811.20 Defense (M) Brazil/820: Telegram
The Ambassador in Brazil (Caffery) to the Secretary of State
[Received 9:27 p.m.]
2480. For Finletter and Allen, Rubber Reserve. Presidential decree law of July 9 created Banco de Credito da Borracha with capital of 50,000 contos of which Brazilian Government will subscribe 55%, Rubber Reserve 40% and Brazilian public 5%. The three directors will consist of two Brazilians and one American. Brazilian Government has approved appointment E. E. Longas, American director, but has not yet named its directors, one of which will be president of bank.
Proportionate stock ownership was changed without our knowledge from the original agreement of 50–50 participation. Bouças explains that new setup is necessary under corporation law requirements of Brazil. Brazilian authorities have assured us that no loans, commitments or undertakings will be concluded without written approval of American director. This is the first time under existing banking legislation that Brazil has permitted foreign stockholders and director and as such represents important concession to United States and is so interpreted here.
If we had been consulted in advance we would have approved the change in proportionate stock ownerships. We regard the decrees and statutes of the bank as satisfactory and feel that the measures will greatly facilitate financing of entire rubber program.
Text by air mail.