832.5151/661: Telegram
The Chargé in Brazil (Gordon) to the Secretary of State
[Received 5:35 p.m.]
165. Department’s 113, June 21, 5 p.m.70 arrived this morning in a badly garbled condition. However, Department’s 114, June 21, 6 [Page 380] p.m., arrived in good shape and just in time for me to use it as the Foreign Minister asked me to call upon him this morning although he had announced that he would only commence receiving members of the Diplomatic Corps on Monday afternoon.
I greatly appreciate this instruction which was exceedingly helpful and in reply to the implied query in the last paragraph please let me say that the points covered and the manner of presentation outlined seem to me to meet the situation for the time being.
When I communicated your views to the Minister for Foreign Affairs he said that he understood that uneasiness should be created and that American interests involved would be quick to bring pressure on our Government; but as to the loss of orders for American interests he was inclined to argue that Brazilian exports of cotton to Germany are the only thing that could cause loss of American orders, and that as cotton is excluded from the latest ruling he did not see how the question of loss of orders could arise.
I then went into a full discussion with him and told him that prior to May 30th (when compensation marks transactions were forbidden) specific cases of loss of orders for American interests through the operation of compensation marks had been brought to my attention and that there was every reason to believe that similar cases would occur again—especially might this be so in the case of American interests bidding against German firms on tenders for supplies of service and imported material, for instance in railroad construction work where the Germans would be willing to accept payment in compensation marks.
Since sending my 161, June 19, 6 p.m. to the Department I have received definite confirmation of the fact that as a result of the decision last Monday of the Brazilian Federal Foreign Trade Council the Bank of Brazil had [announced?] that the 35% in official exchange of Brazilian export bills to Germany would no longer have to be supplied in currencies having international acceptance but would be receivable in compensation marks. Referring to this further factor I further pointed out to the Minister for Foreign Affairs that even in the absence of numerous cases of specific loss of orders for American interests the almost inevitable increase of German-Brazilian trade and the gradual shifting of trade to Germany, which, in the absence of the Brazilian decision of last Monday, would not have gone to the latter country, would, it seemed to me, eventually constitute a definite displacement of American trade.
At the end of our discussion the Minister called in the Secretary General, asked me to repeat what I had said, and told him to make an [Page 381] aide-mémoire thereof on the basis of which the Foreign Minister would take the matter up with the Minister of Finance at once.
I am to see the Foreign Minister again on Tuesday or Wednesday.
- Not printed.↩