832.5151/468: Telegram

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

334. Department’s 180, December 6, 5 p.m. The new regulations are to be regarded as constituting a step in preparation of further relaxation and eventual removal of exchange control in the following sense: In full discussion this morning Souza Dantas stated to me that he expects the effect of these new regulations will be to clear up within a year the backlog of the United States and other countries buying more from Brazil than they sell to her; when this has been accomplished he hopes that greater and eventually complete relaxation of exchange control can be brought about in a comparatively short time for it should then be a relatively easy matter to clean up the backlog of countries who sell to Brazil more than they buy from her.