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EFFORTS TO SECURE FOR AMERICAN FIRMS EQUAL CONSIDERATION WITH OTHER FOREIGN COMPANIES IN BIDS FOR ARGENTINE NAVAL CONSTRUCTION

835.34/405 : Telegram

The Ambassador in Argentina (Jay) to the Secretary of State BUENOS AIRES, May 21, 1926–11 a. m.

[Received 1:25 p. m.] 39. Press announces President by Cabinet resolution has directed the expenditure of 32,000,000 gold pesos for construction of two cruisers, three submarines, two destroyers and two gunboats. Funds apparently to be taken from unexpended balance alleged to have been left over after purchase of naval units appropriated for in 1909. Constitutionality of President's authorizing this and other large expenditures without approval of Congress now in recess is seriously questioned. Naval attaché is following developments closely and will continue to keep Navy Department informed. Representative of Fore River Shipbuilding Corporation arrived here recently on this matter and will continue to receive all proper assistance from Embassy.

JAY

835.34/405 : Telegram

The Secretary of State to the Ambassador in Argentina (Jay)

WASHINGTON, September 9, 1926–6 p. m. 36. Your telegram 39, May 21, 11 a. m. Department is informed that the Electric Boat Company of New York is competing before an Argentine Commission in Paris for an order for three submarine torpedo boats of about nine hundred tons each. It is proposed to build them at works of Cockerill Company in Belgium but from designs and under superintendence of Electric Boat Company which would also furnish certain parts.

Strong foreign competition is reported. You should seek an early opportunity informally to request the appropriate authorities that American firms be given an equal chance to compete for this business and that their offers receive consideration equal to that accorded any other foreign companies.

KELLOGG

835.34/409: Telegram

The Ambassador in Argentina (Jay) to the Secretary of State BUENOS AIRES, September 11, 1926–9 a. m.

[Received 2 p. m.] 63. Department's telegram 36, September 9, 6 p. m. I have taken up informally but actively with Minister for Foreign Affairs competition for submarines. He assures me our bids will receive equal opportunity and be examined strictly on their merits regardless of any foreign political considerations. Minister who was most friendly did not deny my tentative suggestion that Italian Government was pressing matter, but repeated his assurances that no favoritism would be shown.

I had just heard former Italian naval attaché here was attached to chief of Argentine Naval Mission in Europe during latter's visit to Italy and followed him on his further journeys. Also learned Italian Embassy here has urged building of submarines in Italy.

Our naval attaché will take first opportunity for appropriate action with the Ministry of Marine.

JAY

835.34/409 : Telegram

The Secretary of State to the Ambassador in Argentina (Jay)

(Paraphrase)

WASHINGTON, October 18, 1926—1 p. m. 41. Referring to your telegram No. 63 of September 11, 9 a m., and particularly to the statements concerning American bids which were made to you by the Minister for Foreign Affairs, I now understand that the Government of Argentina is on the point of awarding contracts for the construction of two destroyers, three submarines, and two cruisers amounting in all to about 1212 million dollars, and that a new program for 95 million dollars is also contemplated. I am informed that heretofore most of this work has been done for Argentina by the Bethlehem Steel and Shipbuilding Company and in an entirely satisfactory manner. I am further informed that it is not the intention of the Government of Argentina to give any opportunity to that company or to other American shipbuilders to bid, but that business is being carried on with Italy, England, and France exclusively. Because of the attitude which I have always taken in not raising objection to and, as a matter of fact, in encouraging American bankers to lend money to Argentina, and because of the relations which exist between the two Governments, I feel very strongly that

Argentina should grant American shipbuilders an equal opportunity to bid on and receive these contracts. Kindly present this subject informally, but in no uncertain terms, to the Minister for Foreign Affairs and any other authorities you deem best.

KELLOGG

835.34/412: Telegram

The Ambassador in Argentina (Jay) to the Secretary of State

[Paraphrase]
BUENOS AIRES, October 19, 1926noon.

[Received 5 p. m.] 76. Department's telegram No. 41, dated October 18, 1 p. m. Em. bassy's despatch No. 168, October 6, which was mailed on October 7, should reach the Department within a few days. In it was enclosed a translation of the new naval appropriation act finding an expenditure of 75 million Argentine gold pesos to be spread over the next 10 years.

As was mentioned therein, the Minister of Marine, when I approached him, told me that American shipbuilders such as Fore River and Cramps were being requested to make tenders in common with European competitors.

