832.5151/567: Telegram
The Chargé in Brazil (Gordon) to the Secretary of State
[Received 7:07 p.m.]
71. Department’s 31, February 28, 7 p.m., my 52, March 1, 5 p.m., last paragraph. In 12 days since return to Rio de Janeiro of Foreign Minister I have had frequent conversations with him and have not [Page 354] failed to impress upon him the Department’s disturbance at the protracted delay in resuming the supply of official exchange during which we are kept in the dark as to the intentions of the Brazilian Government. As I feared, however, Minister stated that it was impossible even to issue any declaration of intentions in the premises prior to the return of the financial mission; that any statement that might be issued would necessarily be too vague to be helpful inasmuch as he himself (and he implied other members of the Government) did not know with precision what the mission had accomplished.
Since its return last Friday mission has discussed its activities with the President and yesterday submitted its report to a full Cabinet meeting but evidently the Government has not yet reached a final decision as to its complete course of action.
Foreign Minister today told me that Government was determined to carry out the 1934 foreign debt plan and that the mission had concluded an agreement with the British Government for paying off the English commercial backlog through the issue of Brazilian Government Treasury notes. (This last item sounds strange to me and I shall endeavor to check up on it.) This agreement of course requires ratification by Brazilian Congress which should not be long in forthcoming.
I pointed out to the Minister that none of the foregoing helped the American backlog situation as regards supplying official exchange in payment thereof or giving assurances as to when this will be done. The Minister said that as soon as Aranha had received cable information of just what the mission had accomplished in Europe he could begin negotiations with the Export and Import Bank. I again urged that under the circumstances which we had often gone over dating from the Finance Minister’s promise as reported in your 13, January 31, 6 p.m., it would not be right to leave the American backlog situation to drift further without at least giving definite assurances pending further negotiations whose duration was quite indefinite. Further than that I felt unable to go in view of my lack of knowledge of developments in this field during the last few weeks. If Department will as soon as possible supplement its 25, February 16, 2 p.m., it will undoubtedly be of great assistance to me in my further conversations.
In our conversation today the Minister stated that the Government is considering altering the February 11 exchange regulations in the sense of only requiring the sale of 25 percent of all exports at official exchange rate. This is another indication of divergence of views which still exists and of the further time that will be necessary to iron them out preparatory to evolving a comprehensive plan that will take care of our backlog.
[Page 355]Further in the conversation the Foreign Minister characterized the Finance Minister’s report as “containing many words but really being very little”.
Foreign Minister tells me that he is having a long conference with Finance Minister on this subject tomorrow and has asked me to see him again Thursday morning.