832.6511/47

Memorandum of Conversation, by Mr. Walter N. Walmsley, Jr., and Mr. Ellis O. Briggs of the Division of the American Republics

Participants: The Brazilian Ambassador, Dr. Carlos Martins
Mr. Noble, Under Secretary of Commerce
Mr. Pierson, President, Export-Import Bank
Dr. Feis
Mr. Duggan
Mr. Briggs
Mr. Joseph Cotton, Jr., Treasury
Mr. Schmidt, Treasury
Mr. Walmsley
Mr. Harry Mulligan (RFC)30

The meeting was called at 3 p.m. and according to arrangement the Brazilian Ambassador joined the group at 3:45. The period prior to his arrival was utilized for a discussion of the general background by Dr. Feis and a summary of the project by Mr. Walmsley. It was explained that since the Steel Corporation has turned down the project, President Vargas now apparently expects the United States Government “to do something concrete in the light of the Good Neighbor policy”.

When at 3:40 the Brazilian Ambassador joined the group, he was invited by Dr. Feis to state the position of his Government in the matter. Dr. Martins stated that Brazil had for 50 years listened to various propositions to build a steel industry but that the coal problem had always been the stumbling block. With the discovery by the Steel Commission that Santa Catharina coal might be used, the Brazilian hopes for a steel industry were revived. It was the Ambassador’s understanding that all the technical problems were found by the Commission to be susceptible of solution. It was therefore difficult for his Government to understand why the Steel Corporation had said of the report that while there were no insurmountable technical problems, the Corporation was not interested. The Brazilian Government felt that after President Vargas’ approval in principle of the report, the conditions could be discussed, but now the Steel Corporation’s action closed this approach.

Dr. Feis restated, with the concurrence of the Ambassador, the Brazilian Government’s position: “President Vargas, in approving the Commission’s report meant he was ready to discuss the conditions [Page 603]stipulated by the Commission, and that therefore the conditions in themselves should be no reason for the adverse decision of the Steel Corporation”. Dr. Feis explained to Dr. Martins that while the Department knew of the Steel Corporation Commission’s activities, this Government had of course made no commitment of any kind regarding the project, and the present was, in fact, the first time the Department had had the matter before it. We were pleased to have an opportunity to consider the situation, which would however require some time to examine its various details and possibilities.

The Ambassador indicated his understanding of our position and the meeting terminated with the suggestion that a further discussion be held within the Department with an officer of United States Steel present, and that on January 31 another meeting with the Ambassador be held.31

  1. Reconstruction Finance Corporation.
  2. It would appear from the records of the Department of State that no meeting with the Brazilian Ambassador was held on January 31.