832.6351 IT 1/180

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

No. 12215

Sir: I have the honor to report that Mr. R. K. West, Special Representative of the Export-Import Bank in connection with the Rio Doce project, and a member of my staff, have conferred with the Minister of Finance and officials of the Rio Doce Company regarding plans for speeding up the reconstruction of the Vitoria–Minas Railway17 and other work relating to the entire project. I attach copies of the letters of July 2018 from Mr. West to Mr. Pierson of the Export-Import Bank reporting on the meetings with the Minister.

The Minister of Finance is not satisfied with the progress of the work and has accepted Mr. West’s suggestion that the company employ an American contracting firm to supplement the work of Brazilian contractors on the reconstruction of the railway. I understand that the Export-Import Bank has made arrangements with a firm in the United States (please see the Department’s telegram No. 2393 of June 27 [26], 7 a.m. [11 p.m.]19) to send a representative to Brazil this month to study the project, to make recommendations as to how the work can be improved, and to submit an overall construction contract. The Minister feels that the work can be further facilitated by transferring the head office of the Rio Doce Company from Belo Horizonte to Rio de Janeiro.

Mr. West has prepared and submitted to the Minister of Finance, on the stationery of the Rio Doce Company, a memorandum reporting the probable interest of the Bethlehem Steel Company in reaching a separate understanding with the Brazilian Government for the purchase and transportation of Itabira iron ore on a very large scale, copies attached.18 The Minister of Finance has approved of the plan in principle, and it is believed that he will discuss it informally with the President. The proposal would not conflict in any way [Page 663] with the Rio Doce project, and even if approved by the Brazilian Government, it is unlikely that the plans would be carried out until after the war.

Respectfully yours,

For the Ambassador:
Walter J. Donnelly

Counselor of Embassy for Economic Affairs
  1. This railway was the feeder for the Rio Doce Valley.
  2. Not printed.
  3. Not printed; it indicated the Export-Import Bank’s report of slow progress on the Rio Doce project (811.516 Export-Import Bank/778).
  4. Not printed.