ARGENTINE CREDIT

Mr. WIGGLESWORTH. That Argentine break-down would not indicate any new credit except as to Italy, would it?

Mr. SPIEGEL. The same comment applies in general to the Argentine figure. If there are additional extensions of credit in the case of Argentina, they would also be a part of this $150,000,000. We have listed all the significant items we knew about and the corresponding amounts on the basis of the latest information.

Mr. WIGGLESWORTH. The only new credit that you put down there is the Italian credit of $50,000,000, is that right? Mr. SPIEGEL. That is a credit

Mr. WIGGLESWORTH. That is the only new one?

Mr. SPIEGEL. The Netherlands credit is a new credit. The Italian credit was concluded in October 1947, but there is an unused balance under that credit which we are counting on here.

Mr. WIGGLESWORTH. Then the Netherlands credit is the only new one; is that correct?

Mr. SPIEGEL. That is correct.

Mr. WIGGLESWORTH. That is $25,000,000. And you have not conducted any negotiations with Brazil, Cuba, or any of these LatinAmerican countries? Have you any idea how much they propose to cooperate in this program?

Mr. SPIEGEL. No, sir; we have not felt that we have been able to carry on formal negotiations with them because of the status of the legislation. We would not have felt authorized to do so.

The CHAIRMAN. Are there any such negotiations currently in process?

Mr. SPIEGEL. There are no negotiations which are currently in process. We have from time to time discussed with the Canadians their financial position and we do from time to time get from certain of the Latin-American countries some information about their financial position as well, but there has been nothing in the way of a conclusive negotiation.

SHARE TO BE BORNE BY OTHER WESTERN HEMISPHERE COUNTRIES IN PROGRAM

Mr. WIGGLESWORTH. I notice that the House Committee on Foreign Affairs, in referring to this picture, on page 21 of its report says that-The $700,000,000 included in the Administration program as the share to be borne by other Western Hemisphere countries seems rather low in the light of the favorable international position of certain of the Latin-American countries (notably Cuba, Argentina, and Brazil), and in view of the plans to spend 1.7 billion dollars of the 6.8 billion dollars in offshore procurement in Latin-American countries.

Mr. SPIEGEL. Yes; I am aware of that statement. We have, in fact, had some discussions with the staff of the House committee. I do not know whether at this date they would be inclined to change their opinion on the basis of what the Canadian Government has recently said. On the basis of what we knew about the position, we felt that this $700,000,000 figure

The CHAIRMAN (interposing). Just a moment. What they say there has relationship to the favorable international position of Cuba, Argentina, and Brazil and not Canada, so that what you were saying about Canada is hardly pertinent to their statement; is it?

Mr. SPIEGEL. The latest information from the Canadian Government that we have is to the effect that I previously indicated.

The CHAIRMAN. That may be true, but the countries to which they were referring in their report were Cuba, Argentina, and Brazil.

Mr. SPIEGEL. We have allowed in the $150,000,000 for something from Cuba and something from Brazil. We do not feel that we can specify at this time what we may be able to get from Cuba partly because in the Cuban case there is no central bank or developed market for government securities, as you know, and therefore no easy mechanism for the extension of these credits. But we do feel that we can expect something from Cuba and similarly from Brazil. On the basis of such information as we have about the balance-of-payments positions of those countries, we have felt that the total will probably not be as much as $150,000,000. If we could get more, we would be pleasantly surprised and I am sure everyone would be very happy.

The CHAIRMAN. The Foreign Affairs Committee even felt that that was low and this committee is supposed to be a little stiffer-bitted than the Foreign Affairs Committee. I am wondering what we ought to think.

Mr. SPIEGEL. Mr. Chairman, we have here in the room, in case you want to pursue this further at this time, Mr. Palmer, who knows about these Latin-American statistics and who may be able to answer any questions you wish to address to him respecting Cuba and Brazil or, for that matter, Argentina, or any other country in Latin-America. He is at your disposal.

CREDIT POSITION OF LATIN-AMERICAN COUNTRIES

Mr. WIGGLESWORTH. How many of these Latin-American countries. have favorable international positions at the moment?

Mr. SPIEGEL. I wonder if we might ask Mr. Palmer to answer that question. If you do not mind, just before doing so, I would like to suggest to you that the Harriman committee figure, corresponding to the $700,000,000, is $450,000,000. It was some months ago when they made that estimate but you might be interested in that figure as another indication of opinion.

Mr. PALMER. When you ask for the favorable international position, do you mean balance of trade or dollar and gold position? Mr. WIGGLESWORTH. Both.

TRADE POSITION OF CURA

The CHAIRMAN. Let us start with Cuba. What is their position? Mr. PALMER. Cuba has a favorable balance of trade and a favorable dollar and gold position. In other words, it has not been losing dollars or gold to finance its imports from the United States.

The CHAIRMAN. To what extent?

Mr. PALMER. I have not the figures before me, but they have ample dollar exchange.

The CHAIRMAN. Do you have the figures so that you could supply them for the record?

Mr. PALMER. Yes; we can supply that information, if you wish. The CHAIRMAN. I want you to do it.

POSITION OF ARGENTINA

Let us turn to Argentina. What is her position?

Mr. PALMER. Argentina has been running a very sizable deficit with the United States and during the past year has had to liquidate

considerable of its gold and dollar holdings in order to finance its purchases in the United States.

The CHAIRMAN. What is its present position?

Mr. PALMER. The latest figures that we have are that as of the end of the year, apart from private holdings, it was estimated that Argentina had approximately $460,000,000 of gross gold and dollar exchange.

