Memorandum by the Assistant Secretary of State (Welles)

The Brazilian Ambassador called this morning accompanied by Dr. Muniz.25 I presented the latter to Dr. Grady,26 who invited him to commence discussions on commodity schedules for the new Trade Agreement. I handed the Ambassador the memorandum containing the tariff concessions on commodities requested by the United States.27 The Ambassador looked it over hastily and observed that we had increased our list materially over the list presented last year. He said he preferred to study our memorandum and to enable Dr. Muñiz to talk with Dr. Grady before presenting the concessions requested by the Brazilian Government, which he remarked, in any event, he had not yet received in final form from Rio.

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The Ambassador read me portions of a letter which he had received under date of October 30th, from the President of Brazil regarding the discussions with the German Mission in Kio.28 President Vargas stated that Mr. Souza Dantas29 was energetically supporting the suggestion of the German Mission on the ground that if the agreement proposed was not concluded, Brazil would lose a very important market for certain Brazilian exports which the United States did not take, particularly hides and cotton. The German Mission had likewise informed the Brazilian Government that agreements similar to the one proposed had been completed by Germany with almost all of the most important countries of the world. The Ambassador remarked that he doubted this assertion and I told him that Dr. Grady would be glad to give him such information on this point as the Department had available. The letter from President Vargas seemed to indicate considerable hesitancy as to the policy which Brazil should pursue, namely, whether to go ahead with Germany or to go ahead with the United States. It was obvious from this letter that Dr. Aranha had been energetically upholding the American point of view in his communications with President Vargas.

The Ambassador referred to a statement published yesterday in the New York Times, alleging that the Brazilian Government had issued a communiqué to the press announcing the conclusion of an agreement with Germany. He said that this was completely untrue and gave me a copy of the official statement by the Brazilian Government, which reads as follows:

“The Brazilian and German Delegations have finished the studies which they have been carrying out respecting the best method of enhancing commercial intercourse between Brazil and Germany. The Delegations have informed their respective Governments of the results of their labors in order that the two Governments might reach a decision with regard thereto. The German Delegation will continue its journey within the next few days to Uruguay and to Chile. Meanwhile, commerce between the two countries will not be interrupted; commercial procedure continuing as at present without difficulty or impediments on either side.”

I expressed my gratification to the Ambassador that the report in the New York Times was incorrect and that no decision had as yet been reached by Brazil.

The Ambassador said he hoped to receive, today or tomorrow, the decision of his Government with regard to our proposal and that he would let me know as soon as possible what this decision was.

S[umner] W[elles]
  1. João Carlos Muniz, Counselor of the Brazilian Embassy and Special Assistant to the Brazilian Ambassador in connection with commercial agreement negotiations.
  2. Henry F. Grady, Chief, Trade Agreements Section in the office of Assistant Secretary of State Sayre.
  3. Supra.
  4. For correspondence regarding the German mission, see pp. 595 ff.
  5. Exchange Director of the Bank of Brazil.