The Secretary of State to the Secretary of the Treasury (Morgenthau)
My Dear Mr. Secretary: The Department has had recently before it the matter of the Brazilian steel project, on the technical phases of which a Commission of the United States Steel Corporation in the latter part of 1939 rendered a favorable report. The proposal envisages a modern steel plant with an initial capacity of 285,000 tons of finished steel products and financed jointly in Brazil and in the United States. Although details have not yet been elaborated, it is estimated that Brazil would contribute a minimum of 26,000 contos ($13,000,000) in milreis, and United States interests, between $17,000,000 and $25,000,000, principally for equipment.
Early in January 1940 the Board of Directors of the Steel Corporation decided against participation of the Corporation in the venture, but the matter has been kept alive by the Brazilian Government which continues to be very much interested in the proposal. In fact, the Brazilian Ambassador has stated to the Department that the establishment of a steel industry is one of the major aspirations of President Vargas’ administration.
Shortly after the decision of the United States Steel Corporation was made known, the Department was apprized by the Corporation of the serious consideration which had been given the project by Ford, Bacon and Davis, Incorporated, of New York. On February 15, Mr. [Page 604] George W. Bacon, Chairman of the Board of the firm, confirmed to the Department that his company had been giving the matter serious thought. However, before it could proceed with a thorough exploration of the project, Mr. Bacon affirmed, it desired to ascertain this Government’s attitude, including, it was inferred, the availability and extent of possible financial participation by governmental agencies.
It would appear that the matter is one which might now properly be examined by the Committee32 of which you, Mr. Jesse Jones,33 and Mr. Welles34 of this Department, are the members. I believe that a meeting of the Committee for this purpose should be held at as early a date as practicable and that Mr. Bacon and his associates be heard by the Committee following a preliminary discussion. In the absence of both Mr. Welles and Dr. Feis, I shall request Mr. Duggan, Chief of the Division of the American Republics, to represent this Department. When I have heard from you concerning the convenient date for the meeting, I shall be glad to arrange with Mr. Bacon for his presence in Washington.
I am enclosing for your information copies of a brief memorandum describing the Brazilian steel project, and of a memorandum of conversation of February 23 with the Brazilian Ambassador.35 The Office of the Economic Adviser and the Division of the American Republics have assembled a considerable file on the steel project which is at your disposal should you wish additional information on the subject.