Evening star., 1938-12-12
Exchange Difficulties
Stand in Way Of
Lima Delegates
German Barter System
Also an Obstacle for
Trade Expansion
BY the Associated Press.

By the Associated Press.
NEW YORK, Dec. 12.-The diff
f1culty of transferring funds-for-
eign exchange-and the German
barter system are grave barriers in
the way of Secretary Hull and his
aides at the Lima conference in
their expressed desire to promote
greater trade with the countries
south of the Rio Grande, some Wall
Street bankers say.
Two events recently pointed to a
few of the obstacles in the way Of
freer trade in this hemisphere.
The first was the disclosure the
State Department had sent two of
its agents on secret mission to Ar
gentina to investigate the foreign
exchange control situation in that
country, then to visit Uruguay and
Brazil on similar mission.
The second was an announcement
from Mexico City that the govern
ment there is arranging to swap
S17000,000 worth of oil-some of it.
perhaps. from the appropriated
properties of American companies,
for German agricultural and irriga-
tion machinery, chemicals, office
equipment, cameras and other goods.
United States Firms Forced to Wait.
In virtually all South American
countries some form of exchange
control is practiced and American
firms selling goods to them must
await payment until the control
"allots" sufficient money to care for
the bill.
The State Department S move for
an investigation was touched off by,
it was said, report exchange con-
troll authorities in Buenos Aires had
informed automobile importers there
that they should not ask for ex-
change to be used after December 81.
That would squelch very good little
business that has developed over
the last few years.
In some sources the opinion was
expressed the Argentine demarche
was in retaliation for the United
States ban on Argentine meat i'm
ports through failure to ratify the
sanitary treaty which would permit
Argentina to certify that certain
districts were not infected with hoof
and mouth disease before permitting
cattle exports from them. The
treaty is in the pigeon hole of the
Senate Foreign Relations Committee.
The two countries have been in
conversation for more than a wear
on details of a reciprocal trade
agreement which might "unfreeze"
Argentine exchange, but nothing
definite has emerged.
Barter Plan Rejected.
The barter method of promoting
foreign trade has been pretty well
rejected by the administration
which wants a free flow of goods
and exchanges, and by many ex-
porters who tried it and found it
unsatisfactory.
But the Latin American countries,
with raw materials to sell and no
manufacturing industries to speak
Of, are in need of finished goods.
Their import balances have been
greater than their export balances
during the depression and their
stocks of foreign exchange have
run low. So have those of Germany,
Italy and Japan, who also need
many of the raw materials which
the South American nations, espe-
cially on the west coast, produce.
Two or three years ago, when the
rearmament race was just peeping
out from under cover, virtually all
the steel scrap in many portions of
South America was exchanged for
Japanese cotton textiles, rayor. and
the like and German manufactured
goods. Italy's products, likewise,
found their way to Brazil and Ar
gentina, where there are large Ital-
ian populations.
Some manufacturers with export
connections said today they belived
the Government had under way
arrangements calculated to solve
the exchange problem, either
through the operations of the ex-
port and import bank, or by the
granting of credit Once that is
done, they said, this country need
fear, less and less, competition from
the barter countries.