on earlier occasions). The Chief of the
US Department of Agriculture's sugar branch, had mentioned the
amount of 240.000 tens As the most probable volume of the new
purchase, but although no definite figures have been established
yet, some Sugar interests believe that the operation will be nearer
290.000 tons. In any ease, the probability of the US quota for
Cuban sugar imports being increased again. and the proposed
guarantee against large surpluses, has naturally strengthened the
market. Hence the new rises in quotations.
SHARP DECLINE IN MAY EXPORTS
Our fereivii trade'figures fer the first five months of 1948
were made public last Week. It is very regrettable that in spite
of the very Justified declarations made by H. E. the President
or the Republic on the great importaece of statistical data. these
sinned continue to be published with so much delay. This is
evinced be 'lust one inetance: In our previous issue we quoted
British foreign trade figures for the month of May. This infor-
mation was received bY steamer mail. The nublication in question
gives a very detailed account of trade exchange. not only under
each heading of imports and exports. but also indicating fieures
in the case of the more important countries trading with Great
nietilin One week 'Inter we receive the statistics or our own
foteien trade during that same month, bet in a very synthetical
reenter which inakes It impossible to follow the development of
our trade under each heeding. We believe that if the indications
lai?Itre followed, and
ltde-M greater detail,
Approved For Release 2003/12/01 : dlitkbP80-00926A000600010004-2
that Lamy of the prableme that ,affeet eura economy/ could , e factor hes jeeen the, purchasing policy, as expressed in these figu-
ereseen earlier and the necessary Measures ten at the proper, resaFurtherteonehevrtions on this aspect of the question may be
?
r '?' ' found Under 'The nanclal Situation'l
a This all the more so,, as our foreign trade seems to ?have
reached a decisive point: The May ?figures show that our er OUR TRADE WITH THE WK. s
have undergone a sharp contreetion. Watile import figuree v
also declined, the reductioh is far less announced inetine caete ?
The situation is clearly shOwn in the following table:
INES
' Exports:,
In 1.009 It; Millions of
tons rn$n. ?
January
1.030.5
656.0
' '
February
1.038.2
-; 018.3
March
909.9
0,66.e
,
April
800.9
Al?'F'.
Monthly
average
947.4,
May
646.2
0.8.2
- Imports,: -
In. 1,000 In Onion,
tOns inktn,
1.059.7
, gep.6
1,10,3,3
1-40.6
- 1.144.0 520"
1.080.3 ?437.,1
The main declines in the ernounts exported (in percentages
with respect to April 1948) have occurred= the following group:
hides '(44.6%); cereals (28.1%);."other agricultural products",
which group includes principally vegetaale oils (34.1%);- forestal '
products, especially quebracho extract (32;2%); and sundry manu-
factured goods (23.1% ) ; dairy products, (3a,9%); -live aeimals
(58.3%). The only increase took place M flour and wheat by-.
products, which rose from 14.700 to 67.40q tone, as a nataral con-
sequence of the extended stagnation which had previously. occurred ;
In the exportation of these products, already ,commented here
at the time.
The import quantities are' influenced to a large extent by
the fuels purchases, a group which always amounts to about 50%
of our total import tonnage. These declined in May to 543.600
tons against 718.700 tons in April, but the shrinkage also includes
iron, steel, etc. imports (67.100 against 85.400 tops), reachinerY
(33.300 againpt 38.900 tons) lumber, (51.300 against 99.200 tone),
earth, stones, etc. (285.100 against 376.900 tons). The only Increases
were recorded in the groups; Foodstuffs (22.000 against 13.200
tons); Tobacco (1.200 against 600 tons); -Textiles (7.300 against
4.100 tons); Chemical and pharmaceutical products (27300 against
19.200 tons); Rubber, (400 against 300 tons) arid 'Others" (24.900
against 14.900 tons).
