and Mr. Bittinger was pressing for a reply, I instructed him to ship down the additional 100 tons, so if in the end we cannot obtain the space on the steamship Mormacsul we have the alternative to either shut out 100 tons of Sastre Supremo extract, booked on this steamer for Norfolk, or keep the 100 tons canned corned beef in this port until the next Norfolk steamer, which is going to be the steamship Collamer, sailing around October 15. The steamship Mormacsul is expected in this port on or about September 19 and, if after all I should be unable to arrange for additional space on this steamer, I shall cable you to inquire whether we are to postpone shipment of the quebracho extract or the corned beef. With very best wishes, I am, Sincerely yours, DEAR MR. STERNS: On my return to Buenos Aires after an absence of 3 weeks I find the following letters from you: two of February 3, two of February 4, three of February 6, two of February 11, one of February 16, two of February 18, with enclosures, all of which I have read with interest. My reply must necessarily be brief as I am leaving this evening for Montevideo to spend several days with the American Ambassador. For some unaccountable reason the mailing of the Pinasco budget for 1942 was overlooked but now goes forward by air mail. The final result for the year, I feel confident, will not materially exceed the $630,200, which you have used in estimating the cash balance as at December 31, 1942. I am particularly interested in what you say about Mr. Owen exploring the possibility of forming a South American corporation to take over the business of the present American corporation. I have had this very definitely in mind for some time but doubted the possibility of being permitted to make a change of this nature. I shall, however, be interested to know Mr. Owen's opinion after further consideration. Mr. Kelly and I were both surprised by the reference in your letter of February 18, to reducing the proposed reserve from $150,000 to $100,000 as Mr. Kelley has been very definite and so advised me that the board of directors at the meeting, when the final dividend was declared, agreed informally to a reserve of $150,000-the only question being the advisability of creating a special reserve or transfer this amount to the present general reserve. I am therefore cabling you today as follows: "Kelley states directors agreed informally to $150,000 reserve trust; no less amount will be suggested"— it being uncertain that this letter will reach you before the April meeting. In order to maintain the present price of quebracho extract, which was being threatened by Argentine manufacturers outside of the pool, the Argentine Government has issued a decree placing all Argentine manufacturers on quotas, based upon the productive capacity of each. The Government of Paraguay for the same reason proposes to issue a similar decree. In the general arrangement Paraguay has been assigned 20 percent of the total exports against 80 percent for the Argentine and quotas will be issued for the four Paraguayan manufacturers on the basis of their productive capacity, which means that the International Products Corporation's proportion will be 35.61 percent of the 20 percent assigned to Paraguay. It is proposed that quotas be issued over 3 months and based on the estimated total sales for the year, our company should be allowed to ship about 12,000 tons. As it is important that this should be understood and taken into consideration by our sales department I am cabling you today as follows: "Paraguayan Government propose following Argentine example by issuing decree placing all Paraguayan quebracho manufacturers on quota basis according to their productive capacity. Paraguay will be assigned 20 percent of total sales of which our quota is now estimated to be 12,000 tons for the year 1942; our sales policy must be governed accordingly. As shipping difficulties increasingly acute preference in sales and shipments should be given our brands." I fully approve of your recommendation, which I have also had in mind, that in view of the serious uncertainties we sell and ship up to this point our own brands as rapidly as possible and supply the later demand with agency extract. As you know, we have about 45,000 cases of corned beef packed and ready for shipment on account of the Republic contract. I am, naturally, very anxious that every opportunity to make shipments of this corned beef be taken advantage of in order to release the very considerable amount of cash, now tied up on this account. Mr. Seldes has arranged to substitute 200 tons of corned beef for quebracho, to be shipped on the steamship Delmar middle of March to New Orleans, and is cabling you to this effect. This substitution has my full approval, provided that it does not interfere seriously with your quebracho commitments, and trust it may be arranged accordingly. With best wishes, INTERNATIONAL PRODUCTS