832.51 Sa 6/32
Speyer & Co. to the Secretary of State
[Received November 5.]
Sir: We are now in negotiation with the State of São Paulo, Brazil, covering a Loan for an amount between $25,000,000 and $35,000,000, to be issued under a law to be passed by the Congress of the State of São Paulo. The Bonds are to carry interest at a rate still to be determined (which will be either 7½% or 8% per annum) and will be in the form of Twenty Year or Twenty-five Year Bonds, to be redeemable by means of a Sinking Fund sufficient to retire all of the Bonds at or before maturity. The Bonds will be the direct external obligation of the State of São Paulo, and will be payable in United States gold, free from all Brazilian taxes, and [Page 535] will be secured by a first charge on the railway tax of One Milreis Gold per bag of coffee transported across the State of São Paulo.
We are advised by cable that the President and State Secretary of São Paulo have declared as follows: First, that the proceeds of the Loan will be deposited in the São Paulo banks to finance agricultural and commercial interests; second, that the purpose of the Loan is not for coffee valorization. The President and State Secretary further advise that the policy of the Defense of Coffee Institute is to stop speculation and not to valorize coffee.
We trust that the Department will find no objection to the flotation of this proposed Loan in the American market, and we shall be obliged if you will so advise us.
Respectfully yours,