832.5151/787: Telegram

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

4. Department’s 2, January 3, 6 p.m. The situation with respect to the liquidation of American frozen credits has been further developed here by a telephone call put through yesterday by Thomas37 to Drumm, local Vice President of the National City Bank in an effort to secure the latter’s support in combating the Boucas plan outlined in paragraph 2 of my 346, December 21, 1 p.m.38 Thomas states this plan has been substituted in the United States by Aranha. This call is construed by the Americans here as an indication that their views are being taken seriously and that Thomas feels obligated to offer them terms.

American business men here who are unanimously and perseveringly in favor of plan submitted by Boucas to Aranha or some similar plan providing Bank of Brazil notes, believe that Export-Import Bank could play a role at once safer and more important if Boucas plan were accepted. Confidentially they feel as individuals that Thomas is seeking to put them on the spot as impeding his plan and thus impeding the settlement of the question. They assert that their efforts have not been aimed against Thomas or against anything but have merely been designed to secure a type of settlement similar to the 1933 arrangement which will really restore confidence and create an atmosphere in which American companies can again flourish here.

According to Drumm, Thomas stated that he had discussed the Boucas proposal with the Department which had expressed definite [Page 283] opposition to the plan and said it would telegraph me instructions to take action accordingly.

This conversation has been reported by Drumm to Boucas and therefore I trust you will put me in possession of the facts in order that I may know what line to take in the event of inquiries from Boucas or the Government.

In this connection I am informed that the President and the Exchange Director of the Bank of Brazil are entirely in favor of a settlement based on the Boucas plan.

The Minister of Finance would not actively oppose making a cash payment to American Congelado owners equivalent to that promised the British creditors provided a loan covering that amount (5 million dollars) can be conveniently obtained. It appears that he would definitely prefer the Boucas plan inasmuch as it eliminates not inconsiderable expense attached to obtaining a foreign loan. We referred today to the 1933 agreement as having worked out satisfactorily and as furnishing a good method of approach.

Incidentally the Minister of Finance showed me his estimate that American frozen credits total 16 million dollars of which not quite 1 million is in claims under 5 thousand dollars.

  1. Eugene P. Thomas, President of the National Foreign Trade Council.
  2. Foreign Relations, 1935, vol. iv, p. 386.