832.6511/105: Telegram

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

138. From the Under Secretary. Your 227, May 22, 4 p.m. Ambassador Martins called on Jesse Jones on May 23 under instructions from his Government to make a vigorous and urgent plea for assistance in the steel project along the lines of your conversation with President Vargas. Feis was present. The Ambassador presented the case substantially as follows:

Delay having occurred in developing a steel project with the cooperation of the United States Steel Corporation or any other steel making company in this country, President Vargas had decided to carry the project forward with a Brazilian corporation. The financial assistance required of this Government for the purchase of machinery under such a setup would be approximately $17,000,000. The Ambassador laid emphasis on the political aspects of the problem, pointing out the importance of assuring for the President internal Brazilian stability by some real progress in the matter in question. Referring to President Vargas’ efforts to cooperate with the United States and to respond favorably to requests from us for a concerted policy, the Ambassador stated that the President was under the strong obligation to demonstrate that Brazilian-American relations were based upon reciprocity.

Mr. Jones stated that he was still hopeful of obtaining the participation in the Brazilian steel project of a strong American steel company and that he was shortly to confer again with officers of both the United States Steel and of Bethlehem. He showed some reluctance to proceed along the lines of the Ambassador’s exposition, but is entirely willing to leave the matter open for further discussion should his new conversations with the steel people bear no fruit.

I shall present the case strongly to Jones during the coming week. It would, in this connection, be useful if you could obtain the figures which you mentioned in your penultimate sentence before my conversation with him. [Welles.]