550.S1 Washington/628
Memorandum by Mr. William R. Manning, of the Division of Latin American Affairs, of a Conversation Between American and Brazilian Representatives
At 10 o’clock this morning there was another meeting with the Special Delegation. In addition to those present at the two previous conferences (last Friday),8 Doctor Augusto Amaral, who had in the meantime reached Washington, was present with the Delegation. The Secretary, Senator Pittman, and Mr. Warburg9 were present part of the time.
Doctor Feis, Messrs. E. C. Wilson, Manning, Merrell and Grosvenor Jones10 were present. Doctor Feis opened the conference by asking whether the Members of the Delegation had any comment to make or questions to ask regarding monetary and financial matters which had been discussed in the conferences on Friday. Some time was spent in reviewing the discussion of Friday afternoon concerning Brazilian exchange restrictions and it was decided to hold a further meeting on this subject.
Members of the Brazilian Delegation asked what Brazil might be able to do, looking toward the general improvement of her financial and commercial situation, referring to the fact that Brazil possesses no gold on which to base her currency, which consists of inconvertible paper.
Doctor Feis suggested that with an improvement in business and trade between countries, together with more rational distribution of gold, Brazil would inevitably recover gold. Mr. Warburg referred [Page 515] to the top-heavy debt structure of Brazil and suggested that a solution of this problem would also contribute to putting Brazil in such a position that gold would normally flow back.
Doctor Amaral brought up the question of the gold clause in the loan contracts, referred to the arbitral award which obliged Brazil to pay her loans to France in gold francs, and inquired whether this question had been discussed with other delegations and what the position of our Government was. Doctor Feis stated that it had not been discussed with other delegations, and that so far as we were concerned it was a matter for the courts to deal with.
Doctor Feis then began discussion of the economic phase of the questions before the London Conference. When he reached the tariff truce,11 the Brazilian delegation stated that their Government had for some months had under consideration increases in certain items of the tariff. It was explained to them that practically all countries were in exactly the same position and that it was precisely in order to enable Governments to abandon efforts to push up their duties and to enable them to take a stand against private interests in all countries which were urging tariff increases, that this tariff truce proposal had been made, and we very much hoped the Brazilian Government would get behind the tariff truce and support it fully. Doctor Eulalio stated for the delegation that despite the difficulty Brazil would find in abandoning its program of tariff increases, nevertheless the delegation had instructions which authorized it to accede to the truce.
The Brazilian delegation then raised two questions in connection with coffee. They intend to propose at the conference an agreement under which nations would refrain from increasing beyond a certain maximum figure, domestic taxation on commodities not produced within their respective countries. They asked what the attitude of the United States would be on such a proposal. Doctor Feis explained that it had been customary in this country to place excise taxes on liquors and tobacco, but that with these two exceptions he personally felt that a proposal such as the Brazilians mentioned would not find any objection on the part of the United States. The second point the Brazilians raised had to do with the various substitutes for coffee. They intend to propose an agreement under which countries that place revenue duties on coffee would place duties no lower on coffee substitutes. Doctor Feis said that he could not see any objection on the part of the United States to such an arrangement.
It was agreed that there would be another meeting with the Brazilians tomorrow at eleven o’clock.
- For memoranda of conversations, held May 19, 10 a.m. and 3 p.m., and May 23, which dealt with the subject “distribution of exchange cover,” see vol. v, pp. 45, 46, and 48.↩
- Vice Chairman of the Board of Directors, Bank of the Manhattan Co.↩
- Chief, Division of Finance and Investment, U. S. Bureau of Foreign and Domestic Commerce.↩
- Post, p. 605.↩