811.20 Defense (M) Brazil/327: Telegram
The Acting Secretary of State to the Ambassador in Brazil (Caffery)
640. Following from Rubber Reserve:
“The following Agreement was signed by Rubber Reserve Company and the Republic of Brazil on March 3d:
‘This Agreement, made and entered into as of this 3d day of March, 1942, by and between Rubber Reserve Company, an Agency of the United States Government, (hereinafter called “Reserve”), a corporation existing under the laws of the United States of America and having an office for the transaction of business in Washington, D. C, party of the first part, and the Republic of Brazil (hereinafter sometimes called “Brazil”), party of the second part;
Witnesseth:
1. Brazil agrees to establish, or cause to be established, a single selling agency (which will be the Bank of Brazil or some other Brazilian Government Department or Agency, such selling agency, being hereinafter referred to as the “Selling Agency”), located at Belém, Para, and at such other places as may be deemed desirable by Reserve and Brazil, with appropriate authority to acquire and sell crude rubber produced within the territory of the Republic of Brazil (such crude rubber being hereinafter referred to as the “Rubber”).
2. Reserve agrees to make such arrangements as may be necessary for the purchase of the Rubber, it being understood that all such purchases shall be on the basis of cash against shipping documents, f. o. b. Belém, Para, or such other places as may be deemed desirable by Reserve and Brazil. All of the rubber so purchased shall be subject to a final price adjustment based on quality inspection and net certified weights determined at the port of entry in the U. S. A.
3. During the term of this agreement, Reserve agrees to buy and Brazil (acting through the Selling Agency) agrees to sell all of the Rubber which is not required by the Republic of Brazil for domestic consumption or use.
[Page 693]4. Reserve and Brazil agree that the base price for all purchases and sales of the Rubber under paragraph 3 hereof shall be thirtynine (39¢), U. S. A. currency, per pound, f. o. b. Belém, Para, for Upriver Acre Fine, on a washed and dried basis, with appropriate differentials for unwashed types and lower grades (said base price, together with said differentials being hereinafter referred to as the “Fixed Price”); provided, however, that after the expiration of the first 2 years of the term of this agreement the Fixed Price shall be subject to such adjustment from time to time as Reserve and Brazil may mutually agree is appropriate by reason of any changed circumstances affecting the world price of crude rubber.
In addition to the base price above referred to, the Rubber Reserve Company will pay premiums as follows: 2½¢ per pound for all rubber in excess of 5,000 tons and up to 10,000 tons purchased hereunder by the Rubber Reserve Company during any one year of this agreement; a premium of 50 per pound for all rubber purchased hereunder in excess of 10,000 tons during any one year of this agreement. All premiums so paid,
- (a)
- shall be credited against the $5,000,000 fund of the Rubber Reserve Company referred to in paragraph 1 of the note of His Excellency, the Brazilian Minister of Finance, addressed to the Acting Secretary of State of the United States of America, dated March 3, 1942, and,
- (b)
- shall be turned over by the Brazilian Government to the Instituto Agronomico do Norte, or other department or agency of the Brazilian Government having similar functions, to be utilized for the immediate expansion of the production and improvement of quality of raw wild rubber in the Amazon Valley and adjacent regions.
5. It is understood that Brazil intends to establish, or cause to be established, the Fixed Price for all purchases and sales of the Rubber for domestic consumption or use.
6. Brazil agrees that it shall use its best efforts to cause the maximum amount of the Rubber to be produced and to be made available for sale to Reserve.
7. Brazil, recognizing the large requirements of rubber in the United States for the war emergency, agrees to restrict to the United States of America, the exportation of the rubber in raw and manufactured form from the Republic of Brazil, provided that arrangements shall be made for the purchase by the United States of manufactured rubber at prices to be mutually agreed upon. Reserve agrees that all rubber purchased by it hereunder shall be disposed of only in accordance with the regulations of the War Production Board or some other Agency of the United States Government having similar authority.
8. Reserve agrees that it shall use its best efforts to expedite the purchase and exportation of the Rubber which Reserve is obligated to buy under paragraph 3 hereof.
9. The term of this agreement shall be for a period beginning with the date hereof and ending on December 31, 1946, unless sooner terminated by the mutual consent of the parties hereto.’ End of Agreement.
Rubber Reserve Company is also prepared to pay the following prices, F. O. B. Belém, for the different grades of rubber, and is establishing a letter of credit through the Reconstruction Finance Corporation so that the Bank of Brazil may draw against such letter of credit as rubber is shipped from Brazil on ocean going vessels destined for Continental U. S. A. ports:
| Acre Washed | 39¢ |
| Upriver Washed | 385/8 |
| Islands Washed | 385/8 |
| Acre Cut Classified (Crude) | 305/8 |
| Upriver Cut Classified (Crude) | 30¼ |
| Islands Cut Classified (Crude) | 281/8 |
| Sernamby Rama Washed | 281/8 |
| Sernamby Rama Crude | 20 |
| Sernamby Cameta Washed | 295/8 |
| Sernamby Cameta Crude | 15½ |
| Caucho Washed | 33½ |
| Caucho Crude | 24 |
and Rubber Reserve Company will pay the following prices, U.S.A. Currency, per pound, F. O. B. São Salvador (Bahia) and such other Brazilian ocean ports, as Reserve and Brazil may mutually agree upon for the following grades of rubber:
| Ceara Scrap (Crude) | 17¢ |
| Mangabeira (Crude) | 17 |
Please advise Brazilian Government and Bank of Brazil accordingly. Also advise Rubber Reserve Company if Brazil proposes to provide for shipping arrangements or if Reserve is expected to do so. Suggest Brazilian Government be encouraged to expedite selling arrangements so that exports can be started to United States.”