832.51/961 Suppl: Telegram

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

2. We are at a loss to understand how any serious shortage of exchange has arisen. The fact that recent coffee shipments have been low does not seem sufficient to explain the situation. In connection with this matter and our discussions here please see Souza Dantas again and request exact information as to present exchange situation and reasons which have brought about existing shortage.

For your own strictly confidential information conversations with Aranha give the impression of loose handling of the exchange control recently and of large remittances, about 14 million pounds, over the past few months by firms transferring funds from Brazil, e. g., transfer of some 4 million pounds by Canadian owned public utilities.

With reference to the Department’s telegram No. 1, January 4, 1 p.m., you will please, unless you perceive objection, call upon the Minister for Foreign Affairs and in your discretion on the Minister of Finance in order to request information regarding the debt situation, making reference to the receipt by the paying agents in New York of advices from the Bank of Brazil that no exchange is available to make remittances for payment of January 1 service. You may say that this Government very much hopes that it may be found possible shortly to transmit funds for payment of these issues and furthermore that no difficulties may arise in the complete carrying out of the terms of the Brazilian foreign debt plan.