811.20 Defense (M)/2071: Telegram

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

332. Referring to Department’s no. 325 of May 20. The Federal Loan Agency is prepared, through Danforth, to make purchases, take delivery of and pay for the quantities of materials at the prices indicated, but believes that the Bank of Brazil or other agency to be set up by the Brazilian Government must have the responsibility of all negotiations with Brazilian producers or handlers for the acquisition of such materials, the determination of quantities and qualities and the [Page 544] prices to be paid such producers or handlers, as well as the necessary steps to effect the concentration of the same at some central point to be agreed upon for delivery to Danforth.

Sales by Brazilian producers to private consumers in the United States would continue to flow through the normal channels of trade at such prices and at such amounts as they may mutually agree upon.

Presumably some agreement between the Bank of Brazil or the other Brazilian Agency and the Federal Loan Agency going into the details will have to be worked out by Danforth with the Embassy’s assistance and sent to the Department for approval by the Federal Loan Agency here.

The Federal Loan Agency realizes that in many cases the prices quoted in telegram no. 325 apply to certain specific grades. The Agency is willing to buy materials of other grades at the discounts from or premiums above the standard prices set forth in exhibit A prepared by Messrs. Wright and Pierson in their negotiations in Rio.

Please advise as promptly as possible whether these proposals meet with the approval of the Brazilian Government.