Office of the Historian

311. Memorandum of a Conversation, Washington, May 24, 1955, 11 a.m.1

Washington, May 24, 1955, 11 a.m.

SUBJECT

  • Political and Economic Situation in Brazil

PARTICIPANTS

  • Secretary of Treasury George Humphrey
  • Under Secretary of Treasury Randolph Burgess
  • Assistant Secretary Andrew Overby—Treasury
  • Colonel King—CIA
  • David Smizer—CIA
  • ARA—Assistant Secretary Henry F. Holland
  • OSA—Rollin S. Atwood
  • OSA—Sterling J. Cottrell

The discussion covered the present political and economic situation in Brazil. It was noted that there are now five declared candidates for the presidential election in October of this year. Ex-Governor Juscelino Kubitschek of Minas Gerais is in the leading position with ex-Labor Minister Jango Goulart as his Vice Presidential running mate. General Juarez Tavora will attract conservative and military support. Etelvino Lins, ex-Governor of Pernambuco, is weak politically and unlikely to win. Adhemar de Barros may announce his candidacy soon on a liberal platform. Plineo Salgado2 will attract some ultranationalist support. Other candidates may emerge. The Commies do not favor any of the present candidates and urge a separate movement.

Political maneuvers preclude any accurate estimate at this time of who will win the election. A regrouping among the conservative forces to present one candidate appears to be their only possibility of overtaking the Kubitschek lead.…

With respect to the economic situation, it was noted that on May 24 Brazil had drawn $45 million of the $75 million Eximbank credit and that the balance might be requested soon, depending upon the movement of coffee. It was also noted that Finance Minister Whitaker is now considering possible changes in the present exchange system, moving toward a single rate, at least for exports. Dollar receipts through the first half of May were low and improvement will depend to a large extent on Brazilian decisions with respect to the exchange rate. Importers of coffee are apparently buying “hand to mouth” pending some indication that Brazil will [Page 669] settle on some rate with the expectation of holding it for a reasonable length of time.

In summary, it was agreed that … the developing political situation should be watched very carefully. Also, this Government should be prepared to extend the minimum amount of credit necessary to keep Brazil afloat through this year if and when the $75 million credit is exhausted.3

  1. Source: Department of State, Central Files, 732.00/5–2455. Secret. Drafted by Cottrell. Holland transmitted a copy to Hoover on May 27.↩
  2. A candidate of the Partido de Representacao Popular (PRP).↩

  3. In telegram 1134 from Rio de Janeiro, June 11, the Embassy appraised the Brazilian politico-economic situation in light of developments which occurred since telegram 1011, May 1 (Document 309). In concluding its analysis, the Embassy made the following assessment:

    “Foregoing would appear to indicate that it is neither necessary nor desirable for us to contemplate at this time large scale measure of financial aid to Brazil which would, of course, involve correlative measures of economic reform. Present government is not in position and Brazilian Congress is not appropriately oriented to effect fundamental changes required. We do not discount possibility that Brazil may need some additional assistance before end of year, but feel that if granted it should not exceed minimum requirements.” (Department of State, Central Files, 732.00/6–1155)

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