832.852/76: Telegram

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

4867. Department’s 3803, October 9, 5 p.m. Aranha is opposed in principle to the return to Brazil of the nine chartered ships on the grounds that the Brazilian Maritime Commission is not properly organized to operate Brazil’s merchant fleet. He added, “I understand your interest in wanting to return the ships to us”, the inference being that the operation of the ships is uneconomical and the crews not very efficient. He said that he would study the matter and communicate with me later.

Maintenance of the replacement feature with respect to the 21 ships in United States trade is of political as well as economic significance and the Brazilians would strongly oppose deletion of the provision without some inducement. A possible solution of the problem would be for us to turn over to Brazil now, instead of after the war, 5 ships to replace the 3 chartered ships and 2 of the 23 ships lost since the signing of the agreement. In doing so we would request the Brazilians (1) to maintain 21 ships to be replaced in United States trade; (2) to place 9 ships in coastwise trade; (3) to give United States and Brazilian Government cargoes like treatment in Brazilian coastwise trade; (4) not to increase the number of Brazilian ships now operating outside of the Americas (South Africa).