832.51/1695: Telegram

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

30. Department’s 13, January 18, noon. Aranha, who left for Buenos Aires early this morning, sent me word that the Cabinet voted unanimously to authorize the Minister of Finance7 to make arrangements to resume foreign debt payments on the basis of one half of the amounts scheduled for the first effective year April 1, 1934 to [Page 562]March 31, 1935 of the Aranha plan with the increases in the subsequent years as set out in the plan. The President and Cabinet refused to approve the plan for resumption of initial payments based on the last year of the plan alleging insufficient resources at this juncture.

Aranha promised me yesterday afternoon that the Brazilian Government would make clear that its offer was not a permanent settlement.

Aranha sent me word also that I should send a representative to meet with Souza Costa this afternoon at 2:30, when the Minister will probably announce the Government’s intentions to the representatives of all the interested bondholders.

I repeat that they have in mind April 1, 1934 to March 31, 1935 (as the Department is aware payments in 1934 began only on April 1).

Please inform Treasury.

Caffery
  1. Arthur de Souza Costa.