The CHAIRMAN. Has Argentina a substantial balance of sterling exchange?

Mr. PALMER. Yes.;

The CHAIRMAN. How much?

Mr. PALMER. It is approximately

The CHAIRMAN. Five hundred million pounds, something like that? Mr. PALMER. About 150,000,000 pounds less 40,000,000 pounds, which were to be paid out for the purchase of British railroads, which would leave them as of approximately 30 days ago with 112,000,000 pounds of accumulated sterling balances.

Mr. WIGGLESWORTH. How about the over-all balance of payments? Mr. PALMER. Argentina's over-all balance of payments has been favorable but since 1945 they have been accumulating sterling balances and selling to Europe for soft currencies and credit, and although they have a favorable balance with the world, they have been running an increasing deficit with the United States, which has forced them to liquidate their currency reserves in order to finance their trade with us while selling to Europe either on credit or by the accumulation of soft currencies.

The CHAIRMAN. They have been buying a lot of things from people in this country that has thrown their position out of balance, such as the telephone and telegraph system, and that sort of thing. But proceed with what you have.

Mr. PALMER. In addition they had an unfavorable merchandise balance, besides the purchase of investments, which you noted.

The CHAIRMAN. Have they been encouraged by a lot of things they could get along without?

Mr. PALMER. I think they have ordered things that they wanted. I doubt if they have been encouraged to do so over the things they wanted to purchase.

POSITION OF BRAZIL

The CHAIRMAN. How about Brazil?

Mr. PALMER. Brazil has had the same problem as Argentina, in that Brazil has been forced to sell for soft currency in Europe along with liquidating its gold and foreign exchange to finance its purchases from the United States.

Mr. WIGGLESWORTH. How much gold and dollar exchange does Brazil have?

Mr. PALMER. I am sorry I do not have those figures.

Mr. SPIEGEL. We can supply that information.

Mr. WIGGLESWORTH. I think it would be a good plan, Mr. Chairman, to have such a table.

The CHAIRMAN. Of all South American countries giving a picture of both dollars

Mr. WIGGLESWORTH. And sterling.

The CHAIRMAN. Yes.

Mr. WIGGLESWORTH. And balance of payments.

The CHAIRMAN. Plus or minus.

Mr. SPIEGEL. Insofar as the balance of payments is concerned, particularly for some of the smaller countries, there is almost no information available. They do not publish it, and we have no means of getting it, but we will do our best.

(The information requested is as follows:)

DATA REQUESTED BY HOUSE APPROPRIATIONS COMMITTEE; ERP FINANCING BY OTHER WESTERN HEMISPHERE COUNTRIES

The $700,000,000 estimate of ERP financing by other Western Hemisphere countries during the 15 months ending June 30, 1949, originally presented to the Foreign Affairs Committees in January 1948, is still considered by the executive branch to be a maximum in the light of subsequent developments. This sum is deducted from the ERP requirements for which an appropriation is being requested. This maximum can presumably be obtained only following negotiations between the countries concerned in which the question of offshore dollar procurement against ERP requirements will be an element.

To provide an indication of the financial position of the major Latin-American countries, there are attached financial and trade data in table form as follows:

1. Gold and foreign exchange as of December 31, 1947.

2. Exports and imports with the United States.

3. Total exports and imports.

With respect to the table on gold and foreign exchange holdings it may be noted that approximately $370,000,000 of the total official and private dollar balances consist of official holdings. This means that official holdings of nondollar currencies by the Latin-American countries can be estimated at $1,088,000,000. Detailed information respecting the sterling and other nondollar holdings of each of the Latin-American countries is not publicly available. Unofficial estimates from various published sources would indicate that at the end of 1947 Latin-American countries held sterling equivalent to $935,000,000 distributed roughly as follows: Argentina $600,000,000; Brazil $260,000,000; Uruguay $68,000,000; other LatinAmerican countries $7,000,000.

It will be observed that practically all the Latin-American countries except Cuba and Guatemala experienced a deficit in their trade with the United States in the calendar year 1947. Sizable surpluses in trade with all countries was experienced in 1947 only by Argentina and Cuba. Brazil and the Dominican Republic had much smaller but nevertheless significant surpluses.

Gold and foreign exchange of Latin-American countries as of Dec. 31, 1947 [United States dollars, millions]

1 Gross assets-International Monetary Funds statistics.
As reported by United States banks to the U. S. Treasury.
As of September 1947.

Mexico's foreign-exchange holdings carried by Central Bank in "authorized investments" and therefore are not available.

Exports and imports-Latin America and U. S. A.1 calendar year 1947

Total exports and imports of Latin-American countries,1 year 1947, except as noted

1 Department of Commerce-Provisional figures for periods indicated by number of months-in some cases monetary gold and silver included.

Not available.

Not including United States $20,000,000 of imports from Argentina on credit.

12 months ending Sept. 30, 1947.

12 months ending June 30, 1947.

While balance of payments data provide a more comprehensive basis for estimating the ability of the Latin American countries to contribute to ERP financing such data are compiled by only a few of the Latin American governments. The data published are not on a current basis. Argentina, Chile, and Peru have only recently published figures for the year 1946. Colombia, Cuba, and Uruguary have done some statistical work on their balance of payments but complete information is not available in published form. Brazil, Mexico, and Venezuela, the other principal trading countries, as well as the remaining American Republics are not known to compile statistical information of this nature. The principal component of the Latin American balances of payments is foreign trade which is shown in the attached tables.