The Secretary of State to the Chargé in Brazil (Gordon)
11. For your information. The Brazilian Finance Minister and his party arrived in Washington the afternoon of January 24. They made a courtesy call on the Secretary of State the morning of January 25 and that afternoon we had an opportunity to hear the views of the Finance Minister. In brief, he stated that Brazil desired to reach mutually satisfactory agreement with the United States regarding our commercial and financial relations and for that reason had come to the United States first, and that whatever is agreed upon here will form the basis for arrangements made subsequently by the Mission in Europe. The Minister said that he was convinced Brazil could not continue to carry out integrally payments abroad of the various elements comprising her foreign obligations. He is inclined to favor a program comprising fulfillment of the debt plan, credits to pay off the backlog and then the lifting of exchange control. He feels credits are needed to handle the backlog and to prevent a sharp drop in the value of the milreis following lifting of exchange control with resultant [Page 334] lowering of coffee prices and reduction of Brazil’s capacity to purchase abroad. He recognizes such a program favors immediately foreign financial interests, British, more than foreign commercial interests, American, but believes it the best long term plan for Brazil and the United States. At the request of the Brazilians further meetings postponed until today, when we hope to obtain detailed information from Mission’s data regarding exact situation.