832.51/1480: Telegram
The Ambassador in Brazil (Caffery) to the Secretary of State
[Received June 10—12:45 p.m.]
187. Department’s No. 106, June 8, 3 p.m. As the Department is aware at the time that Aranha signed paragraph V contained in his note to Secretary Hull of March 8, 1939,19 he was not convinced that his Government would carry out his undertaking. Upon his return here he was bitterly attacked especially by the army and even in the Cabinet for having made the promise (he had a near breakdown and had to go away for a month to recuperate) it is only recently that President Vargas has agreed that something should be done about it. In the meantime Aranha has hammered away consistently in an endeavor to have some sort of payments resumed on July 1. At the same time the Minister of Finance20 has been referred insistently to prevailing unsatisfactory business conditions; to the state of the budget; and to the lack of available foreign exchange for making debt payments (obviously any large debt payments would have immediate effect on our present exchange arrangements).
As I have frequently reported Aranha has never failed to tell me that payments would be resumed in some form on July 1 but the President has not yet decided what sort of payments he feels able to make. Aranha said yesterday that the President was now contemplating [Page 358] making payments on July 1 on arrears accumulated under the Aranha plan;21 and then entering into discussions for a general plan of future payments.
Aranha said also yesterday that he would attempt on Tuesday next to secure a decision in the premises from the President.
- Ante, p. 352.↩
- Arthur de Souza Costa.↩
- See Foreign Relations, 1934, vol. iv, pp. 602 ff. For Spanish text of debt funding plan embodied in Decree No. 23.829, February 5, 1934, see Brazil, Diario Oficial, February 7, 1934, p. 2689; for translation, see Foreign Bondholders Protective Council, Inc., Annual Report, 1934 (New York, [1935?]), p. 36.↩