832.5151/1051: Telegram
The Secretary of State to the Ambassador in Brazil (Caffery)
46. The Department finds the developments reported in your 69, March 28, 1 p.m., highly disturbing. Taken in conjunction with your [Page 340] No. 62, March 19, noon, it would appear that there have been no exchange allocations by the Bank of Brazil since March 19 and that no contracts have been issued for maturities subsequent to March 5. Thus the past week has witnessed a deterioration in the exchange treatment of Brazilian imports from the United States instead of the realization of the expectations of the Minister of Finance, as reported in your No. 34 of February 15, 5 p.m., that it would be possible to grant spot exchange for imports from the United States in March.
The Department has tried to understand the conditions which have made it necessary for the Brazilian Government to enforce delays in the granting of exchange for the payment of American goods, even though this treatment seemed to fall short of that promised by the Brazilian Government in the exchange of letters accompanying the trade agreement.
Despite the shortening of the period of delay from 60 to 30 days on February 15, and despite hopes that the process of delay would not prove necessary indefinitely, the Department has witnessed its continuation from week to week and has feared that such continuation of delayed liquidation would confirm the practice and that any adverse change in Brazilian circumstances, even though slight, would lead to a lengthening of the delay period and that another frozen situation would arise. These fears are accentuated by the latest changes reported in your No. 69.
This concern is also shared by American interests both in the United States and in Brazil, as reported in your despatch No. 419 of March 17.17 Although the Department is not willing to concur in the suggestion of the American Chamber of Commerce for Brazil transmitted with your despatch No. 419, of what is in effect a modified compensation or clearing arrangement, it does believe that it should strongly present to the Brazilian Government its dissatisfaction with the existing situation.
No doubt in order to provide the necessary dollar exchange promptly, some special effort may be necessary by the Brazilian authorities and perhaps some curtailment may be necessary in the use of Brazilian exchange resources by the Government for its requirements other than debt service and the service of funded commercial accounts.
You are therefore requested to inform the Brazilian Government of our disappointment over the change reported in your No. 69 and to state again the earnest hope and expectation of this Government that the imposition of delay on the provision of exchange will shortly be ended and to ask when such action may be expected.
- Not printed.↩