832.5151/1260a: Telegram
The Acting Secretary of State to the Chargé in Brazil (Scotten)
145. You are requested to deliver to the Minister of Finance the following letter to him from the Secretary of the Treasury in reply to the former’s communication of December 2:
“December 16, 1938.
My dear Mr. Minister: I have read with great interest your communication of December 2, 1938 regarding financial cooperation between the United States and Brazil.
It is gratifying to note that you feel that your nation is approaching more and more a situation where you will be able to reestablish free exchange markets. We are pleased likewise to receive your expression of the principal aims of your financial and economic policy which would ensure the relative stability of the milreis, not only in the internal but also in international markets. It is particularly gratifying to learn of your intention to establish a Central Bank for Brazil which might cooperate closely with the appropriate agencies of this Government.
As I have already made known to you, this Government is desirous of cooperating with your Government in achieving the economic objectives set forth in your communication. The form of this Government’s [Page 372] cooperation, however, would necessarily be dependent upon a more definite understanding of the general economic program which your Government contemplates.
In answer to your specific inquiry relating to the maximum length of time which could be granted to your Government for the payment on purchases of needed productive equipment we can say that in our thinking of the problem we have assumed that this would be appropriate to the character of the equipment and its projected life. Obviously, the establishment of this principle would, in many cases, permit far longer periods of amortization than those mentioned in paragraph 26 of your communication to me.
Much, too, depends upon the comprehensiveness of the entire program of economic reconstruction which you are planning and the circumstances under which this program is to be undertaken. It would be necessary, of course, to consider the long term as well as the short term factors with respect to the general economic position of Brazil at the time credits are arranged. Obviously such factors as the appropriateness and effectiveness of contemplated changes in your monetary system, stability of exchanges and the status of your international balance of payments would need to be considered.
I assure you of my personal gratification at the renewed expression of your Government’s wish for increasingly effective cooperation between the United States and Brazil.
Sincerely yours,
Henry Morgenthau, Jr.”