810.20 Defense/1098a: Telegram

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

519. The Department on July 7 handed to the Brazilian Ambassador and General Amaro copies of a draft basic agreement88 for the lend-lease program of transferring military matériel to Brazil. The principal financial provisions are as follows: Brazil is to receive a total of $100,000,000 of war and navy matériel of which it is expected $15,000,000 of army matériel and $1,000,000 of navy matériel will be transferred during the fiscal year ending June 30, 1942. This delivery schedule is subject to change if broad defense considerations so require.

Brazil is expected to repay $35,000,000 prior to June 30, 1947, $15,000,000 during the first year, and $4,000,000 a year for 5 years thereafter. In consideration of the broad objectives of the program and of certain very general economic concepts, the entire obligation of Brazil to the United States would be considered discharged by such payments.

The Ambassador has been informed that the $12,000,000 Export-Import Bank credit is not to be considered in any way supplemental, but rather as a line of credit to the Bank of Brazil for use if necessary in order to meet the $15,000,000 payment for the first year. The Dept understands that the Bank of Brazil informed Mr. Pierson during his recent visit to Rio de Janeiro that it would probably not have to draw upon this credit of $12,000,000.

The Ambassador was also informed that to permit a smooth functioning of the purchasing machinery it would be essential that Brazil do as other governments have done and establish a single individual or board to coordinate and unify the activities of the several purchasing missions in this country.

  1. Ante, p. 139.