832.5151/1146: Telegram
The Secretary of State to the Ambassador in Brazil (Caffery)
89. Your telegram no. 170, July 14, 3 p.m. This matter is causing widespread comment and speculation in this country. It is assumed that the first sentence of your telegram does not mean that the news of the recent German action had not reached Brazil. Please telegraph fully the reaction in the Brazilian press and official and business circles, and indicate what action the Brazilian Government appears to be contemplating in the way of either retaliation or coming to an agreement with Germany.
The American Embassy at Berlin telegraphed yesterday that the Economic Section of the German Foreign Office, as well as the Reichsbank and the Brazilian Embassy, expressed the opinion that the difficulties would not be of long duration. The Brazilian Embassy appeared to believe that as a result of negotiations in Rio de Janeiro the purchase of compensation marks by the Bank of Brazil and normal trade relations between the two countries would soon be resumed. The Reichsbank was of the opinion that political considerations may have played a part in the suspension of purchases of compensation marks.