The Secretary of State to the Ambassador in Brazil ( Gibson )
14. Your 19, January 15, noon. Yesterday the Council proposed to Aranha a cash payment by March 1 of $2,250,000 to liquidate frozen credits of $25,000 or less, the larger creditors to receive a series of 56 monthly Bank of Brazil notes the first of which would fall due on [Page 293] July 1. The Council proposes that 10 per cent be added to the principal of each frozen credit to be funded which, it calculates, would be practically equivalent to 4 percent interest on the notes. I believe Aranha cabled this at once to his government.
The Department has noted with interest your suggestions as to provisions for the readjustment at a future date of the rate of liquidation of American frozen credits and will transmit them to the Council should the development of the negotiations render their consideration feasible.