The President of the National Foreign Trade Council ( E. P. Thomas ) to the Acting Secretary of State

Dear Mr. Phillips: Following negotiations instituted about the first of June between Dr. Numa de Oliveira and Mr. Valentim C. [F.] Bouças representing the Brazilian Government and the Banco do Brazil and the Committee representing American holders of approximately $25,000,000 of blocked currency in Brazil, an Agreement has been reached in the terms set forth in the enclosed printed copy.

I am also appending for your interest copies of the letter of submission by the sub-committee and the letter accompanying the Agreement40 which is being sent to all firms having these blocked currencies advising them as to the steps to be taken to convert them into American currency.

This matter has engaged the attention of the Council for several months past and we feel the solution now arrived at will greatly aid in overcoming one of the greatest handicaps to the restoration of normal trade with Latin America. It further provides a definite settlement of the frozen balances and it enables American firms to resume their normal trading position with Brazil, with a greatly improved prospect of their future drafts for sales being met at maturity.

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It is proposed to continue this work with other South American countries where similar problems exist, and your interest and cooperation will be appreciated as this important work progresses.

Very truly yours,

E. P. Thomas

Draft Agreement Between the Banco do Brasil and Certain American Firms

Agreement, executed in the City of New York, New York, this . . . . . of June, 1933, between Banco do Brasil, as Principal, hereinafter called “Banco”, and the Federal Government of the United States of Brazil, as Guarantor of Banco, parties of the first part, both herein represented by His Excellency Dr. Rinaldo de Lima e Silva (Brazilian Ambassador to the United States, or his designate) and—

  • The Texas Company (South America) Ltd.
  • Electric Bond and Share Company
  • American & Foreign Power Company, Inc.
  • Standard Oil Company of Brazil
  • Atlantic Refining Company
  • Westinghouse Electric International Company
  • The Caloric Company

for and on behalf of themselves, or their subsidiary companies, and on behalf of other companies, firms and individuals who may hereafter become parties signatory hereto, in the manner hereinafter set forth, parties of the second part;

Whereas, the parties of the second part of their subsidiary companies have in Brazil, on the date of this agreement, Brazilian currency awaiting conversion into currency of the United States of America, in amounts set opposite their respective signatures, and

Whereas, the parties of the first part desire to supply such exchange without delay or restriction,


In consideration of the mutualities hereof it is agreed as follows:

1. Banco agrees to receive from each of the parties of the second part the respective sums in Brazilian currency set opposite their signatures, which Banco agrees to convert into New York dollar funds, as hereinafter set forth.

2. Upon payment by any party of the second part of the above respective amounts in milreis to Banco, which payment shall be made on or before June 30, 1933, Banco shall deliver to the party of the second part so paying its seventy-two (72) bills of exchange in U. S. A. dollars in equal amounts accepted by Banco, or at its option [Page 58] its promissory notes in like amounts in either case guaranteed and endorsed by the Federal Government of the United States of Brazil payable in New York funds calculated as follows:—

The total amount of milreis delivered by such party of the second part to Banco shall be converted into U. S. A. dollars at the rate of exchange of 13.965 milreis per dollar. The resultant amount of dollars shall be increased by twelve percent (12%) representing interest at the rate of four percent (4%) per annum for three (3) years. The seventy-two (72) bills of exchange or notes shall be dated July 1, 1933 and shall mature one each calendar month following the date of issue and shall be payable without discount or extension of time by the fiscal agent appointed by the Brazilian Government, in the City of New York, in U. S. A. dollars.

3. Banco agrees to reserve from the exchange made available out of exports from Brazil the necessary amounts to meet on maturity any and all bills of exchange or notes delivered by it hereunder.

Banco further guarantees to each of the parties of the second part, on the request of the latter, out of said exchange and after the payment of such bills as and when matured, a preference in the supply of U. S. A. dollar exchange sufficient for the current needs of each of the parties of the second part, from the date of this agreement on and until payments of all of the bills of exchange delivered hereunder. By current needs the parties intend to refer to amounts necessary for the importation of merchandise, for earned interest and dividends and any and all other essential charges.

4. Banco agrees to provide, within ninety days (90), at its current official rate, U. S. dollar exchange for the conversion of all blocked milreis deposits held on the date of this agreement by parties entitled to become signatories of this agreement having blocked milreis, on the date of this agreement, not exceeding in any one case 665,000 milreis, subject to the verification of the amounts by the Banco do Brasil; the aggregate of such dollar exchange not to exceed one million ($1,000,000.00) U. S. A. Dollars.

5. All questions which may arise relative to the interpretation or fulfillment of this agreement shall be decided by arbitration in the form and manner to be agreed upon between the parties.

6. Banco and the Federal Government of the United States of Brazil agree that no arrangement relative to exchange shall be made with any other country or the nationals of any other country, more favorable than the terms of this agreement or make any other arrangement which may interfere with the orderly carrying out of this agreement.

7. Any company, firm or individual national of the United States of America, or subsidiaries of any such company having on the date of this agreement blocked milreis or blocked dollars awaiting exchange [Page 59] in Brazil, may become a party of the second part hereto by executing and delivering to Banco or the fiscal agents referred to in paragraph 2 on or before June 30, 1933, a counterpart hereof with the amount of such blocked milreis so presented by him, it or them set opposite his, its or their signature.

8. This agreement shall become effective immediately upon the fixation of signatures of the representative of the parties of the first part and of the parties of the second part, provided the aggregate amount of blocked milreis possessed by the latter on the date of this agreement, as set forth opposite their respective signatures, shall at least equal the sum of one hundred and fifty thousand (150,000) contos of reis.

9. It is understood and agreed that the parties of the first part may address any or all communications intended for the parties of the second part as a whole to the Chairman of the Council on Inter-American Relations, 1 Hanover Square, New York, who will be authorized to act for each of the parties of the second part in the manner and to: the extent that each such party, in its discretion, may hereafter state in writing. Duly authenticated attestation of any such authority shall be transmitted to the parties of the first part.

This does not preclude either of the parties of the first part or any of the parties of the second part from communicating with or negotiating directly with the other party in respect to any question or matter relating to the interpretation of this agreement or arising in the operation thereof.

10. The Banco do Brasil will satisfy themselves that milreis balances tendered by trading concerns under the provisions of this agreement conform to the description set out according to paragraphs 1 and 7 hereof, and for the purpose of dealing with questions or difficulties arising under this agreement the Bank hereby appoint Messrs. Haskins and Sells to act in conjunction with the Bank.

In Witness Whereof the parties have caused these presents to be duly executed in ten original counterparts the day and year first above written.

Banco do Brasil
Federal Government of the United States of Brazil

Signature of company, firm or individual accepting, and becoming a party of the Second Part, to this agreement:

Attest: Name
Officer’s Signature
Secretary Title

  1. Neither letter printed.
  2. Filed separately under 832.5151/155.