632.6531/27a: Telegram
The Secretary of State to the Ambassador in Brazil (Gibson)
99. I read your telegram No. 167, July 17, 5 p.m., to Aranha, and at the same time endeavored to convey to him the impression that other [Page 276] information indicated that the Brazilian-Italian negotiations were rapidly approaching a conclusion. Aranha said that he had recently received a letter from President Vargas saying that no commercial agreements would be concluded without full and public discussion. The Ambassador therefore tended to minimize the possibility of any agreement being concluded within the next few days. The subject will be discussed with Aranha fully on Monday.
Please endeavor to get in touch with Macedo Soares and by discreet reference to his friendly gesture in having made available the principal features of the proposed German agreement endeavor to secure from him a proffer to make available similar information regarding the Italian agreement.
If, in your judgment, however, the signature of an arrangement, whether overt or covert, is imminent, you may, with reference to the Department’s telegram No. 80, of June l,26 impress upon Macedo Soares the concern with which this Government would view the subscription of Brazil to any arrangement of a compensation nature and which would limit her freedom of action in behalf of multilateral trade. Any arrangement setting up inter-governmental machinery for compensation trade would be a threat to the success of the program of re-establishing the system of multilateral trade.