832.5151/1154: Telegram
The Ambassador in Brazil (Caffery) to the Secretary of State
[Received 9:11 p.m.]
173. The Brazilian authorities and business circles believe that complete suspension of German purchases from Brazil exists only in view of the action of the Bank of Brazil reported in my telegram 147, June 22, 9 p.m. and do not take seriously the article from Berlin by Tolischus; they have not heard of any retaliatory German action. The local press has not commented. The German Ambassador here continues to protest against the Bank’s action and to insist upon a resumption [Page 353] of negotiations for a new trade agreement with Brazil. As the Department is aware, it has always been the intention of the Brazilian Foreign Office to resume those negotiations, but Aranha refuses to negotiate with the present German Ambassador here (the Ambassador has announced his departure for Germany on leave from Rio de Janeiro on August 6th next).
The over-bought position of the Bank in compensation marks has been reduced from a maximum of 35,000,000 to around 5,000,000 therefore the Bank will probably soon allow resumption of purchases of compensation marks of limited quantities of certain Brazilian products (especially in view of the obvious dissatisfaction of the exporters of cotton, cocoa, tobacco, citrus fruits, meats, coffee with the present policy of the Bank of Brazil).