832.51/1579: Telegram

The Ambassador in Brazil (Caffery) to the Secretary of State

284. My 278, August 31, 4 p.m. Brazilian financial circles are in a state of intense depression today but it is my opinion that when the present confusion clears up the Brazilian authorities will be in a position to negotiate a settlement with our bondholders. A member of the Brazilian Debt Commission gave Munro yesterday a memorandum in which the figure $12,000,000 was mentioned as the amount Brazil might possibly be able to set aside for annual payment on all of her foreign bonds. Aranha mentioned the same figure to me yesterday as a “possible maximum”.

However, Brazilian authorities will probably now plead inability to make commitments at this juncture in face of loss of important European markets.

Principal British bondholders representative is endeavoring leave Rio as soon as possible. Munro will remain until the 9th. (In any event there is no air passage available before that date.)

Caffery