632.6231/75: Telegram

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

156. For Assistant Secretary Welles. After the exchanges referred to in my 152, June 10, 1 p.m. and the unilateral announcements as to import and export quotas the Brazilian press was filled with misleading articles indicating that a commercial treaty had been signed with Germany.

Macedo Soares in his anxiety to secure the support of coffee and cotton interests addressed to the governors of the various states an unwisely worded telegram, which, while it did not misstate the facts, was clearly calculated to create the impression that a treaty had been signed with Germany resulting in a highly advantageous arrangement for Brazilian interests.

The censorship which was set up solely to deal with subversive activities has been applied to more accurate statements of the facts as well as to criticism of the compensation system and general mystification has resulted.

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In view of the fact that the business community has had nothing to go on except misstatements of facts published in the press and as no publicity has been given to Macedo’s assurances to me as to keeping the Germans within their normal sales, the impression is growing among American interests here that American business has been placed in jeopardy. Accordingly, I am informed, a move is under way to furnish Peek18 with information as to the unfortunate position of American business in Brazil for use against our present trade policy.

I have gone over this situation with Macedo and drawn his attention to rather disquieting editorials from the New York Times and the Journal of Commerce, pointing out to him again that because of the censorship a distorted statement of the situation has gone to the American press which is harmful to Brazil and is bound to arouse resentment in the belief that American interests are being unfairly treated. I have suggested to him that from the point of view of Brazilian interests he should lose no time in restating categorically to the American press agencies the assurances he had already given to me to the effect that (1) no trade agreement has been signed with Germany; (2) Germany has been warned not to increase her markets in commodities usually purchased from the United States; (3) that the same admonition would be addressed to all countries imposing the compensation system; (4) that the compensation system is distasteful to the Brazilian Government which hopes it will be abandoned as soon as conditions permit in view of Brazil’s definite attachment to principles of free commerce.

Macedo has got himself into an awkward position by the press propaganda he has made here, and although I believe he sees the wisdom of my suggestions, it may be difficult for him to extricate himself sufficiently to make such a statement for the American press without difficulty.

You may feel warranted in going into the subject with Aranha and suggesting that he communicate to Macedo his views as to the dangers of the situation as it now stands and the necessity for clearing the air once and for all with a categorical and satisfactory statement.

  1. George N. Peek, Special Adviser to the President on foreign trade policy; president, Export-Import Bank.