Foreign Relations of the United States Diplomatic Papers, 1940, The American Republics, Volume V

832.6511/63

Memorandum of Conversation, by the Adviser on International Economic Affairs (Feis)

[Washington,] January 22, 1940.

The Brazilian Ambassador²⁷ called upon the Secretary by appointment. I was present.

The purposes of the Ambassador’s visit were two:

(a) To convey to the Secretary the sharp disappointment of President Vargas that the decision of the United States Steel was not to go ahead with the plan for development of the iron and steel industry in Brazil.

(b) To see if he could arrange, according to instruction from President Vargas, to see President Roosevelt.

The Ambassador explained that the fact that the United States Steel Company had sent down its large commission of experts²⁸ and that this experts commission had reported that there was no technical obstacle to the development had led to real expectations that the American company would be willing to contribute to the undertaking. He explained further that President Vargas had expressed views to him to the effect that the achievement of this seemed to him to be a most important test of the good-neighbor policy, and that further, the President had stated he would greatly prefer to have this thing carried out with the assistance of American enterprise and capital but that if this were not forthcoming, he would turn in other directions. The Secretary made it clear that we shared the disappointment of the Brazilian Government. He explained that we of course were in no position to influence the decision of private American interests like the United States Steel. The Secretary said that he would be glad to explore all means by which further possibilities could be examined.

As to discussion with President Roosevelt, the Secretary explained that he was speaking for the President in this matter, and that he reflected the President’s really positive wish to have something accomplished, but that he did not feel there was anything the President could add to the explanations he gave.

The Ambassador then manifested an increasing measure of emphasis and anxiety as regards President Vargas’s deep interest in the matter. He said that he was much worried over the fact that a despatch had gone down to Rio to the effect that this steel question was involved with the debt question²⁹ and that the two were combined together in some way in a plan worked out by the Department of Commerce; … I went into a rather elaborate explanation to the Ambassador—stating of course that I could only give it as my conjecture not as something within my knowledge—that the story had grown out of a plan that an individual in the Department of Commerce had been trying to promote for some time and which he had no doubt discussed with newspapermen. I assured him that the plan had no official recognition whatsoever and that the current discussions and interchanges on Brazilian debts would be handled entirely inside the Department. I was not at all sure that the Ambassador believed these completely accurate explanations.

It being apparent that the Ambassador felt at a loss as to what to report to Vargas that might in any way check the disappointment, I suggested that if the Secretary thought it wise, we might, by Wednesday at the latest, get together a small committee to meet with the Ambassador and completely review the situation with him with a view to seeing what new initiatives might be taken in the matter either by himself or by us. The Secretary said that he thought we should do this as promptly as possible, and I agreed with the Ambassador to hold such a meeting on Wednesday.

Incidentally, from the Ambassador’s remarks it could be discerned that one reason President Vargas was so interested in this plan was the fact that the military in Brazil was apparently exceedingly interested in it.

H[erbert] F[eis]

27. Carlos Martins.
28. Major Macedo Soares came to the United States in May, 1939, on behalf of the Brazilian Government to discuss with American steel interests the establishment of a steel plant in Brazil. Following this visit, the United States Steel Corporation sent a party to Brazil, headed by Mr. Heman Greenwood, Vice President of the United States Steel Products Company, to investigate the proposal. The Department of State was informed of these developments, but apparently took no part except to express informally its interest and willingness to be of assistance.
29. See pp. 559 ff.