832.51/792: Telegram

The Ambassador in Brazil ( Gibson ) to the Secretary of State

82. The Brazilian Government has for some time been formulating a plan as to payment of foreign debt obligations and has consulted [Page 76] rather extensively with Sir Otto Niemeyer51 during his recent visit here. Fortunately through unofficial channels it was possible to convey to the Minister of Finance52 the unwisdom of taking any definite action in a matter of this character involving large American interests without frank consultation with us. Mr. Valentim Bouças, Secretary of the Commission on State and Municipal Finances, had been particularly active in pressing this point of view on the Minister of Finance and came to see me last evening to hand me in strict confidence a copy of the plan. He is also, with the authority of the Minister, sending a copy of the plan by air mail today to Fred Kent53 who has obviously won the confidence of the Brazilians. In an accompanying letter he is asking Kent to give his views, objections and suggestions on the plan as it stands.

Mr. Bouças said that personally and confidentially he could assure me Niemeyer’s suggestions as to preferential treatment for British interests could be considered as dead.

The plan which I have not yet had time to examine thoroughly begins with the statement:

[Here follows a summary of the plan, the complete text of which is printed on page 77.]

As there may be British pressure for early action, I have considered it advisable to telegraph this rather full summary. As British have capable and active banking representative here I shall value any guidance Department can give me and any suggestion Kent may feel disposed to offer.

  1. Of the Bank of England.
  2. Oswaldo Aranha.
  3. Fred I. Kent, Supervisor of Exchange, Federal Reserve Bank of New York.