832.51/1338
The Ambassador in Brazil (Caffery) to the Secretary of State
[Received September 22.]
Sir: I have the honor to inform the Department that in the course of a conversation with Mr. Warren Lee Pierson of the Export-Import Bank regarding credit facilities in connection with the proposed purchase of twenty-six locomotives and one thousand freight cars, the Minister of Finance stated that the Government would require long term credits so as not to upset budget calculations for the next two or three years. When Mr. Pierson informed him that the Bank would cooperate with manufacturers on the basis of credits for five years, the Minister stated that such a project would be acceptable to the Government, and that it would not interfere with plans for resuming part payment of the external debt.
The Minister stated that the Government must do something about the external debt and that before the end of the year a commission would review the matter, with the thought in mind of meeting part of the servicing requirements. While he did not state that the Government intends to begin payments in 1939, he repeated several times that the present situation cannot continue and that the Government must do something about it as soon as possible. The Minister stated that, beginning in 1940, the payments on commercial credits in arrears would decrease, and that this would facilitate payment of part of the foreign debt. Mr. Pierson pointed out that the question of the foreign debt was very important and that he was pleased to learn that the Government was likewise mindful of the desirability of settling this problem.
Respectfully yours,
Counselor of Embassy