832.51/1506a: Telegram
The Secretary of State to the Ambassador in Brazil (Caffery)
125. For the Ambassador from the Under Secretary.26 I had this morning a long conversation with Francis White27 with regard to the Brazilian debt situation. White has prevented his Executive Committee from issuing any statement to the public here and will refrain from sending any further telegrams to the Brazilian Government for the time being. He tells me that it is absolutely impossible for the Council to send any representatives to Rio de Janeiro to undertake negotiations there. They have no personnel that they can employ for that purpose, and they have literally no funds at their disposal to [Page 366] utilize in payment of the expenses and work of some outside person whom they might engage.
As I explained to the Brazilian Ambassador here, while I recognize fully and appreciate greatly the efforts made by Aranha and I likewise recognize the value of the principle involved in the decision now reached by the Brazilian Government, the failure of the Brazilian Government to live up to the letter of the assurances officially given last winter has without question created a very unfortunate effect upon public opinion in the United States. The most helpful step that could now be taken would be the announcement on the part of the Council or on the part of the Brazilian Government that negotiations will be commenced on a definite date to be set as near in the future as possible for the purpose of arriving at a definite agreement for the resumption of service on that portion of the debt held in the United States. Since it is absolutely impossible for the Council to send a representative to negotiate in Rio de Janeiro, I hope you will urge as strongly as possible upon Aranha the desirability of sending a representative of the Brazilian Government to New York for this purpose. If such a step could be taken in the near future, I believe it would greatly remedy the unfortunate impression which now exists. Such a step would likewise avoid the possibility that negotiations for resumption of service on the American held debt might be confused with similar negotiations with regard to the debt held in England or in France. In the latter connection White informed me that he had received word from Lord Bessborough28 by cable from London this morning that the British had been invited to send representatives to discuss resumption of debt service in Rio at the end of the present month. In his reply White will maintain the position that the American negotiations are separate from the negotiations of the British and French creditors.
Please telegraph me the result of your conversations with Aranha. [Welles.]