CORPORATION. EXHIBIT No. 173 December 16, 1938. Via steamship Queen Mary, Sailing December 16. Baron EMILE B. d'ERLANGER, Care of Erlangers, Ltd., London, S. C. 2, England. MY DEAR BARON: I know that this time of the year you will be going over the Forestal and its associated companies figures, and this is just an informal word to say that we estimate our operations will result in an even break, and as a result we will have to break our long and continuous record by not declaring a dividend. You have, however, received a profit of $78,000 from us in the form of the interest on debentures. Our total sales for the year, covering all commodities, are approximately 40 percent below normal, which directly reflects the leather industry in this country— but it is very satisfying to us to be able to report that the number of our customers has increased and the relationship with all is on a better plane than ever before. Our quebracho sales constitute 70 percent of all of that commodity sold in our territory, which comprises, as you know, the United States and its possessions, Canada and Mexico. Apart from the decrease in sales, the government tax requirements necessitate all companies to bring their inventories down to market, and, as we carry large supplies of foreign materials, there are several adjustments that are required. This, however, will be reflected on the other side of the balance sheet in 1939 and subsequent years as liquidated. Our new manufactured products are showing a steady gain, and we prognosticate very substantial returns from them in the future. I hope this letter finds you extremely well, and our staff here in New York send very warm personal greetings to you and your codirectors. With warmest well wishes, I am, Yours very sincerely, THE TANNIN CORPORATION. EXHIBIT No. 174 Tanners Trading Co., Buenos Aires, February 7th, 1935. AMERICAN TANNERS, LTD., Boston, Mass. GENTLEMEN: We beg to confirm that we have loaded on the steamship Coldbrook which sailed on February 3, the following: To Boston: Pur. No. 466B, 1, 500 Segal Matadero steers, for P. E. Co--‒‒‒ Pur. No. 467A, 1, 500 Segal Matadero steers, for P. E. Co__‒‒‒ Pur. No. 467B, 1, 500 Segal Matadero steers, for P. E. Co.____. Pur. No. 468, 2,000 Decarlini Matadero steers, for P. E. Co_. To New York: United States Pur. No. 473, 2, 000 Armour La Plata rejects, for Howes B. Co--- for Howes B. Co--- Pur. No. 484, 2, 485 Swift La Plata light steers, for Howes B. Co--- for Howes B. Co--- 6, 432. 29 6, 453. 62 6, 358. 92 8,968.96 9, 656. 54 9, 919. 42 9, 956. 16 7, 143. 09 9, 487.96 10, 983. 29 9,915. 20 9,991. 82 Total 22,476_ 105, 267. 27 To Boston: Pur. No. 425E, Pur. No. 443, Total 668 bags "T T. C.," 33, 031 ks., for P. E. Co------ 1,544, 45 772 bags "T. T. C.," 38, 140 ks., for P. E. Co‒‒‒‒‒‒ 1, 782. 65 1, 011 bags "Realtan," 50, 004 ks., for P. E. Co‒‒‒‒‒ 2, 344. 75 2, 451 bags 121, 175 ks 5, 671. 85 We would like to refer to purs. Nos. 425 and 441 which we have put together in one bill of lading to save expenses as pur. No. 425 was the final of a clean draft and pur. No. 441 was part of a new clean draft, so that there should be no question about the documents going forward in the manner we have sent them. We have made separate invoices and have economized in bills of lading and consular invoices. We are particularly anxious that you give us a close report on the Segal hides. It is our opinion that the rejects are a better buy by far than the "Buen Desuello" hides and a close inspection of the rejects shipped and the Matadero hides will give you a fair opportunity of forming your opinion. We have been struggling all week to try and get some hides suitable for Frank. Swift offered us 2,000 from Rio Grande, 80 percent Herefords, but it only contained 5 percent of the cattle which we mentioned to you as being desirable and although the pack contained 80 percent Hereford cattle, it only gave an average of 261⁄2 ks., and we were frightened of two things, that there would not be the growth in the hide, and the tick. We did not offer the hides to you partly because the price Mr. Peterson wanted seemed extremely high and partly because as we have alreay stated, we were not sure of the quality. We are on the constant look-out for a well-grown plump hide suitable for Mr. Frank and as soon as we get anything we will make you offerings and we trust that Mr. Frank will make an effort to try and do the business because it is very discouraging to work up a special lot for him and get no reply. We have been struggling all week to try and fill the International Shoe Co.'s order, but apparently 10 cents is to low. Hides have begun to move to Europe direct and it would almost look as if we will not get the hides. On rejects we thought that 8% cents would tempt you, but apparently you have no interest. Here also the hides are beginning to move to Europe direct. It would almost seem that our tanners were suffering from the “gold-clause complex" and to us down here, although we realize that this gold clause question is probably one of the most important things that has arisen in the American history in the past hundred years, on the other hand we feel that its effects have been largely discounted and irrespective of what decision the Supreme Court may give, the Government will take measures to protect its position so that the final result will be the same as it is at the moment. No doubt the issue is very confusing and very upseting to business. QUEBRACHO Mr. Baranda called on us on Tuesday morning and spent two and a half hours. Strange to say he did not mention advance, so we consider that matter washed out. He brought up the subject of price adjustment and we intimated to him that that subject could not be discussed until the pool had established a market. He acknowledged that no extract apparently had been sold although he confirmed Forestal's report that they had moved 8,000 tons in January. We asked Mr. Baranda point blank if he knew of any manufacturer who had received any quota of these 8,000 tons and he could not give us the name of a single person who had benefitted, hence we came to the conclusion as we wired you, that the whole thing is a question of consignment and an eyewash to the independent manufacturers. We worried Mr. Baranda very considerably by pointing out bluntly to him that up to a year ago we had considered him a friend, one who would take every step to steer clear of Forestal and its ramifications; that your confidence had been greatly shaken by his new attitude of linking his interests with Forestal and that naturally any proposition that he presented, as long as he was linked up with this combination, would be looked upon with suspicion, not of Mr. Baranda, but of the ulterior motives of the controlling influences of Forestal and naturally with the uncertainty of conditions in the United States and this natural suspicion; conditions were not easy to arrange between himself and our tanners. The old gentleman was visibly affected by this attitude, he also showed considerable nervousness as to his future and we intimated to him, without any commital, that the best policy that he could follow was to study his position carefully, draw up a definite program for cutting loose from the pool and offer us 18 months extract, total production, at a reasonable price and then possibly something could be done to assist him on his existing contract. We warned him that other people were also interested in finding a means of escape from the present existing condition and that inasmuch as he had sacrificed to a certain extent that strong bond of friendship and sympathy between our tanners and himself by linking up so closely with the pool, that it would be a question to a large extent of, the first to come, first served. He immediately assured us that this matter would have his immediate attention and he would study the situation carefully to see what means could be taken to get over his difficulty. He frankly acknowledges that his position forward of June is highly unsatisfactory and that this continued inactivity of the market worries him greatly. He is beginning to realize that his dream of $85 Argentine gold is not coming true in the way he expected. Mr. Baranda left our office in a most friendly spirit, but considerably worried as to what he must do for the future. Forestal is reporting that they are on very friendly relations with the German Government and that they have succeeded in securing quotas on a flat price of £16 for both soluble in cold water and the common extract; in other words, they have sacrificed, according to their own story, 10 shillings on the soluble in cold water and gained £1 on common extract. We hear from German exporters that this is all bunk; however, there are so many stories out, that it is becoming difficult to know what is bunk and what is not. Another new development. Some time ago we wrote to you that Mr. Nielsen of La Cruz had called on us and intimated that he might be interested in considering a future position, that he was hard up for cash. Then we learnt that Forestal had advanced him a certain amount of money in sterling which we interpreted as being the first step toward control. Mr. Nielsen called on us on Tuesday afternoon and also spent over 2 hours with us. Just what his object was we are not sure as Mr. Nielsen can also be interpreted as a stool pigeon for Forestal; however, he intimated to us that he had interviewed the Commission of the pool with the idea of coming to some arrangement to sell extract to the Tanners Trading Co., he intimated that we might call on the Commission and discuss the matter, that the pool were beginning to realize that the resistance of the American tanners was not desirable, that the Commission was also willing to recognize that we were a very large client for quebracho and could not be treated in an off-handed