832.51/1588
The Ambassador in Brazil (Caffery) to the Secretary of State
[Received September 14.]
Sir: I have the honor to report that Dr. Dana Munro had another talk with the Minister of Finance yesterday afternoon. The Minister said that of course everything was being changed by the outbreak of war in Europe, that its repercussions had left them little time to think about the debt question during the past week, but that obviously the resulting uncertainty made it impossible to do anything about debt payments at present. He went on to say that if Brazil’s export proceeds begin to show an improvement and conditions thus become favorable following the present uncertainty he will be glad to take up the debt matter again. He had made the same statement the day before to Sir Bertram Hornsby, the representative of the British bondholders.
Dr. Munro has accordingly arranged to return to the United States on the plane leaving here Saturday. While the outbreak of war has prevented any immediate concrete accomplishment on his part, his trip has enabled him to become familiar with the way things are going here, and any continuation of the negotiations that may be desirable can be carried on from the United States, probably through the Brazilian Ambassador there.
As Dr. Munro took leave of the Minister for Foreign Affairs, the latter assured him that he would be glad to carry on with him any correspondence about the debts that might be appropriate, and took occasion to reiterate that as far as he, the Minister, was concerned, the earlier communications from the Foreign Bondholders’ Protective Council had not left him very well disposed toward negotiations with the Council.
The French and British bondholders’ representatives have given Dr. Munro the impression that the present situation in Europe makes them so desirous of an immediate settlement that they would be willing to accept almost any terms, however unfavorable, that the Brazilians might offer them now. However, Sir Bertram Hornsby, who is the principal British negotiator, is leaving today to return to London, and it is understood that Mr. René Berger, the French representative, is also preparing to leave, indicating that they consider it hopeless to try to obtain even an unfavorable settlement in the present circumstances.
Mr. John Phillimore, the second British representative, is still here but this is primarily because he is now working in the British Embassy, [Page 372] helping with its suddenly increased volume of business. The Portuguese negotiator never actually came to Rio de Janeiro.
Respectfully yours,
Counselor of Embassy