Office of the Historian

832.51/2113a: Telegram

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

Washington, November 27, 1942—midnight.

3719. For West24 from Pierson.

1st: Failure to organize Companhia Vale do Rio Doce25 is creating serious legal difficulties and moreover is holding up important interdepartmental arrangements. We urge therefore that formal organization be completed at earliest possible moment, even if necessary to delay until later date the full dress ceremony which Brazilian officials seem to desire.

2d: (a) The inability to obtain and ship materials and equipment as promptly as originally contemplated is certain to postpone date upon which full deliveries of ore can begin. This naturally reduces period during which Eximbank will be able to obtain reimbursement.

(b) In effort to expedite program Eximbank is approving use of dollar credit for items not foreseen when agreement was made.

(c) Proposed ore purchase contracts contain force majeure clauses which, if exercised, will further limit period during which Bank may expect reimbursement.

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For foregoing reasons we feel that it is only equitable for Brazil to extend reimbursement period from 20 years to 30 years. This will involve merely substituting 30 for 20 annual notes and, of course, 30 instead of 20 interest notes. Will you please broach this subject to Pinheiro26 pointing out reasons for suggestion?

3d: Because of changes in local situation I feel that you should return to Washington for brief period for consultation. I hope this may be after formal organization of Company, but if this is to be further delayed, perhaps you can come to Washington prior to date of organization. [Pierson.]

Hull
  1. Robert K. West, Engineering Consultant of the Export-Import Bank.↩
  2. This company was a Brazilian Government corporation which by acquiring the Itabira Mines and the Victoria Minas Railway was to be the Government instrumentality for increasing ore production; the United States was represented on its board of directors by Robert K. West and B. H. Blanchard.↩
  3. Israel Pinheiro, superintendent of the Itabira project.↩