611.3231/998

Memorandum by the Secretary of State

The Counselor of the Embassy of Brazil came in upon my invitation. After some general preliminaries, I proceeded to refer to the fact that there were serious international trade difficulties threatening and also bad repercussions upon our domestic situation through the probable uprising of owners of blocked exchange and other securities in Brazil. I said that from the time the broad reciprocity program for general economic recovery here and among the important nations of the world was adopted and the twenty-one American nations unanimously agreed to support it and, I might say, when Brazil took the [Page 314] lead along with the United States in this one exclusive movement for both domestic and international trade and business recovery, it had been all important that the American nations should steadily push forward the reciprocity program; that I had confidentially counted on Brazil, with its powerful influence in Latin America, to go forward arm in arm with the United States in support of this program; that, accordingly, Brazil promptly negotiated a trade agreement with the United States which carried much hope and encouragement to other nations here and abroad; that, unfortunately, month after month had elapsed without the ratification by Brazil of this trade agreement, and that the hopes of the friends of this program for business recovery had correspondingly become discouraged. I went on to say it was now the belief of many of us that the lobbyists representing various manufacturing industries, especially from São Paulo, which was the heart of the coffee country, where the United States purchased most of this Brazilian product, seemed gradually to be getting the upper hand of the friends of this trade agreement in the Brazilian Parliament, and that unless very resolute and aggressive action by the Government was undertaken without delay, the treaty would either be killed or destroyed by indefinite delay. I said this would be a great setback to the progress of the economic program in question and that it would seriously injure, not to say discredit, this program when a great country like Brazil failed either to support it before the world or even to ratify a bilateral arrangement in harmony with it. I stated that the other phase giving us serious concern was the domestic one which related to our nationals holding blocked exchange and other Brazilian securities in default. I said that I and other officials of this Government had experienced terrific opposition and severe criticism from month to month because we had entered into trade arrangements without taking care of the debt situation as it related to United States holders; that other governments had endeavored to take some care of their creditors in such instances; that these creditors were becoming more and more vociferous in their criticism and threatened a sort of uprising against us, as well as against Brazil, and that they repeated those old statements about the people of the United States purchasing the chief portion of Brazilian coffee and paying a large export tax which enabled them to stabilize the price on a rather high level much of the time, while imposing no import duties on such coffee. I stated that for some manufacturing interests in the São Paulo country to turn on a trade agreement, which mutually benefited both Brazil and the United States, and to destroy it presented a condition that we just could not much longer defend against the attacks of the United States creditors aforementioned, and that serious developments might arise very soon. I repeatedly assured the Counselor that [Page 315] I was speaking as the same close friend of Brazil that my country and myself uniformly had been; that I would not for a moment speak of a proposal that I did not consider equally in the interest of Brazil and the United States, and that I felt that his country would be as proud as mine was for the two to go forward with their leadership in support of the economic program referred to. I continued that I felt the treaty was about to be destroyed unless immediate and strong efforts were made by the Brazilian Government to check the movement and to secure ratification, and that I felt it was due the Government of Brazil frankly to express these views from the standpoint of our mutual and common welfare.

The Counselor listened with apparent interest and at the conclusion of my statement expressed himself as understanding and appreciating the matters that I had brought to his attention and the necessity for early action by his Government if the treaty were to be saved. He had heard nothing for fifteen days, according to his statement. He said he would get these views substantially before his Government and in the right spirit. I requested him to let us keep in touch with each other from day to day with respect to the matter, each gathering all the latest information and transmitting it to the other. This, he said, he would be glad to do.

C[ordell] H[ull]