832.51/1296: Telegram
The Ambassador in Brazil (Caffery) to the Secretary of State
[Received 11:35 a.m.]
90. Last night the President gave a long statement to the press concerning the state of the nation. Following is full text of portion relating to the foreign debt:
“The suspension of the foreign debt was not a mere caprice; it was imposed by compelling circumstances of our not disposing of the necessary funds. The fall in the price of coffee, the reduction in the favorable trade balances from our exports, which was much greater than the sum necessary for the service, and the lack of cover for our foreign exchange, all created a situation for which this was the only remedy. However, this solution is of a temporary nature. The readjustment of our economy will certainly permit us later to resume the payments if our exports show a sufficient favorable balance. Otherwise there would remain for us only the recourse of nationalizing our foreign debt by the conversion of bonds into national currency. This would still be an evidence of our desire to pay. However, time and circumstances may still provide us with an opportunity to examine with the interested parties some other solution.”
Please inform Department of Commerce.