832.61333/958: Telegram

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

1175. At the recommendation of Guedes of the DNC the Minister of Finance today suggested that termination of the coffee agreement could be expedited if we would agree to purchase 600,000 bags of coffee consisting of the unshipped balance of Victoria’s for the quota year 1942–1943, or roughly 356,000 bags, approximately 158,000 bags of Paranaguá and 106,000 bags of other low grade types. The Embassy representative countered with appropriate arguments against the proposal and repeated that our Government desires unconditionally to cancel the agreement.

The Embassy representative suggested that the Brazilian Government not overlook the importance of other phases of the coffee trade with the United States such as the competition of mild producing countries, quotas, shipping, etc. (Embassy’s 1135, March 25, 3 p.m.)

The Minister of Finance said he would present the coffee and ship agreements to President Vargas tomorrow and that he would review with him the points raised by the DNC and the Embassy. (Department’s 981, March 25, 8 p.m.88)

The Embassy suggests that the Department again emphasize to Penteado the importance of canceling the coffee agreement at once. His recommendations carry considerable weight with the Minister.

Guedes has informed the Embassy that the DNC has established extra quotas for Santos firms for the sale of 400,000 bags of coffee to our army. (Department’s 892, March 27 [17], 7 p.m.)

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