CLEARING AND FREE CURRENCY AREAS
With one exception, namely, imports from Dutch Possessions
in Central America, which are made up Of petrOleum and its
by-products, while our exports to that market are practically, nil,
we have classified all the countriee with respect to which official
statistics give only the figures of imports from or of exports to
those countries, respectively, but not both data, under 'the heading
"Other Destinations", in addition, naturally, 'to the figures already
shown in the official statistics under these headings. Inasmuch
as this heading covers, both countries with which we have signed
clearing agreements and countries which have not made such
agreements with Argentina, we have not ettablished the balance,
and we deal with it apart from both groups. The statistics for
the first 5 months of 1948, in comparison to those for the same
period of 1947, show that the balance of the grand total of our
trade interchange hag remained almost constant during botla
periods. However, a discrimination such as' that made in the
following table clearly shows an unwelcome displacement between
clearing agreement countries and free currency countries. Our
exports to the first named group rose sharply and absorbed 70,8%
of all 1948 exports, against 60.4% during the smile, period in 1947;
whereas our imports 'from the same countries only amounted to
31.8% (against 36.6%) during the first 6 months of 1948. It is
evident, of course, that this pattern does not really agree, with
the Texplanation which is always given 'with regard to clearing
agreements, I. e. that they are agreements which in principle
provide for the balance of our foreign trade accounts. The sharp
surplus of our export figures in our trading with esueh,comitries,
amounting to m$n 1.101.1 millions for the first 5 months-of 1948,
indicates this very clearly.
the other hand. we have a sharp unfavourable
in our trade with free currency countries. The velem of our 0-
ports to these countries areolentS to Wee MAUone third of the
imports valueal This explains the sharp deficit fn this trade, and
is the main factor in our present exchange situatfen; tI'he totel
deficit with such countries an-Wanted, to m$n 1.103,7 millions,
whereas la pt year, it only reacaerl, 388.2 realitoPa, in the eeMe
Period3Within this trade lutereaarige, the most important feetors
are purchases made and imported lama etia USA; trading accounee
with that country show a deficit of not jess'?than 486,6 anda1503
millions, in the perieds surveyed of 194a arid IN respectively.
While in 1948 our imports from that sciurce were almost doubled;
our exports, on the contrary, dropped, although to a small extent.
[Although the import surplus from countries which must be paid
in U$S, especially those providing us with petrOleum, has contri-
buted to the scarcity of U$Se the present eituetion has been
provoked mainly by purchases made directly in theaUSA. Nor can
it be said, in our opinion, that this tircumstance is explained by
the inconvertibility of the ?. As the figures show, our :export sur-
plus to the U.K. for the first 5 months of 1948. only amounted
to m$n 320.9 millions, Even assuming that these had been totally
converted, the deficit in our trade With hard currency countries
anyway would have reached 782.8 millicaes. Abd while naturally,
this Convertibility would have meant it certain ',relief, the; main
Approved For Release 2003112/01.: C1A-RDP80-00926A000600010004-2
' A sped
It will be
? ;.100 milli
cove-red, hi
,
that Grea
ineel t:13 r ain , granted us a loan of
fe44,iaeW in tais question, ipue, tralle with the U.K.
e
s toe peirchaee the reilwayseaeneh loan should ,be
eindiple; by t e value Of our exports to that destine,-
tion during his year. How ver, the figures of ?tie balance of, trade,
ineicaee that it 'is improbable thee this will be achieved, unless
ig
experts to t e U,K, are stepped UP ate emitaltrably. Our axport
marines for she' fita 5 months of 1948 arriiennted, as We seed be-
to m$111,20a Ainllions; At this rate the ellralus for theewheee,
yam Would aftioilfeteto 770 millions., leaving' an uncovered belaneai
of about 589 "millioas. This, figure corresponds to 9 months trade
Sli1151118,' calculated at the rate of the first 5 months of 1940. There',
are two was to cover this amount: The first le teen, foreseen in
the "Andes; agreement, iaccording to Which 'the amounts not
covered by March ,31, 194a, by our exports 'to ,the U.K. must be
refunded in: ?. At the present rate, this wade amount to about
m$21, 387 minions or ? 28 millions, I. e. 28% eie the total amount
received from the U.K. The other possibility is, ed course, that in
any' new agreement to be made with the U.K. for 1949, a clause
be included ; to the effect that the export sifrpals will be paid in
? to the British Treasury until the aceoeiha arisitig from the ? ton
millions loan is exeinguished.
