561.333D3/1615: Telegram
The Ambassador in Brazil (Caffery) to the Secretary of State
[Received 6:07 p.m.]
5824. Souza Costa instructed Penteado (Department’s 4615, December 17, midnight) by telephone yesterday to desist from agitating for increases in OPA prices and to concentrate his efforts on facilitating the importation of Brazilian coffee into the United States. He told Penteado that: (1) he does not share his views on increased prices; (2) as a result of his activities, firms here are holding coffee for better prices when Brazil should be taking advantage of favorable shipping conditions to increase exports to the United States; (3) his campaign favors mild producing countries because they are taking advantage of the situation in Brazil to export more coffee to the United States; and although he (Souza Costa) realizes that it is impossible for the United States to increase prices at this time, it would be politically inexpedient for him to make such a statement in Brazil. He told me in confidence that he had been passing on this information to his friends.
Souza Costa assured me that arrivals of new crop coffee at the port of Santos have reached 40,000 bags daily and that the stock of this coffee at Santos now approximates 500,000 bags. He repeated that it is the policy of his Government to stimulate shipments to the United States so as to increase the blending of Brazilian coffee there.
[Page 709]I believe Souza Costa will accept a reasonable adjustment of our coffee purchase agreement with Brazil, but I am not yet in a position to pursue this matter owing to the delay in obtaining from Washington authority to negotiate the transfer of the chartered ships to the Brazilian Government.