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835.34/421 : Telegram

The Acting Secretary of State to the Chargé in Argentina (Cable)

WASHINGTON, March 1, 1927-3 p. m. 9. Bethlehem Steel Company states that further difficulties are being encountered in getting contracts for Argentine naval construction. It appears that contracts are to be awarded to Italy for cruisers, to England for fast destroyers and to France for submarines. It is stated that although the bids of the Bethlehem Steel Company were higher than those of foreign competitors the Argentine Government has hitherto always found this added expense justified by superior workmanship. If contracts were awarded to lowest bidder all would go to Italy whereas company considers that they are evidently to be divided for political reasons between Italy, England, and France. It seems to be the intention nevertheless to finance this construction in the United States. The Company points out that other countries have taken the position that when they make loans in similar circumstances their nationals must receive the contracts.

If you are satisfied that the foregoing information regarding the allocation of the construction in question is substantially correct, and that there has been in fact an unwarranted discrimination against American interests, particularly if margin by which British and French bids exceed Italian bid is comparable to margin by which American bid exceeds the Italian bid, you may express to the Minister for Foreign Affairs the hope of this Government that an equitable share will be accorded to American firms. You may add that if it is contemplated to arrange for the necessary financing in this market it would undoubtedly give rise to difficulties unless at least a fair share of the construction should be placed here. See the next to the last sentence of the Department's cablegram 41, October 18, 1 p. m., and instruction 117 of January 25.9 In the event that all construction should go to Europe it would be a matter of keen regret to this Government.

GREW

835.34/422: Telegram

The Acting Secretary of State to the Chargé in Argentina (Cable)

(Paraphrase)

WASHINGTON, March 9, 1927—7 p. m. 11. Department's telegram No. 9, dated March 1, 3 p. m. Please inform Department of present status of matter. Representative of

• Instruction No. 117 not printed; this instruction enclosed the two memoranda of conversation with Mr. Hugh Knowlton, dated Jan. 7 and 14, pp. 427 and 428.

Bethlehem interests in Washington states that he has good reason for believing that the board which is supposed to receive and report upon all tenders did not even pass upon his company's bids.

GREW

835.34/423: Telegram

The Chargé in Argentina (Cable) to the Secretary of State

[Paraphrase)

BUENOS AIRES, March 10, 1927–3 p. m.

[Received 5:30 p. m.] 27. Department's telegram No. 11, dated March 9. During an interview with the Foreign Minister on March 4, I informed him of the attitude set forth in Department's 9, March 1. The Foreign Minister said that as yet President Alvear had signed no contract, but that he would not fail to invite the attention of the President and Minister of Marine to the substance of our conversation. Since the Government has been informed of the attitude of the United States, it does not appear for the present that any further steps can be taken. Mr. Hill, the vice president of the Bethlehem Steel Company, who is now here, is fully aware of all measures taken by the Embassy.

CABLE

835.34/428

The Chargé in Argentina (Cable) to the Secretary of State No. 261

BUENOS AIRES, April 7, 1927.

[Received April 27.] SIR: I have the honor to refer to the Department's telegrams No. 41 of October 18, 1926, 1 p. m., No. 45 of November 24, 1926, 2 p. m.,' No. 9 of March 1, 1927, and No. 11 of March 9, 1927, 3 [7] p. m., and subsequent correspondence relative to the purchase by the Argentine Government of various naval units comprised in the forthcoming naval programme authorized by this Government.

The situation at present I understand is as follows:

The Bethlehem Steel Company has been unsuccessful in arriving at an understanding with the Argentine Government. This may be put down to several reasons, the primary one of which is the cost of manufacture in the United States. It has been decided, and this is from an authoritative source, that the light cruisers will be built in

• Telegram No. 45 not printed.

Italy and the flotilla leaders in Great Britain. The building programme has not been completely contracted for so that there is an opportunity of Bethlehem coming to an understanding either for future units or possibly destroyers.

I am led to understand that the allegations made by the American companies some four months ago are not without foundation, as it was the original intention of Admiral Domecq Garcia, the Minister of Marine, and Admiral Galindez, who is Chief of the Naval Mission in Europe, to award the complete construction to Italy. ... Pressure brought to bear on the basis of the slogan “Buy from those who buy from you” brought about the tentative awarding of the flotilla leaders to Great Britain. From what I understand, Admiral Garcia has done and will do everything possible to keep any portion of the plan from American builders.