This, of course, would have great effects on the possibilitiee
that might arise for us from ECA's USS. Referring to that pare
of the agreement OIL ECA between the U.K. aeid the USA, repro-
duced last Week in our comnients on the Meat question, the Beitieh
Chancellor of the Exchequer, Sir Stafford Cripps, stated in a
speech delivered pefoxe the House of Commons on July 5, that
It meant "that if for instancethe USA agreed with such country
-- say Canada or the Argentine -- a price level at which a certain
class of goods was to be sold, then we would not pay more liaei
that price. A valuable, provision to -prevent International prof tee!,
ring ? out of ERP aid.' , .
, This naturally would imply 'that in future the U.K. would
pay us our exports with ECA te$S, always assuming a prior
agreement between our country and the USA on the level of
prices to be demanded. However,, on the other band, Sir Harold
Wilson, President of the'British Board of Trade, declared receritaa
that the U.K. would not pay coantries which were in debt' with
the U.K., with ECA funds. From this view-point, the naethod of
financing the purchase of the ex-British railways is already af*
fecting our possible income in US, inasmuch as the agreement
between the U.K. and the USA was signed 'on July 6; 1948; and
If: our debt with the U. K. did not exist, our deliveries trathat
country could already be paid in 'MS: But if the facts xnehtioa
ned above regarding the repayment of This debt,' are not 'rade,
cally modified in the coining months, the effects might be of
Much longer duration and the yielding Of MEI to our cola-I.:try
might be postponed for a still longer period,
THE LOSSES IN TRANSPORTATION
It,. E. the President of the National Eebnornic Council .aultY
confirmed our estimates en the losses experienced by aalleveY
, . .
transports, Iii.' the epeech deliverea et Rosario. /n effect, he natried
a .figure of 'nen .1.8 millions per day, which amounts to, a lase of
m$n 657 millions clemipa -the ,yearVIt is now a long time' ago' that
we estimated the railways' losses at m$n 700 millions. It should
be mentioned, however, that railway circles estimate that those
losses' probably, reach highereeigures at Present. Since we have
assumed the 'responshbility for,the management of the failware
as from July 1046, thelosses so "far incurred, according to Si. Mie
eanelses figuaeseeameunt to about ni$1.1 1.300 millions or, expres-
$edmn imetber NVa'y; the a'ailways' cost to us, so far, amounts riot
to Men 2:50b -millions but to m$n 3.800 millions'. In vieev Of these
figures, it is quite understandable that the railways' former 'i'itish Owners' were so eager to sell, inasmuch as same had long
since ceased to be an asset and bad instead become a definite
liability. Nevertheless, it is regrettable that such eagerness was
hot 'adequately used' to obtain eh increase in the prices, at least
for meat, at the time the "Andes" agreement was signed, as we
pointed out in our two preceding issues. If to the above is added
the heavy deficit suffered by the Buenos Aires City Transport
Corporation Which H. E. the Minister of the Interior has'
mated 'at m$n 43erabi1leens by the encl.-totes Near, the traneport
system will have cost- us over Ian 2.000 Millions at the end of
f t 'ort ns ilat been raised.' Ne::
difference between the aslitem'e'faaillets and disbursements, since
t,ie. inancing. ste
, e. by .incre,asitiTo. atton.., -
f ehet fiffeeence le, made through banking loans,
DISTRIBUTION" 914' 0IJR :FOR ,
EIGNTRADE ACCORDING
TO :COUNTRIE8 - _
. :
The -following figtirea show in greater ciatall the compesitiot
of, our foreign trade aecording to the* perticipating countrieL
during the first 5 months of 1948 and' Mr, respeetiVely
millions of ran) :
, ? ? ,
Vertheless, ueere :arid ne 'ataserse'alNe are vin
'pa- g indirectly for th
c
Up to nor , ,the'_cp o r
Approved For Release 2003/1P/Cf1 : CIA-RDP80-00926A000600010004-2
' -5
Exp.
