The Secretary of State to the Chargé in Brazil (Scotten)
58. Your 112, April 11, 6 p.m. Export-Import Bank is prepared to make acceptance credits available promptly on receipt of advices re allocation of total amount $19,200,000 among commercial banks which are to conduct actual operations. In this connection Export-Import Bank has been awaiting reply to Mr. Pierson’s54 letter of March 16th55 to Dr, Souza Dantas56 and cablegram of March 2155 to Banco do Brasil (Satelgeral). Upon receipt of such advices the Export-Import Bank will notify the agent commercial banks, which will in turn transmit individually by airmail to the Banco do Brasil the final details of the arrangement.
Terms of arrangement are substantially as follows: Banco do Brasil is to draw on designated banks within amounts separately allotted drafts of a tenor not exceeding three months sight signed by duly authorized officers and for individual amounts to be specified by the drawees. Said drafts are to be accepted by the drawees and thereafter discounted by them at the rate of 3.6% per annum proceeds being held at disposal of Banco do Brasil. One day prior to maturity of acceptances Banco do Brasil to pay not less than 10% of face amount in cash and present a renewal draft for balance for acceptance and discount. One day before maturity of renewal acceptance Banco do Brasil is to pay a further 10% or more of amount of original draft in cash and present another renewal draft for balance for acceptance and discount. And so on except that the cash payment at time of seventh renewal is to be not less than 20% of amount of original draft, leaving assuming no augmentation of payments 20% for the final draft. Thus all drafts would be liquidated in full within 2 years. No original draft may be presented for acceptance after June 30 of this year and no renewal draft after March 30, 1941 it being understood and agreed that all acceptances shall be retired on or before June 30, 1941.
The proceeds of these acceptance credits are, of course, to be used by the Banco do Brasil only for the purposes envisaged in the exchanges of letters with Aranha at Washington.