832.51/1285: Telegram
The Secretary of State to the Ambassador in Brazil (Caffery)
53. On April 7 the British Corporation of Foreign Bondholders telegraphed the Foreign Bondholders Protective Council that it understood there is a possibility that the Brazilian Government may invite American, French and British bondholders associations to send experts to Rio to study the debt situation, there being some indications that this invitation might be based on a suggestion that discussions should be to find, as a start, means to pay in local currency. The Corporation feels that an invitation in this form would be dangerous and that discussion would have to be free to explore transfer as well as budget provision in milreis and should not be entered into under unacceptable restrictions. The Corporation asked the Council how it would feel in principle if the invitation were free from such possibilities of misconception. It is also consulting the French with a view to all replying on the same lines if an invitation is given.
The Council replied that it knows nothing of the Brazilian proposal and is not interested in milreis payments and has no present intention of going to Brazil.
The Council writes the Department that it feels that Brazilian dollar bonds are on a different basis from the European ones and are entitled to be treated apart from them and that discussions of the dollar indebtedness should be a bilateral negotiation between the Council and the Brazilian authorities and not a general negotiation, which would not necessarily mean that the Council would try to get something for the American bondholders to which they are not entitled, or to take away from anyone else anything to which they are entitled. The Council has no funds to send anyone to Rio and definitely feels that for other reasons it would be wise to have the negotiations regarding the dollar debt in New York rather than in Brazil. The Council requests, and the Department approves, that you informally and unofficially exert your influence to that end.