Total . 2.708.9
Clearing countries:
TOTAL
Belgium
Luxembourg
BG1I via
Brazil
Spain
IN Baca
Italy
Paraguay
K
4.5witzer1arid ?
it Bard currency count les:
TOTAL
Canada
Colombia
Chile
USA
Mexico
NOTWaY
Netherlands
Peru
Sweden
South Africa
Uruguay
Venezuela
Dutch Possesions in C.
America
_
Other Destinations
+
1.919.2
200.6
14.2
13.7
164.1
181.9
177.5
57.6
367.2
17.8
555.2
493.0
10.3
12.0
31.5
227.7
3.0
10.7
93.3
58.3
14.9
4.4
16.0
10.9
296.7
N'T El 1 4 8." '
'5 MONTH'S 104 T.
Inma, Valance
Nap, Imp, I Mance
2.528,2 4- - 160.7 '
1.920.0 1.647.0 I 4- 179.0
803:9
4_ 1.101.1
1.165.-1
003.1
4- S-63.0
113.9
4- 08.1
83.5
tv9.6
4- 23.9
8.6
2.3
-4- 11.4
19.4
3.0
16.4
160.0
-- 5.9
113.1
151.9
38.8
18.1
163.8
96.9
22.2
73.7
43.1
-4- 134.4
133.6
56.3
4. 77.3
20.7
35.9
17.2
19.4
2.2
128.0
.4_ 239.2
05 5
78 1,
17.4
13.3
4- 4.5
11.8
12.1
0.3
234.3
-4- , 390.8
525.5
148.8
376,7
70.2
4. MT.
CL .2
62.3
4-809
f
, .
1.596.7
-- 1.103.7
573.9
962.1
388.2
54,8
-, 44.5
7.3
39.7
32.4
2.2
4. 9.8
6.5
3.1
4-2.4
21.3
10.2
49.2
22.0
4. 27.2
1,214.3
986.6
231.6
681.3
450.3
10.4
7.4
4.3
9.7
5.4
15:1
22.4
17.3
5.1
23,7
.4. 69.6
83.9
16.5
67.4
14,1
71_ 44.2
18.9
6.5
4. 12.4
80.7
15.5
45.0
50.6
11.6
10.9
8.5
55.4
15 8
-1-39.6
10.7
4. 5.3
29.6
6.9
22.7
52.8
--, 41.9
21.4
31.8
10.4
85.7
857
64.9
54.9
127.6
186,8 81,2
URUGUAYAN NEWS
By our own correspondent/
TOWARDS THE NORMALIZATION OF TRADE
Uruguay has been the first South American country to start
negotiations with the Anglo-American occupation a t.ithorities ru-
ling the Bizo:nia, for the purpose of renewing trade with Germa-
ny, which in prewar years reached considerable sienificance.
These first dealings, which according to our intimations are
well conducted, have been made by Uruguay's commercial repre-
sentative in Paris, Sr. Carlos A. Clulow, and would have been
eeceived with sympathy and interest by the above mentioned
authorities.
Trading would take the form, according to our information,
of a kind of barter, facilitated by an interbanking legreement for
:be clearing of balances, establishing -a maximum overdraft of
500.000 Dollars, in order to avoid any possibility of freezing which
would be damaging to Uruguay and with respect to which it has
had already one experience, certainly not very flatti.eing.
