033.3211 Aranha, Oswaldo/9: Telegram

The Secretary of State to the Chargé in Brazil (Scotten)

12. In accordance with the request contained in the telegram sent the President by President Vargas,4 and in accordance with my recent telegrams5 to you with regard to Aranha’s visit here, I am sending you the suggested agenda for the discussions to take place in Washington. You will see that the questions outlined fall into two general headings, those listed under heading “A” to be taken up with Aranha [Page 349]by the Department of State and those listed under heading “B” to be taken up by Aranha directly with the Secretary of the Treasury.

A. (1) Consideration of the manner in which the Government of the United States may be able to cooperate with the Brazilian Government in such manner as the latter may desire in connection with the Brazilian program of national defense. These discussions may cover points already raised by the Brazilian Government and such other points as the Brazilian Government may desire to propose.

(2) Current trade. A review of trade relations in addition to exchange matters.

(3) Cooperation and the development of Brazilian resources and complementary trade. The long-run possibilities in this field are substantial. They would include:

the possibility of cooperation and assistance of agricultural experts;
progress of the development of the hydrographic service by American technicians;
possible joint study of the status of the growth and development of certain complementary products, such as rubber, oiticica oil, manganese and hardwoods.

(4) Shipping.

(5) Airmail; Pan American service and foreign competitors.

(6) Radio programs.

(7) Refugee problems.

(8) Cooperation between Brazil and the United States with regard to expediting a pacific solution of the Peruvian-Ecuadoran boundary dispute.6

(9) The Brazilian debt situation (Federal, state and municipal).7

(10) The prospect of further investment of American private capital in Brazil and in that connection any specific problems that are current as regards the treatment of American enterprises in Brazil (legislative action affecting foreign banks, insurance companies,8 public utilities).

B. Group I. Steps contemplated by the Brazilian Government to alleviate the existing exchange position.9 Specific action which this Government could take to assist the Brazilian Government in clearing up the existing arrears.

Group II. Steps contemplated by the Brazilian Government to establish a Central Bank; an estimate of the amount of reserves in gold, foreign exchange or the equivalent which the Central Bank would require, either in the form of Central Bank reserves or a stabilization [Page 350]fund. Methods by which the Brazilian Government plans to create and maintain these reserves. Specific action which this Government might take to help create immediate reserves or to assist in the gradual achievement of the desired objectives, including methods providing for continuing cooperation between the two treasuries.

Group III. The long range development program of the Brazilian Government. Estimate of amounts of foreign materials which will be required to carry out this program. Estimate of the effect on the Brazilian balance of payments position. Proposed methods of financing purchases of foreign materials. It is understood that the contemplated methods are those which would have the smallest immediate impact on the external position of the milreis. Specific action which this Government might take to facilitate the development of this program.

In order for this Government to have a complete understanding of these problems, the balance of payments position for 1939 and ensuing years should be thoroughly discussed as well as the anticipated effects of the proposed measures on future years.

This Government understands that in order to carry out the various aspects of a comprehensive program, large amounts of money will have to be contributed locally. For example, a long-range development program will doubtless require large expenditures for local materials and labor. It would be desirable to have information as to the methods proposed by the Brazilian Government to finance both the external and internal portions of the program because of their joint effect on the budgetary and governmental indebtedness position of the Brazilian Government.

Please inform the Minister that this Government is looking forward with the greatest satisfaction to the opportunity which his visit will afford for the discussion of all problems in which the two Governments have a common interest. If there are any further points beyond those above indicated, and which in Aranha’s opinion could be usefully taken up during the time of his visit, please obtain such additional suggestions from him and telegraph me accordingly.

  1. For text of telegram of January 13, see Department of State, Press Releases, January 21, 1939, p. 38.
  2. Not printed.
  3. See pp. 141 ff.
  4. See pp. 357 ff.
  5. See Foreign Relations, 1937, vol. v, pp. 360 ff.
  6. See pp. 379 ff.