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Esq.,

Argentina,
De Iriondo, Banco do la Manion
Argentina,

Manuel 7T.,
"

President,

"tienos

4''res,

which
My dear Sir:

of the interesting

conversations

Ajres, and
stay at Buenos
during his
with you
the inof having
undertake
nleasure
to have us
to you
he had the
for an
would be agreeable
that it
have been waiting
we
since learning
relations,
into a
reciprocal
of entering
in establishing
the pleasure
itiative
ourselves
between
of giving
such relations
opnortunity
appropriate
of establishing
for the purpose
with you
Bank of Mew York.
corresnondenee
Federal Reserve
and the
in
interested
Nacion Argentina
de la
is very nuch
the Banco
Warburg
aware, Mr,
between our
doubtless
As you are
relations
intimate
Anil
with a
basis for friendly
with hin
nrepare a
conferred
having us
frequently
and we have
be the neans
trust nay
institutions,
which no
respective
with you,
this
negotiations
to enter upon
entering upon
opnortunity
view to
A favorable
the passage
relations
such
awaiting
postponed
of establishing
been
has necessarily
finally
however,
amendnents
Act, which
correspondence,
reserve
to the -2edaral
anendnents
of certain
upon nenart of last year.
to enter
law the latter
in a m:sition
became
it
are non fortunately
result we
relationsrhic!1
As a
banking
certain nutual
developing
as follows:
with you for
gotiations
for your consideration,
account,
tentatively
to nronose
to open a current
pleasure
is our
Bank of 7ew York
Reserve
and the Banco
%Nsderal
in pesos
The
(1)
Argentina
Banco de la 'Marion
with the
with the
without interest,
interest,
without
account,
subject to
to open a current
to be
7acion Argentina
both accounts
de la
in dollars,
Bank of Mew York
neserve
?ederql
transfer.
check or by cable
deposits
either by
other in receiving
ivithdrawals
to act for the
and in nuking
institution
(2) Bach
and bullion
of coin
purchases
In this connecin making
and bullion,
nay suggest.
of coin
circumstances
and bullion as
of coin
shipments
Mr. '7arburg




has

informed us

-2-

tion we own to be pleased to be our mutual interests would be best served our having an
would the effect that advisee whether your views coincide with by




understanding that all balandes between the two banks be settled in Fold, if
so desired by the creditor inotitution,
(3)

The natco de la '7acion Argentina to rurchase for account of

tho Aderal Reserve Bank of row York prime bills payable in the Argentine,
such as it buys for its own account, for the purpose of employing at interest such funds as the Federal Reserve Bank of Uew York might desire tanporarily
to invest in the

'. rgentine;

and the :.'edern1 Reserve Bank of !:ew York. to !our-

chnise for account of the Banco do la 7acion Argentina in like manner prime

Inerican Ulla whenever the latter desired to nuke tenporary investments in
the united Itates
(4)

nhe Banco de la 7acion __rgentina to purchase for account of the

Federal Reserve lank of ::env York in Argentina long bills payable in the United

States, and the ?ederal 7eserve Bank of "ew York to purchase for account of
the Banco de la 7acion Argentina in the Unitel States long bills eayable in
the Argentine, all of course drawn on responsible drawees.

?or this purpose

forward rates of discount for bills "to arrive" to be quoted as may be required

The occasion for and amount of such nurchases to be deternined by

the institution for which the bills are to be purchased.

The object of this suggestion is to provide a nedium through which,
-:henever necessary, such bills nay be dealt with pronptly and effectively at

fair and reasonable rates, taking care, however, that such cperations shall
not discourage t o establishment of intimate banking connections between the

connercial tanks of your country and lf ours, and the opening of branches of
commercial banks of one country in the other, whose business it is our desire
to foster,

eommenting unon the tentative proposals which we have nade, eve are

-3-

pleasedin the order maned above. to the following suggestions bearing on them
to invite your attention
Paragraph 7o0 (1) ,

The Federal eeserve Bank of 7ew York, would,

no doubt, act in respect of these relationships not only for itself, bet for
such of the other eleven of our eneeral reserve banks as night desire to join
in the account,

the eederal reserve banks are not authorized by law to

allow interest on balances and do not do no even on the account of the United
3tatea eovernment, or of their member banes, we have sugeested that both accounts be free of interest at least at the outset-

It is also suggested

that the aocounts be free of charges and commissiono, except actual out-ofpocket expenses

earagranh
serve .'oet and beg to

(4)

7e enclose herewith a copy of the Federal le-

nvite eonr attention to sub-section (e) of section 1

which authorizes eederel ...eserve banks to rurchase lore tills parable in the

rnited etates in dollars through their foreign agencies or correspondents, so
long as such bills are drawn for commercial purposes, bear the obligations
of two or nore responsible partieu
eeclesive of days of grace

and have not store than ninety clays to run,

eo the extent that such purchases night be made

by one institution for the other, as well as those nee under paragraph
(3), we believe the bills should be indorsed without restriction by the in-

stitution iskinr the purchase for account of the other so that the bank ectine as purchasing -agent for the other would be fully liable for their pgyment

in case the acceptor fails to neer parent at naturitaa
''e have endeavored above to outline in a tentative and preliminary

way the noesible scope of an arrangement for a close relationship between our
respective institutions which we believe would be of value to the cornerce and
finance of the two countries in stabilizing rates of exchange and in oremoting

commercial and finencial intercourse

In order farther to eromote these 'De-

fects, we relieve it to be highly Oesireele that there shoule ee between us a




-4-

free eachange of views and Information with respect to general financial conditione and of commercial and banking credits in the two countries,
In adO.ition to the popesals above made, we are f?.rmer pleased to
inquire whether we night not be of considorable help to exporters of roods
from the Argentine if we could :lake mutually satinfectory arrangements by

which we could undertake to receive Feld coin or bars for you aad keep them
earmarked and as your property.

7e have made Ruch arraneenente for another

government bank to facilitate its merchants in exporting.

We would undertake

to saferuard this gold with the sane care as err am, without being liable,
however, for acts of superior force or consequences of fire or burglary,.

Please understand that we shall be extremely gratified to receive
your comrlents on the tentative proposals we have made above and would appre-

ciate a very full and free expression of your views as to any additional activities which you think would be mutually advantageous to have included in
the proposed arrangements, or to be developed at a later time

70 do not need to assure yor of the very great interest which is
felt in this country in all efforts to promote closer and 'lore intimate rela-

tions in commercial and banking matters between your country and ours, and
we hope that these ereliminary suggestions nay open the way to an arraneement
whic:Iwill he ruttally orofitable and satisfactory.
7ith assurances of our esteem and regard, and looking forward to the
favor of an early reply, we beg to remain,




Faithfully yours,

Governor,

7

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