The Electric Boat Company stands in a rather stronger position than the Bethlehem Steel Company in view of the fact that a Commission formed prior to the awarding of any contracts reported that the double-hulled boats of the Holland type were far in advance of any type constructed in Europe and should be adopted for the Argentine Navy. President Alvear, with his well-known feeling for France, desired the submarines to be built there, and it is possible that the Electric Boat Company, which has licensees in that country, may adopt the plan of constructing them abroad under the American patents in order to conciliate his point of view.

I have recently been informed that Admiral Garcia proposed to the Minister of Finance that the debt of $20,000,000 which France owes to Argentina should be utilized by the construction of naval units in that country, and suggested that four submarines at present practically completed in France should be considered as part payment. I understand that the French Government does not wish to release these units which they have constructed for themselves, but have proposed to construct four more. As these would not be of thé Holland type, it would be running contrary to the findings of the Argentine Board on submarines.

In my last two interviews with the Minister for Foreign Affairs, in which I emphasized the point of possible financing in the United States and the feeling of the Department concerning a portion of the construction going to American shipbuilders, I met with absolute silence and a statement that the question was entirely in the hands of the Minister of Marine and President Alvear to whose attention he had called the matter, and that he could do nothing further. I have [etc.]

PHILANDER L. CABLE

258346-42-vol. 1-33

835.34/426 : Telegram

The Chargé in Argentina (Cable) to the Secretary of State

[Paraphrase]

BUENOS AIRES, April 15, 1927—5 p. m.

[Received 8:20 p. m.] 38. Embassy's telegram No. 27, dated March 10. Although no contracts have been signed up to the present time, yet it may be stated with confidence that Italy will secure the light cruisers and England the sloops and flotilla leaders. It is said that the French Government will construct the submarines. I have pointed out to the Under Secretary that if such should be the case, it would be contrary to the report of the naval board which recommended the Holland type submarines.

The Electric Boat Company representative informs me that his company is in a position to construct vessels under its own patents in French yards. This may be the Argentine Government's plan, since it would satisfy President Alvear's desire for France to have part of the construction program and it would eliminate the accusation that the United States is being discriminated against.

I have been informed that the Government of Argentina has requested tenders for a loan of $15,000,000 in New York and London, Such an amount would cover the units of the present program. The London terms will be accepted if they should be practically as favorable as those of New York.

CABLE

835.34/428

he Secretary of State to the Ambassador in France (Herrick) No. 2322

WASHINGTON, June 14, 1927. SIR: The Department has been informed by Mr. C. S. McNeir, Washington representative of the Electric Boat Company of Groton, Connecticut, that his principals have virtually succeeded in obtaining a contract for the construction of three submarines for the Argentine Government. There was strong competition for this business from firms in certain other countries and it is understood that considerable influence was used in their behalf, but the Department was able, through the Embassy at Buenos Aires, to obtain due consideration for the bid of the American company.

It now appears that by the terms of the contract the submarines are to be built in France under American patents, and that the matter has reached the point where it is necessary for the Electric Boat Company to come to an agreement with the Argentine Government as to the French yard which is to carry out the construction. The first yard selected by the Electric Boat Company has been rejected on account of alleged lack of experience in the construction of submarines, and it is confidentially stated by Mr. McNeir that the French Government is making recommendations to the Argentine Government as to the yard to be employed.

In this situation the Electric Boat Company has instructed its Paris representative, Captain Paul Koster, that it may ultimately be necessary to enlist the support of the French Government with regard to some yard which is considered satisfactory to the company, and has advised him to consult you when that time comes. Should he do so, you are authorized to render him such assistance as may be consistently possible through informal representations to the appropriate French authorities. I am [etc.]

For the Secretary of State:

FRANCIS WHITE

835.34/428 : Telegram

The Secretary of State to the Chargé in Argentina (Cable)

WASHINGTON, July 28, 1927—5 p. m. 26. Your despatch 261 April 7 last and previous correspondence. Electric Boat Company states that Señor Ribero its representative in Buenos Aires reports that the submarine contract is about to be awarded to Italian firm. Department understood that the matter had been definitely decided in favor of construction by Electric Boat Company under American patents in France and still hopes that such is the case. Please make informal inquiry of appropriate authorities expressing Department's continued interest. Cable exact status.

KELLOGG

835.34/451 : Telegram

The Chargé in Argentina (Cable) to the Secretary of State
BUENOS AIRES, August 9, 1927—5 p. m.

[Received 9:30 p. m.] 70. Department's telegram 26, July 28, 5 p. m. After a consultation with Ribero, had interview with Under Secretary of State for Foreign Affairs stressing Department interest and informed him at Ribero's suggestion that Electric Boat Company fully capable of completing contract. He stated that he would inquire into the matter and communicate with me informally. So far no reply received.

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