811.51/4243: Telegram

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

1975. Department’s 1417, June 2, 6 p.m. Bank of Brazil has asked French and Spanish Embassies to indicate bank in United States to which their dollar deposits should be transferred.

[Page 797]

Director of Exchange reports that there is no legal provision permitting perforation or stamping of bank notes.

Following plan has been agreed to by bank:

Deposits of less than $1000. (In Rio 786 of 917 depositors were in this category. Their deposits represented only $128,538 of $1,097,661 total.) Conversion will be made into milreis except in cases concerning which Embassy has adverse information. Objectionable depositors will be given choice of (1) transfer to special account in New York or (2) deposit in controlled dollar account in Bank of Brazil, withdrawals to be permitted only in dollar currency and only with special permit.
Deposits of more than $1000. Each case will be carefully reviewed and placed in one of following categories:
Unobjectionable as to person or source. Conversion into milreis or transfer to account in United States, at depositor’s option.
Objectionable. Transfer to account in United States or deposit in special dollar account in Bank of Brazil under Decree Law 3911. Withdrawals only in dollars and only under special permit.
European refugees. Friendly but subject to Axis pressure because of home ties. Transfer to account in the United States or place in the controlled account in Bank of Brazil, withdrawals to be made in dollar currency for living expenses at monthly rate previously agreed to by Embassy. (Most of the deposits are in this category.)

Inasmuch as Bank of Brazil in [is?] acting as our agent in this matter, within legal limitations, Embassy assumes Treasury will license all imports currency made by bank and accompanied by Embassy certificate.

Rio deposits by Axis nationals totaled less than $2,000. Dollar currency is being quoted in black market at 10–12 milreis.

Director of Exchange is sympathetic to plan control other currencies but prefers to discuss details with our Treasury officials during his forthcoming visit to Washington. Director says that he must proceed cautiously with respect to Argentine and Uruguayan currencies.

Please request American shipping companies to arrange to pay off crew members arriving at Brazilian ports in milreis rather than dollars.