832.51/1736: Telegram

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

79. My telegram 78, February 29, 7 p.m. Aranha reminded me again today that President Vargas is leaving on March 6 (the Minister of Finance who is ill is also leaving on the 8th for an extended stay in the south) so that if any debt settlement is to be made it must be done before then.

He again stood firmly by his view that the Aranha plan interrelationships were fair; he believes that as far as the underlying equities are concerned a court of law and equity would give grades I and II even more advantage over grade III than is provided for in the new plan being offered. …

Otherwise he says his offer stands as already reported. He said that as it works out the United States holding only 35.4% of the capital [Page 582] amount of the Brazilian foreign debt would get 38.1% of the payments to be made while the British holding 60.8% would get only 59.1%.

I have had great difficulty in securing these favorable percentages. (We now have no unfavorable balance of trade with Brazil about which even to talk; while the British and French do have rapidly growing unfavorable balances now.)