632.6231/44: Telegram

The Ambassador in Brazil ( Gibson ) to the Secretary of State

117. Department’s 62, April 17, 6 p.m. There is now a prospect that a temporary accord delimiting Brazilian trade with Germany may be concluded within the next few weeks under presidential decree of December 30, 19355 transmitted with my despatch 898, January 2, 1936.6 Convinced that Germany needs Brazilian cotton immediately, Brazilian officials are holding up exchange permits and expect this to force Germany into making overtures at once. Thereupon Brazil will insist upon quota arrangement in both directions specifying individual commodities and quantities. The German commodities will be those regularly exported from Germany to Brazil prior to compensation mark regime. The Brazilian commodities will be based on average of 1933 and 34 exports to Germany, cotton being cut to approximately 40,000 tons as compared with 100,000 in 1935. Consent of Brazilian exporters is said to be forthcoming.

Brazil has learned that Germany has been intentionally and needlessly maintaining excess supply of compensation marks here to force additional types of German exports into this market. The aniline dyes and coal which Brazil has been regularly taking could have been shipped against these marks but instead have been sold as from Holland and Switzerland leaving the excess marks as a load on the Bank of Brazil to be cleared only through purchases of new lines of German goods. Discovery that they have thus been exploited has stiffened determination of Brazilian officials to “buy from the Germans what we want from them not what they want to sell us and to sell them what we want them to take not what we could sell elsewhere anyhow.” At present, however, Brazil does not intend to insist on a favorable balance with Germany but is willing to exchange goods on approximately even terms.

  1. Brazil, Ministerio das Relates Exteriores, Relatorio. 1935, vol. ii, p. 357.
  2. Not printed.