I do not understand the situation which the local agent of the Bethlehem Steel Corporation described as having been managed in a hurried and furtive manner inasmuch as I consider the Minister of Marine to be personally most friendly to the United States. However, I will immediately and actively take the matter up with the Foreign Minister and advise the Department by telegraph.

This morning I discussed the matter privately with Ambassador Pueyrredon.” He refused to believe the alleged exclusion of American tenders. He promised me his support if necessary.

JAY

835.34/413 : Telegram

The Ambassador in Argentina (Jay) to the Secretary of State

[Paraphrase)

BUENOS AIRES, October 19, 1926–4 p.m.

[Received 6:20 p. m.] 77. Embassy's telegram No. 76, dated October 19, noon. The naval attaché by exertive friendship with the Minister of Marine this morning learned the following:

Not printed.
Argentine Ambassador to the United States.

In August the Ministry of Marine telegraphed Johnston of the Bethlehem Steel Company to contact the Argentine Naval Mission in New York. The Minister of Marine read cablegrams from Admiral Galindez, chief of the Naval Mission in Europe, quoting bids from Cramps and New York Shipbuilding Company. I make the suggestion that Department verify the above. The Minister of Marine added that the Argentine Mission in the United States had been instructed last week once more to ask tenders from Bethlehem. In view of the above I shall not make further representations to the Government of Argentina unless the Department instructs me otherwise. At official luncheon today I found opportunity to express both to the Foreign Minister and to the Minister of Marine my confidence that American interests will receive equal treatment.

JAY

835.51/564

Memorandum by the Economic Adviser (Young) of a Conversation With Mr. Hugh Knowlton of the International Acceptance Bank

[WASHINGTON,] January 7, 1927. SUBJECT: PROPOSED LOAN TO ARGENTINA FOR NAVAL CONSTRUCTION

Mr. Knowlton stated that the Argentine Government was in course of realizing a naval program calling for an expenditure of some 75 million dollars over a period of years; that it was now contemplated to raise a loan of 15 million dollars to finance the building of certain vessels; that the bonds in question would be six per cent bonds, with a one per cent cumulative sinking fund running for thirty-three years.

The business had been brought to the attention of the International Acceptance Bank through the Argentine branch of the French firm of Louis Dreyfus. I inquired where the proposed naval construction would be carried out. Mr. Knowlton stated that he did not know definitely, but that there had been some discussion of having part, at least, done in France or Italy. Mr. Knowlton would be prepared to specify that a part of the construction be carried out in the United States. He inquired whether the Department would desire a preference for American firms. I replied that it is not the ordinary practice of the Department to suggest any preference, but that we always hoped that in the case of construction work of any sort American firms would have the fullest opportunity to compete freely, and that as to construction work in general the Department was always glad to see the work done by American firms. Mr. Knowlton stated that he would be prepared in any case to stipulate that American firms

should have the fullest and freest opportunity to compete for any proposed work.

In reply to his inquiry whether the Department would object to a loan for naval construction by Argentina, as such, I stated that I was not prepared to express any views without consideration, but that I would take up the matter promptly and communicate with him,

A[RTHUR] N. Y[OUNG]

835.51/567

Memorandum by the Assistant Secretary of State (White) of a Tele

phone Conversation With Mr. Hugh Knowlton of the International Acceptance Bank

[WASHINGTON,] January 14, 1927.

SUBJECT: PROPOSED LOAN TO ARGENTINA FOR NAVAL CONSTRUCTION

I called Mr. Knowlton on the telephone and referred to his conversation with Dr. Young, particularly to his statement to Dr. Young that he would be prepared to stipulate that American firms have the fullest and freest opportunity to compete for any proposed work. In the event, I said, that Mr. Knowlton should write us a formal letter and state that such a stipulation had been made and that an equal opportunity would be accorded American firms to bid, the Department would reply stating that it would have no objection to the proposed financing. I might add also that the Department of course would be very glad to see some of the work go to American firms.

Mr. Knowlton stated that since his conversation with Dr. Young he had telegraphed to his representatives in Buenos Aires inquiring whether American firms would be accorded a free and equal opportunity to bid. The reply had been unsatisfactory, stating that no such assurance would be given. Mr. Knowlton said that he would telegraph again and make his inquiry clear. There might have been some misunderstanding.

I stated that I would be glad to have him do so. It seemed to me impossible that such a stipulation would not be granted by the Argentine Government. I also stated that it was the Department's practice in connection with loans the proceeds of which were to be used for construction work to ask that the bankers concerned should see that there was nothing in the contract which would preclude American concerns from bidding for the work in question. Mr. Knowlton stated that he would let me know what further reply he received from the Argentine.

FRANCIS) WHITE

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