Foreign Relations of the United States Diplomatic Papers, 1938, The American Republics, Volume V

832.51/1265a: Telegram

The Secretary of State to the Ambassador in Brazil ( Caffery )

Washington , January 14, 1938—4 p.m.

6. The Foreign Bondholders Protective Council has given Department the following summary of their position at the present time:

“No word has been received from Brazil since Mr. Clark⁵¹ last talked with Ambassador Aranha on December 6. The Council cabled Finance Minister Souza Costa January 4 expressing hope active negotiation might soon be undertaken regarding Brazilian dollar bonds but so far no reply.

Under Aranha Plan⁵² ten bond issues are in default, one September 1, one November 15, three December 1, and five January 1, and three will be due February 1 and four March 1. Total service on these bonds amounts to $1,590,000. Federal Government will have payment due in April immediately after expiration of Aranha Plan and no arrangement has been made for any payment after March 31. Furthermore, the monthly payments due November and December 15 for funding bonds have not been made.

While consideration is being given to payments on current trade balances the interests and rights of bondholders should not be lost sight of. Consequently prompt negotiation on behalf of dollar bonds is earnestly requested.”

Please cable Department current prospects.

Hull

51. J. Reuben Clark, President, Foreign Bondholders Protective Council, Inc.
52. See Foreign Relations, 1934, vol. iv, pp. 602 ff. For text of debt funding plan embodied in decree No. 23,829, February 5, 1934, see Diario Oficial, February 7, 1934, p. 2689; a translation appears in Foreign Bondholders Protective Council, Inc., Annual Report, 1934 (New York, 1935?), p. 36.