832.51/1622: Telegram
The Ambassador in Brazil (Caffery) to the Secretary of State
[Received 2:50 p.m.]
392. My despatch No. 2003, November 3, 1939.32 Brazil’s improved exchange position under temporary war conditions is reviving the question of servicing the foreign debt. The Minister of Finance has told the European bondholders representatives he likes the so-called Schroeder Plan under which if agreed upon Brazil would pay annually on the whole debt a fixed service of 3,000,000 pounds sterling plus a variable service contingent upon an increase in the price of certain exports. The plan is going forward by next air mail. It is familiar to the J. Henry Schroeder Banking Corporation of New York though possibly not to the Bondholders Protective Council.
The Europeans will oppose it in its present form. Moreover, they would prefer a temporary settlement although they are extremely eager for immediate payments on one basis or another. They are preparing [Page 373] counter-proposals and have also made certain objections to the above plan which the Minister said he would study. He told them he would call them within a few days to a meeting at which he wanted to discuss specific proposals.
Minister of Foreign Affairs keeps me currently informed; he tells me Souza Costa suggested Schroeder Plan because he believes European representatives will reject it. Both Ministers want suggestions from me. If Council cares to express an opinion on Schroeder Plan or make other suggestions or proposals I can put Adams in touch with Costa.
British representative tells me he will suggest a scale of payments to the Brazilian Government which would be favorable to British interests and detrimental to ours. If we sit quietly by and take no part in the conversations the British, French and Portuguese representatives may eventually secure a settlement and we might find ourselves left out in the cold.
Please inform Treasury.
- Not printed.↩