632.6531/31: Telegram

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

107. Your 175, July 25, 2 p.m. You are authorized to convey to Dr. Macedo Soares the considerations indicated in the next to the last paragraph of your telegram under reference. You may, of course, make it clear in this conversation that while this Government is making no threats, it cannot underestimate the seriousness of the effect on public opinion in the United States if the Brazilian Government enters into a series of compensation and clearing agreements with other governments which will inevitably tend to counteract the helpful effects of the trade agreement between our two countries.

I am entirely in accord with your views as expressed in the fourth paragraph of your telegram.

Aranha has called me on the telephone this morning and let me know that he has received a further cable from President Vargas stating that he had not realized until receipt of Aranha’s last telegram that the Foreign Office had not kept the latter fully advised of all [Page 280] features of the German-Brazilian negotiation and adding that President Vargas also had now ascertained facts which were “even more curious.” The telegram contained additional assurances that the President himself would see to it that no further negotiations were undertaken.