811.20 Defense (M) Brazil/365: Telegram

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

813. Your 1030 March 25, 5 p.m.97 On March 11 there was transmitted to Souza-Costa a memorandum outlining proposals from Defense Supplies Corporation with respect to Brazilian burlap, castor beans, ipecac and rotenone, and also outlining the status of negotiations with respect to certain other Brazilian materials. Through an oversight this memorandum was not transmitted to you. The full text follows.

“The Department of State has been informed by the Defense Supplies Corporation that it is prepared to make proposals for the purchase of certain Brazilian products, as follows:

  • Burlap: Defense Supplies Corporation would agree that it or its nominees would purchase, and the Brazilian Government would sell or cause to be sold to Defense Supplies Corporation or its nominees, the exportable surplus of Brazilian burlap meeting standard United States Government specifications for comparable constructions of Indian burlap, in any amount up to 50 million yards shipped during 1942 and in any amount up to 100 million yards shipped during 1943. The price would be 12.9 cents per yard for 40-inch 10-ounce burlap delivered in 1942 and 12 cents per yard for 40-inch 10-ounce burlap delivered in 1943, both prices to be f.a.s. Santos, prices for other constructions to bear the same relation to the prices fixed for 40-inch 10-ounce construction as in the price schedule covering burlap issued by [Page 683] the United States Office of Price Administration, a copy of which is attached. Payment would be made in the amount of 80% of the purchase price against delivery of on-board bills of lading and in the amount of 20% against delivery of inspection certificate covering inspection after arrival at United States port. The Government of Brazil would agree to provide ocean shipping space, at United States Maritime Commission rates, for at least 50% of the amount shipped in any year.
  • Castor Beans. Defense Supplies Corporation would agree that it or its nominees would purchase, and the Brazilian Government would agree to sell or cause to be sold to Defense Supplies Corporation or its nominees, the exportable surplus of Brazilian castor beans in any amount up to 200,000 metric tons shipped during the next 12 months, at a price of $75 per metric tons f.o.b. steamer at Brazilian ports payable against delivery of on-board bills of lading. In lieu of castor beans, there may be delivered the equivalent in the form of castor oil (of such quality and at such price as shall be agreed upon between the Government of Brazil and Defense Supplies Corporation). The Government of Brazil would agree to provide ocean shipping space, at United States Maritime Commission rates, for at least 50% of the amount shipped during the contract period.
  • Ipecac. In case purchases by interests in the United States, the British Empire, and other American Republics which have systems of export control similar to that of Brazil, do not absorb all of the exportable surplus of Brazilian ipecac during the next 18 months, Defense Supplies Corporation would agree to acquire the ipecac not so absorbed during such period in any amount up to 90 metric tons at a price of $2 per pound in the case of Matto Grosso quality, and of $1.40 per pound in the case of Minas quality, in each case f.o.b. any Brazilian port, payable against delivery of on-board bills of lading.
  • Rotenone. In case purchases by interests in the United States, the British Empire, and other American Republics which have systems of export control similar to that of Brazil, do not absorb all of the exportable surplus of Brazilian powdered timbo, having a crude rotenone content of not less than 5%, during the next 18 months, Defense Supplies Corporation would agree to acquire the timbo not so absorbed during such period in an amount up to 4 million pounds at a price of 16½ cents per pound f.o.b. any north Brazilian port, payable against delivery of on-board bills of lading.

The Brazilian Government would undertake, with respect to each of the foregoing products and during the period of the agreement of Defense Supplies Corporation to purchase such product as aforesaid, to restrict, through the issuance of export licenses and other adequate control regulations, the exportation of such product except to Defense Supplies Corporation or its nominees or (m the case of any exportable surplus of such product not purchased by Defense Supplies Corporation or its nominees pursuant to this agreement) to interests in the United States, the British Empire, and other American Republics which have systems of export control similar to that of Brazil.

[Page 684]

Defense Supplies Corporation has advised the Department that it desires to acquire silk from Brazil, but that it does not at present have sufficient information on which to base an offer. It is suggested that the Brazilian Government arrange to furnish to the American Embassy at Rio de Janeiro full information with respect to Brazilian silk, including information as to present and potential production and as to quality.

The Department understands that the Agricultural Attaché of the Brazilian Embassy in Washington2 will communicate in the near future with the Division of Defense Materials of the Department to discuss Brazilian hides and wool.

The American Embassy at Rio de Janeiro, with Mr. F. M. Mc-Ashan, representing the Federal Loan Agency, will be carrying on negotiations with the Brazilian Government concerning the acquisition of babassu nuts by interests in the United States.”

With regard to hides, wool and babassu nuts, no specific proposals are under consideration at the present time. In consultation with Mc-Ashan, however, you are requested to discuss the situation with respect to each of these commodities with the appropriate Brazilian authorities and transmit to the Department any specific proposals which might be advanced by the Brazilians. In the case of babassu nuts, some concern has been expressed here over the possibility that a development program for this product would divert labor from the production of rubber, which is more urgently needed. This aspect should be explored with the Brazilians. In addition, you are requested to inform the Department of any recent developments in connection with the General Mills babassu program.

Welles
  1. Not printed.
  2. Paulo Fróes da Cruz.