832.51/1041: Telegram
The Chargé in Brazil (Gordon) to the Secretary of State
[Received 1:45 p.m.]
93. Department’s 53, April 12, 8 p.m. The Bank of Brazil of course keeps its exchange position confidential but my own opinion after sifting the best information available is that the frozen credits covered by closed exchange contracts could be cleared up within the 30-day period referred to in my 86, April 11, noon.59
As to the Department’s query concerning the total of American deferred credits I take it that this does not include the frozen credits covered by the 1933 agreement. I am inclined to agree with the tentative estimate of the National Foreign Trade Council as to the remaining total of our deferred credits. Accordingly if we agree to an operation similar to that involved in the recent British-Brazilian agreement and are given the equivalent of £100,000 monthly for interest and amortization it would appear that on a conservative estimate our total frozen credits could be cleared up within 3 years or on an ultra conservative estimate within 4 years.
In the absence of any such agreement the only view one can advance with any degree of certainty is that it would certainly take a very long time to clear up our deferred credits from the bank’s exchange reserves and the Government’s quota of exchange. Not only will various contractual exchange obligations which the Brazilian Government has now incurred have to be taken care of but also the amount to be derived from the Government’s 35% quota is necessarily dependent upon the uncertainties of future export trade; moreover as I have previously reported the possibility must always be taken into account of the Government further reducing this quota.
- Not printed.↩