832.61333/952a: Telegram
The Secretary of State to the Ambassador in Brazil (Caffery)
892. Department greatly appreciates efforts made by the Embassy and authorities of the Brazilian Government during the past 3 or 4 months with a view to increasing the shipment of Brazilian coffee to the United States. It is felt that such efforts have been beneficial.
It is still very difficult, nevertheless, to purchase Brazilian coffee at prices which are in line with our ceilings. For example, the Army wishes to buy substantial quantities of coffee, but in spite of strenuous efforts during a 10–day period ending March 11 was unable to consummate a purchase of 250,000 bags of the desired quality in Brazil. [Page 621] It was willing to pay prices equivalent to our ceilings for types of quota coffee needed by the Army. The negotiations in question were carried on on behalf of the Army by J. Aron and Company which was working with the DNC. The Army finally purchased Colombian coffee. Trade reports indicate that registrations under the Colombian quota have now been completed.
This development is a further proof of the desirability of terminating the coffee purchase agreement. It is anomalous for the FEA to be compelled to maintain an organization in Brazil to purchase coffee when importers and the Army are experiencing such difficulty in consummating purchases. The fact that virtually no coffee is being purchased under the agreement is an added reason for terminating it. Furthermore, since the agreement at present guarantees speculators that prices will not decline to any appreciable degree, its termination might facilitate freer movement of coffee in normal channels of trade.
Continued difficulties in purchasing Brazilian coffee are making it increasingly difficult to resist pressure for an increase in the quotas to permit larger imports from other countries. Such an increase has already been suggested by some of the delegates to the Inter-American Coffee Board and is favored by importers in this country.
Please discuss the foregoing with the appropriate authorities of the Brazilian Government with a view to ascertaining especially whether or not the Brazilian Government is prepared to accept our proposal regarding termination of the purchase agreement.