manner, especially so as they could not sell any extract to the United States. This was rather a new one to us and we told Mr. Nielsen that we appreciated the consideration of the Commission, but that during all of the negotiations for the formation of the pool, not once had we as a buyer been considered or consulted, that we were not so vitally interested in the welfare of the manufacturers as to put ourselves out to call on the Commission, that we had been 25 years in the game buying quebracho, that we were well known to all of the Com mission including Mr. Sullivan and that if the Commission was interested in treating with the Tanners Trading Co. or its tanners, our office doors were open, we would always welcome any of the Commission to come to talk to us, that there was an unwritten law that when a salesman wanted to sell goods, that he called on the buyer and not the buyer on the salesman. We also emphasized the fact that if the Commission dreamt of selling quebracho extract at $85 Argentine gold to the Tanners Trading Co., they were wasting their time. We also pointed out the fact that if the arbitrary methods of these gentlemen were pursued, that they were throwing away their markets, they were encouraging the fields of re search and that they would wake up one day and find that the volume of con. sumption of quebracho extract had been greatly reduced due to the introduction of other materials which supplanted quebracho and I cited the instance of what the tanners went through with substituted leather and how the volume of the market had never been regained and that the same thing would happen to quebracho. Mr. Nielsen intimated to us that the pool were upset at the antagonism of the United States tanners, that they could not understand how we could not see with them that $85 Argentine gold extract was cheap and we pointed out to him that anybody who raises raw material 50 percent overnight must be crazy, further that the tanner was not prepared to meet the pool when the manufacturer himself was not receiving the benefit. We pointed out that the new pool arrangement paid $5 Argentine gold per ton to a selling commission, that a levy of $7 Argentine gold per ton was made on the manufacturer to pay for outstanding contracts and that a further levy was made on extract from anything from $2 to $5 Argentine gold per ton supposed to be for Government official, making a total of $17 Argentine gold per ton that was not going to the manufacturers and that the tanners were not prepared to be made to pay bills of such a nature. This rather upset him. He said he had not realized this angle of the project. He left the office with the impression that Forestal was beginning to wonder just how the thing was going to pan out for them, he also left us the impression that other manufacturers were getting nervous and that anything might develop. We heard last night that it was reported now that Mr. Sullivan's and several other high officials of Forestal's positions were very precarious, and they have only retained their jobs because the pool has been formed and further that if the pool breaks they will lose their jobs. Hence they are struggling and striving to maintain the pool. We told Mr. Nielsen that the best thing he could do was to throw a bluff and force Forestal to buy him out at a good price when he had an opportunity rather than have his plant taken away from him at a later date and get nothing for it. This seemed to upset the man very badly and we now await his next move. With regard to your cable No. 20 requesting us to feel the market to secure 250 tons monthly April, May, June, we can tell you at the present moment that One has to step very carefully or you the prospects are far from favourable. will weaken the position completely against the tanner. Any intimation that we want to buy extract would mean a strong card in the hands of Forestal to hold the manufacturers together. It is the fact that we do not want to buy extract that has them worried. We have a feeling that sooner or later this pool will break and it would be our idea that some of the big holders of extract in the United States should parcel out some of their extract to those who are not so well supplied and stay out of this market for the time being. We are watching the situation very closely and the following is what we think might possibly happen. Welbers is a possibility for March or early April. Las Palmas might easily swing over at any time. Realtan may have a little available after April and Baranda's position depends entirely on what Havero can do. Samuhi there is nothing to be done. Resale extract there appears to be none on the market. In all these cases we cannot approach the seller directly, we have got to get them into a mental position of where they come to us and we are watching this situation very closely. This seems to cover all for the moment, we remain, Yours truly. TANNERS TRADING CO., |