The Secretary of State to the Ambassador in Brazil (Caffery)
17. Your 35, January 22. The position taken by the Minister of Finance that the global amount to be devoted to debts shall not exceed one-half of the amount allocated in the first year of the Aranha Plan would mean that even though he revises the percentages offered to the different grades (for example using perhaps the relative positions of the different grades as they worked out in the fourth year of the Aranha Plan) the offer to the bondholders is likely to appear rather [Page 566]meager even as the basis of a temporary settlement. Considering on the one hand the advantage of having Brazil resume payment at all rather than have an indefinite prolongation of complete default, and on the other hand the possible criticism of this offer, it seems to us that the only line open is a continuation of your endeavors to secure the most favorable consideration possible while making it clear that we are not sharing responsibility for the offer. The Department realizes that you have proceeded completely along these lines, and leaves it to your best judgment as to what extent to enter into the further discussion of details.