832.61333/992: Telegram

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

1739. Following is the letter from Chester Bowles, Administrator, Office of Price Administration, to the Secretary regarding the Brazilian request for a readjustment of coffee price ceilings:

“I acknowledge receipt of your letter of June 2, enclosing a copy of Dispatch No. 16028 received from the American Embassy in Rio, and a memorandum from the Brazilian Ministry of Foreign Affairs suggesting a readjustment of the United States ceiling price for green Brazilian coffee.

I have carefully examined the suggested plan and find that, contrary to the opinion expressed by the Ministry, this adjustment of green coffee ceiling prices would require a corresponding increase in the retail ceiling price for roasted coffee.

As you no doubt are aware, some of the most popular brands of roasted coffee consist almost exclusively of Brazilian coffee grading [Page 630] 4’s. To permit green coffee grading 4’s to sell at the ceiling price now set for 2’s, would dislocate the narrow margin under which the coffee roaster is now operating. We would then be required to either raise the retail ceiling price of roasted coffee, or witness the disappearance from the market of these popular priced brands. In either event, the general level of prices of roasted coffee would be raised and result in a breach of the President’s ‘Hold the Line’ order of April 8, 1943.3

On this point I urge you to repeat and emphasize to the Brazilian Ministry our previously published announcement as to the effect that green and roasted coffee ceiling prices cannot be increased under the present circumstances. Our policy is not intended to reflect any position with respect to the equity of the producers’ prices. Bather, it reflects the fact that any action which would upset the present delicate balance in our economic stabilization program would result in such far reaching economic difficulties as to be unthinkable in the face of the present war-time emergency.

Under the circumstances, I regret exceedingly that I cannot agree to re-adjust the United States ceiling prices for green Brazilian coffee, as suggested by the Brazilian Ministry of Foreign Affairs.”

Please inform Brazilian authorities.

  1. Executive Order No. 9328, 8 Federal Register 4681.