Foreign Relations of the United States, Diplomatic Papers, 1943, The American Republics, Volume V

811.20 Defense (M) Brazil/5202

Memorandum by the Vice President of the Rubber Development Corporation in Charge of Brazilian Operations (McAshan) to the Ambassador in Brazil (Caffery)⁶⁰

[Rio de Janeiro,] September 9, 1943.

In June 1943, after receipt of Mr. Donnelly’s despatch on Rubber Development Corporation’s activities in the Amazon Valley,⁶¹ Mr. Jeffers, Rubber Director, and the Board of Directors of Rubber Development Corporation instructed us to tighten up our activities in the Amazon Valley, and establish the following fundamental policy:

1. The United Nations now need more natural rubber than ever before, to use directly in the manufacture of combat articles and to mix with synthetic.

2. Rubber Development Corporation is to concentrate on the fundamentals which will directly assist in getting out more natural rubber, and is to eliminate the non-essentials, which had formerly taken up a large portion of their time and effort. The fundamentals were recognized as being transportation services on the river and by air, adequate supplies of food and tapping equipment, and increased labor.

3. Rubber Development Corporation, carrying out the policy officially requested by the Brazilian Government in February and March 1942, is to work with and assist the Brazilian Governmental and private agencies in establishing a permanent improvement in the Amazon Valley, to prevent, in so far as possible, a let-down after the war.

4. Rubber Development Corporation is to improve its own operating organization, and to eliminate those Americans whose functions are unessential, who have finished their duties or who were inefficient or misplaced.

In the beginning, Rubber Development Corporation did not know fully in advance what facilities were available and how efficiently and quickly the various Brazilian governmental agencies could handle the rubber program in the Amazon Valley. However, we have now found that the Brazilian agencies are performing so efficiently and that many Brazilian employees of the Rubber Development Corporation are as capable, or more so, than North Americans who were sent to the Amazon Valley from the United States. This has permitted Rubber Development Corporation to return quite a few Americans to the United States for other war work, which Americans have been replaced with competent Brazilians in Rubber Development Corporation’s Amazon organization. This has resulted in increased efficiency of our operations and in a better public relationship through the Valley.

Likewise, carrying out the policy as determined by the Brazilian Government, Rubber Development Corporation is now devoting a large part of its efforts toward the financing and furnishing of facilities to the several Brazilian governmental agencies established in the Amazon Valley; particularly SNAPP,⁶² which handles rubber transportation, SAVA, which handles the transportation and placement of additional labor, the Banco de Credito da Borracha, which carries out rubber production financing; and SESP,⁶³ which is responsible for improvement in health and sanitation measures. Rubber Development Corporation is also maintaining ample stocks of staple foods and tappers’ supplies, which Rubber Development Corporation sells at fixed cheap prices, under a formula established with SAVA. All Rubber Development Corporation activities are carried out in collaboration with the CCWA, and with their advance approval.

Rubber Development Corporation has concentrated recently on working with and through the established merchant firms, and now gives those firms first preference on all freight space obtainable by Rubber Development Corporation, both from the South of Brazil and on the Amazon River and its tributaries. Rubber Development Corporation now maintains a fixed price differential in favor of the established merchants, thus assuring them a reasonable resale profit on all foodstuffs and tappers supplies. By agreement with Rubber Development Corporation, the Banco de Credito da Borracha is now protecting the established merchant firms on their outstanding rubber production financing, and has returned to those merchants and washing plants the deposits formerly required by the BCB.⁶⁴ For these reasons, a very noticeable improvement in our relationships with the Amazon Valley merchants has come about during the last three months.

Rubber Development Corporation, under formal agreements between the Brazilian and United States Governments, is obligated to purchase the entire Brazilian production of rubber in excess of domestic needs, at guaranteed prices, through December 31, 1946. Brazil thus has a guaranteed market, without limit as to quantity for its increased rubber production, through 1946.

There has been no let-up in our efforts, but on the contrary, we are finding that working through and with Brazilian agencies, and with a larger proportion of Brazilian employees, and by concentrating on the fundamental requirements, the Rubber Development Corporation’s organization in the Amazon Valley is now performing much more efficiently, and is now actually contributing a great deal more toward increased rubber production and toward a sound and permanent improvement in the Amazon Valley.

60. Copy transmitted to the Department by the Ambassador in his despatch No. 12666, September 11; received September 18.
61. For the substance of this report, see telegram No. 2617, May 29, from the Ambassador in Brazil, p. 668.
62. Servicos de Navegaçao da Amazonia e de Administraçao do Pôrto do Pará.
63. Servico Especial de Saude Publica.
64. Banco de Credito da Borracha.