The Ambassador in Brazil (Gibson) to the Secretary of State
[Received 2:20 p.m.]
135. Department’s 76, May 27, 6 p.m.10a I called on Macedo Soares this morning to get the draft of the agreement referred to in my 134, May 27, noon. Macedo informed me that the whole matter had been thrown into a state of flux by a telegram received from the Embassy at Berlin wherein the Germans asked for modifications of the figures on some 30 different commodities. The telegram was very long and considerably garbled and he has not an accurate idea of what it is all about beyond the fact that it will call for careful study. I was concerned to learn from him that import purchases from Germany are to be based on the 1935 figures plus 10% “to allow for normal increase” the Germans pressing for 25%.
This morning’s papers contain a Havas despatch from Washington stating that Aranha had received a telegram from President Vargas to the effect that the Brazilian Government has gone no further than a simple exchange of telegrams with Germany for the purpose of discovering whether it was possible to find the basis for a commercial agreement. I drew this to the attention of Macedo Soares who stated that I might confirm definitely to Washington the statements he had made to me yesterday and which I checked over with him on the basis of my 134 in order to make sure that he understood in what sense he was being quoted.
He apparently knew nothing of the telegram from the President but showed me a telegram he had sent to Aranha some days ago in which he gave him substantially the same information I have sent in with the additional information given above.
On the whole I believe that Aranha’s activities both in his telegrams here and his statements to the press have had a distinctly useful effect. These coupled with the new outburst reported in my 133, May 25, 7 p.m., and the representations I have made under the Department’s instructions, have, I believe, slowed up the entire negotiations so that we shall probably be afforded ample opportunity to make our views known before any final decision is taken. To this end, however, I believe it would be desirable for the Department to keep the matter clearly before Aranha in order that he may confirm my statements as to our anxiety over the broader aspects of this problem.[Page 256]
Macedo Soares informs me that it is contemplated that the agreement shall run for one year from June 1936 to June 1937. I shall, of course, telegraph the text as soon as it can be furnished me by Macedo Soares although I do not anticipate being able to do so for several days.
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