832.51/1688
The Ambassador in Brazil (Caffery) to
the Secretary of State
No. 2345
Rio de
Janeiro, January 8, 1940.
[Received January
15.]
Sir: With reference to the Department’s
telegram No. 249 of December 29, 7 p.m.,2 authorizing me to participate informally
and independently in debt discussions with the Brazilian authorities for
the purpose of ascertaining what terms the Brazilians are prepared to
offer, I have the honor to enclose copies of a letter3 and memorandum that I have sent
to the Minister for Foreign Affairs3a following my recent conversation with him on the
subject mentioned in my telegram No. 461 of December 30, 10 p.m.4
No discussions are being carried on with the Europeans at present.
I have the honor to suggest that the Treasury Department be informed
appropriately.
Respectfully yours,
[Enclosure]
Memorandum From the American
Embassy to the Brazilian Ministry
for Foreign Affairs
[Rio de
Janeiro, January 8, 1940.]
Is this a correct statement of the position of the Brazilian
Government in regard to the dollar bonds of the Brazilian foreign
debt?
The dollar bonds of all issues, state and municipal as well as
Federal, are to be serviced.
The relative positions of the dollar issues in the Aranha
Plan5 will be preserved so that no dollar issue
will receive service relatively less favorable than any issue in
other currencies on the basis of the Aranha Plan schedules.
No agreement is to be made with other bondholders prior to an
agreement with the American bondholders.
[Page 560]
The state and municipal governments will obligate themselves in
due form to provide the milreis payments on their foreign bonds
up to the amount agreed upon.
The Federal Government will give appropriate guarantees to
provide the foreign exchange required for the transfer of the
payments of the states and municipalities as well as those of
the Federal Government itself.
If this is a correct interpretation, the Embassy would be happy to
hear what amounts in dollars will be available for the Federal
dollar issues and what amounts in dollars will be available for the
state and municipal dollar issues.
