File No. 611.326/135
The Secretary of State to the Ambassador in Brazil ( Morgan)
Your September 13, 5 p.m. For your own information: Department has been informed under date of September 18 that the United States Food Administrator upon his recent visit to Europe discussed the international food program with various Allied countries and that a complete control of food imports with a view to reduction in tonnage of such imports has been set up. In order that the margins necessary for the transportation of the American Army may be provided for, the whole of the food imports has been placed in the hands [Page 721] of the Inter-Allied Food Council, and the administration of the various commodities has been set up in different places. Coffee imports into Allied countries are to be handled through the Food Administration in Washington, so far as any contracts or purchases outside of those already in existence are concerned, and in order to economize tonnage, coffee imports into the United States must be reduced through the usual conservation methods in consumption. On behalf of this Government an organization for the handling of coffee called the Sugar Equalization Board, with a capital sum for handling all food imports into the United States, has been created, and a single agent for the purchase of coffee in Brazil for the above-mentioned board is being appointed. This agent will allot purchases to different coffee importers into the United States and will simply purchase coffee at the market price from day to day as may be required in order to effect the necessary supplies. The Food Administrator informed the Department that this method has been adopted by all the Allies in respect to practically all commodities except coffee, it being put in force in this final issue. The Food Administrator further informed the Department that arrangements are being made so that a continuous supply of coffee may be brought to the United States from Brazil in sailing vessels in order that the market and trade may be regularly and equitably supplied, and that there is no intention on the part of that Administration to order a drastic reduction of consumption but desires all users of coffee in this country to be economical in its consumption.
The Brazilian Ambassador was today informed of the above-mentioned plan and stated that he was confident that if a notice in the sense of the above plan were published at this time without any attempt on the part of the United States or the Allies to protect Brazil’s coffee industry through some plan of purchase and storage, a very serious financial situation would arise in the coffee-producing states and the relations between the United States and Brazil would be seriously jeopardized. The Ambassador has suggested that the suggestion made by the President of Brazil regarding the purchase and storage of coffee be put in effect and has asked that no definite steps be taken or any notice given to the public in regard to this plan until such time as something along these lines can be arranged. The Department asked the Ambassador to obtain from his Government information as to the exact situation in São Paulo and definite information in regard to the amount of coffee considered necessary to be purchased and stored. This the Ambassador promised to do and a further conference will be held next week, prior to any publication of the plan.[Page 722]
Cable Department your views in this connection and also what Brazil’s present foreign interest obligations are for this year and whether you think she will be able to meet them and whether she has taken any means to obtain a loan for this purpose. Also inform Department what in your opinion would be the amount of coffee necessary to be purchased and stored in order to prevent further complication of the financial situation.