832.51/2092: Telegram

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

4299. The Chief of the Economic and Commercial Section of the Ministry of Foreign Affairs73 today confirmed that the Brazilian [Page 811] Government is negotiating with the French Embassy here for reinstatement of the payments agreement (see my despatch 7787 of June 29, 194274) and for the repatriation of franc bonds of the Brazilian funded debt. He stated that the repatriation would be based upon 20% of the nominal value of the bonds or approximately 550 million francs (275,000 contos), the funds to be credited to a special account of the French Embassy here for the exclusive purchase of any foreign products to be warehoused in Brazil until after the war.

I spoke to Aranha about this and expressed disappointment over the decision of the Brazilian Government to resume negotiations with the French Embassy, and pointed out the obvious objections to the proposal. Aranha said that he was not impressed with our arguments but asked me to give them to him in a confidential memorandum.

  1. Mario Moreira da Silva.
  2. Not printed.