832.5151/466: Telegram

The Chargé in Brazil (Gordon) to the Secretary of State

331. My 330, December 4, 6 p.m. In conversation this morning Souza Dantas furnished the following estimated round figures: Brazilian official foreign exchange derived exclusively through its purchase of the percentage of coffee bills stipulated by decree on a total yearly exportation of 15 million bags, amounts to approximately 155 million dollars. Forty-five million dollars of that is applied to foreign debt payments. Forty-six percent of the remainder, which would be available to Brazilian importers of American goods, would thus total some 50 million dollars. This represents the 60 percent official exchange to which such Brazilian importers are entitled. See Embassy’s 212, September 11, 11 a.m.66

Dantas estimates yearly exports from the United States to Brazil at some 50 million dollars (which so far as I know, based on Department of Commerce figures for 1932 and 1933 exports, is a most liberal estimate) and 60 percent official exchange to which Brazilian importers of our goods would be entitled on this basis is thus 30 million dollars. There would therefore remain available for backlog 20 million dollars; consequently Dantas’ estimate that the entire American backlog will be automatically liquidated within 1 year would seem justified.

This represents a measure so favorable to American interests that it is bound to bring immediate and severe attack from British and other sources. This has already been made evident in the last 24 hours. Brazilian authorities and in particular the Director of Exchange Control will need, and would certainly seem to be deserving of, support to resist the determined attacks which are sure to come. Would Department care to consider giving to the American press statements of gratification or approval of this voluntary Brazilian action and would it also consider formulating the general lines of some statement of similar nature which at the earliest moment possible I could give to the local press? In this latter connection I might state that the local [Page 601] press are already asking for Embassy comment but in view of the importance as well as the technicality of the matter I should like to have Department’s reaction to this inquiry before speaking in more than general terms to local press representatives.

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