The reestablishment of this trade current would enable this
country to place part of its production which to-day has no easy
outlet, and in turn, it could obtain certain metallur ecal products
and certain tvpes of goods, machineries and repair parts, which
Bizonia's industry would be in conditions te supply. It should be
remembered that the intense prewar trade caused important
quantities of German machineries to be placed in Uruguay, and
that at present there are no replacement or repair parts for
Japan, for its part, is sending a trade m,ission which would be
supported by the US authorities. to South America. and it would
attempt to purchase Uruguayan products and to reestablish trading
between both distant countries. All this would tead, as etated
iareviously, to normalize trading which was so deeply upset by
war without having been reestablished up to now despite the
INVESTMEN
THE STOCK EXCHANGE WEEK
The slight animation in industrial securities which started
the end of the previous week continued throughout last week and
several shares obtained sniall profits, especially the Fabril Fi-
nanciera group. The small purchases were mainly for investors'
account. Speculators have operated practically one., with their
favourites, which are' already known, and which we ye headed by
Pesea. Transactions were very large and the market also parti-
cipated actively. Questations rose to high levels esteblishing new
:maximum prices. The shares of El Globo and' San Nicolas re-
eordedi fewer -operatiOns and a decline in 'their miiikets was evi-
dent. especially in San Nicolas, due to the recent ilublication of
the State lawsuit against the company alleging leek of fulfill-
ment of the concession contract. Quotations drappt 1 about 10%,
and transactions were so ..restricted that only one itneration was
eecorded during -last Fridars two rings.
eiIPO shares were oUtAtanding in other markets due i to a
firmness of approximately 10%, togethet with rumoi rs of a good
financial yeart-which ends on September 30, 1948. The market
oredicts a dividend equal to last year's, which amounted to
33 13% in ordinary shares. The maximum price could not be
upheld, due to the Market's collection of profit-% Rising approxi-
mately 50% of its rise.
time lapsed since the end of hostilities.
It is a well known fact that in America, Uruguay and Mexico
still have U$S reserves, which they try to defend zealously, and
therefore they are in conditions to buy from. the USA.
In this connection, it is interesting to mote the fact - we
refer to TJruguay - that even having exchange it is not possible
to obtain from the USA all the goods desired. We have already
drawn attention to this fact here, With reference to concrete
cases. Statements made by travellers and commercial agents and
which we have had occasion to hear, lead to believe here that
the USA in actively preparing itself to meet any eventuality in
international spheres, and that it would be taking precautions In
this direction, expropiating a good part of US production. The
same reports point out that, due to this circumstance which re-
duces the volume of production available, the possibility of price
rebates is postponed. at least in the near future.
THE ARGENTINE PESO
The Argentine monetary symbol is quoted in the money-
changer's shopwindows, at the time of closing this corresponclen-
ce, at irates which vary, according to the establishment, between
au 31,20 and oeu 31,80 per 100 Argentine men.
The step taken by the Central Bank in Argentina fixing the
maximum buying prices of foreign currencies over the counter,
and establishing an important difference between the rates paid
in Montevideo and Buenos Aires, per m8n 100 in the first and
au in the second market, would have allowed a certain money-
changing house in Montevideo, which 'has agents in the Ar-
gentine capital, and which was estimated to have incurred in
serious losses due to the drop of' the Argentine peso. to compen-
sate part of the damage suffered in the purchase of Arg. men,
distributing the difference.
T NOTES
The shares of Benegas, Hnos. nese from 225 to 255 due to an
increased dividend, on Which we already infOrrned our readers in
our previous issue.
The marked closed the week with slight drops in industrial
securities. The volume of transactions was reduced, excepting in
Plasm and (Moho, and small fluctuations have occurred in the
csiee of small quantities of shares up for sale. The nublic's re-
stricted purchases in investment shares were due, according to
market opinion, to the activities of some customer grouns in epe-
culative securities, and Who withdrew therefiere, from other mar-
kets. This is also attribAted to the fcithcorning advance nayment
on income tax which absorbs a considerable arieolent of funds.
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SIBMANN 7 Cis, S. A. 0. X, 9 P. rheum an 36710 - Agosto de 1946
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25X1
Approved For Release 2003/12/01 : CIA-RDP80-00926A000600010004-2