The Ambassador in Brazil (Caffery) to the Secretary of State
[Received 6:11 p.m.]
1566. My telegram 1556, October 22, 3 p.m.68 When the Minister for Air69 agreed in principle to the elimination of Lati he took the occasion to make it clear with emphasis that he would resent any attempt to eliminate Condor until enough of our planes were actually on hand to provide a substitute service for Condor, In this connection I suggest a rereading of my telegram 581 of June 4, 3 p.m.;70 in the concluding paragraph I said “I am sending this telegram because I apprehend that the Brazilian authorities will be unwilling to continue indefinitely to do everything we ask them to when we may appear to be remiss on our side.” The bombers which we promised (and then withdrew the promise) were not furnished to the Air Ministry. On our side we have continued with new requests for favors which have at times reached one favor a day. We have established what is in effect a ferry service for planes to Africa over Northeast Brazil (three services described in Radio Bulletin number 196). I arranged yesterday for a flight of the first 3 “of another 45 or 50 United States Government transports” as set out in Department’s telegram 735 of August 28, 8 p.m.68 which also says “eventually but not before January 1942 service number 1 may include flying deliveries of military aircraft.” Brazil has continued to reserve strategic materials for our use in spite of strong pressure from Germany and Japan; Germany at one point even prevented Swedish vessels from carrying Brazilian goods to Europe in reprisal. Brazil forced the Argentine to establish an export control system to supplement ours.
President Vargas has continued to cooperate along hemisphere defense lines and especially recently has agreed to cooperate with us in regard to Dutch Guiana.71 The Brazilian authorities have agreed to exempt American companies from fines involving several million dollars in connection with the so-called cable terminal tax. The Brazilian authorities have promised to exempt American banks from the constitutional provision prohibiting foreign interests from maintaining [Page 526] banks of deposit in Brazil. Aranha told me that the President authorized him to tell General Horta Barbosa to take over for the Government’s account the Lufthansa and Air France oil stocks mentioned in my despatch 5156 of August 12 and the Department’s telegram 890 of October 2, 9 p.m.73 The Brazilian Department of Justice prevented the cancellation by local authorities of the concessions of various American corporations. The Brazilian authorities have closed down all German, Italian, and Japanese language newspapers, et cetera.
On the other hand, the Brazilian authorities are extremely irritated with our black list and Aranha is constantly bringing cases to my attention. They are also resentful of our cotton policy. They are disappointed and now very skeptical about results from our Lend-Lease law.74
The Minister for Air has recently referred to what he termed a shortage of planes for Panair to Brazil in its present services. He will be disposed to talk about the elimination of Condor when he is convinced that substitute planes are actually on hand. He remarked that Condor is the oldest airline in Brazil and has rendered excellent services to this country; that furthermore, as it continues to render good and necessary services he does not wish to eliminate it until a substitute has been definitely provided for.
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