832.5151/599: Telegram
The Secretary of State to the Chargé in Brazil (Gordon)
70. Your 110 of April 29, 7 p.m. Your assumption that if the proposal is found unsatisfactory you should engage in further discussions is correct.
Regarding treatment of small creditors you may say to the Minister of Finance that the Department regards it as incumbent on the Brazilian Government to make cash payment of such claims. As stated in the Department’s telegram No. 68, it is felt that this action should not be dependent upon any arrangement for a loan, and should be unconditionally undertaken by the Brazilian Government.
You may also urge that Bank of Brazil obligations instead of Government bonds be offered Class C creditors as was done in the 1933 [Page 365] frozen credit operation and to meet the wishes of the American creditors.
The proposal should also indicate the time which it will take to liquidate that class of deferred credits for which exchange contracts have been closed by the Bank of Brazil.
The Department will await with interest details of the Brazilian proposal for the funding of Class C credits. It is assumed that the plan will state a guaranteed minimum annual allotment of exchange to retire the obligations which will be issued to cover this class of credits as well as the term and interest rate of such obligations.
What is the term of the obligations to be issued under the Anglo-Brazilian payments agreement?