632.6231/70: Telegram

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

152. Department’s 87, June 9, 7 p.m. Press reports mentioned are inaccurate. The facts regarding this whole subject are as reported in my 147, June 6, 8 p.m.

In order to be quite sure of the facts I have this morning talked with the exchange director of the Bank of Brazil. He states categorically that no agreement of any character has as yet been signed between his bank and the Reichsbank. He states, moreover, that up to the present time he knows nothing about the matter beyond what he has read in the newspapers. However, he informs me that he has been summoned to see the Minister of Finance this afternoon. After this interview I may be able to afford the Department more definite information as to how the Bank of Brazil will deal with the problem of compensation marks.

In order that the Department may be in a position to answer inquiries I quote text of identic notes exchanged between Brazilian Minister for Foreign Affairs and German Chargé d’Affaires on June 8th.

[Page 270]

“I have the honor to inform Your Excellency that the Government of Brazil desiring to continue her commercial relations with Germany and in view of the present impossibility of concluding a treaty of commerce and navigation between the two countries has decided to adopt a temporary measure effective from the 31st of next July the date upon which the present German Brazilian commercial accord as denounced by Brazil will terminate. In accordance with this provisional measure and pending the signature of a future treaty of commerce and navigation the Brazilian Government maintaining the regime of the accord which is to expire will grant to German products entering its territory unconditional and unlimited most-favored-nation treatment with respect to customs tariffs.

“It is understood, however, that this concession can only be granted on a basis of reciprocity, its application depending upon concession by the German Government to Brazilian products entering its territory of the same unconditional and unlimited most-favored-nation customs tariff treatment an understanding which Your Excellency has agreed to confirm in writing as of this date. I desire furthermore to enlarge herein that either of the two interested Governments will have the right to terminate the present provisional accord upon 3 months advance notice”.

The Department is aware of the nature of the original temporary agreement which Brazil intended to make with Germany and which was abandoned. Some days ago one or two papers here printed the substance of the original plan as the one about to be signed and the American correspondents appear to have telegraphed this as an agreement actually signed without attempting to verify the facts.

Gibson