832.796/597: Telegram

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

941. Negotiations between the Reconstruction Finance Corporation, other interested agencies of the Government, and Pan American Airways have reached a point where a definitive agreement between Pan American and the RFC can be signed at any time providing for a once-a-week round-trip service between New York, Belém, Natal, Portuguese West Africa, and Lisbon, using large seaplanes of the type currently in the Atlantic service. Before signing the agreement and inaugurating the service, which will cost the United States Government several million dollars a year and necessitate the reduction of important services elsewhere, it is essential that Brazil agree to the elimination of Lati, to take effect concurrently with or shortly after the establishment of the new service. The sole reason for the establishment of the new service, is, of course, the elimination of Lati. Within 60 days the service can be started with one airplane and by the end of 90 days, possibly a little bit sooner, with two airplanes. One airplane can provide a fortnightly service and two airplanes a weekly service. The route from Brazil to Europe will not pass through British territory (regularly at least) so that the censorship question should not arise. Additional DC–3 service will also be provided by Pan American Airways between Natal and Buenos Aires in substitution for Lati’s routes between these points.

As the Department envisages the problem, two alternatives offer themselves for the elimination of Lati. The first and preferable one of course would be through positive action on the part of the Brazilian Government cancelling Lati’s franchises, justifying itself on the basis of Lati’s menace to hemisphere defense. The second one, appealing perhaps more to the Brazilian Government but in the Department’s view of possibly dubious efficacy, would be to dry up Lati’s fuel stocks; the Department entertains serious anxiety with regard to the time element involved. However the Department leaves to your judgment the approach to use in broaching the subject with the Brazilian Government.

The Department wishes once more to emphasize the importance which it and the War and Navy Departments attach to the prompt elimination of Lati, and it entertains the hope that with the offer of the new Pan American Airways service you will succeed in obtaining the desired Brazilian assurances to cancel Lati’s franchises.