Memorandum by the Director of the Office of Economic Affairs (Hawkins) to the Secretary of State

The Secretary: I hope with the explanation that follows that you will express to the Brazilian Finance Minister, Dr. Arthur Souza Costa, our great appreciation for his cooperation in the present coffee problem and the apparent inevitable need for increasing quotas this year, in favor of Colombia.

We are discussing with the Brazilian Finance Minister, at the insistence of the War Food Administration and the Quartermaster General’s Office, the serious coffee inventory situation which may lead to renewed coffee rationing. The blame for rationing would be placed squarely on Brazil.

The facts in brief are as follows:

Brazilian private speculators have withheld shipments since last December in the expectation of ceiling increases (despite a recent categorical denial by OPA of such intention). As a result, ships scheduled to load Brazilian coffee have arrived with part or no cargoes. WSA18a thereupon transferred tonnage away from Brazil to more pressing war purposes.

[Page 150]

In the meantime, however, the Finance Minister took vigorous steps to force coffee into this market. In taking these measures, however, the Finance Minister incurred the enmity of power interests in São Paulo.

The intention of War Food Administration and Quartermaster General to have the Inter-American Coffee Board increase coffee quotas in order to permit one million bags of Colombian coffee to enter before the end of the quota year, October 1, would thus avoid rationing. The Brazilian objection to increased quotas is based on the effect on American roasters’ blending practices and the American taste, since increased quotas will benefit Colombia only. It would, however, seriously embarrass the Finance Minister, especially by its timing at the moment of his arrival in the United States and in the face of his vigorous, though belated cooperative measures in Brazil.

Harry C. Hawkins
  1. War Shipping Administration.