832.61333/10–144: Telegram

The Chargé in Brazil ( Donnelly ) to the Secretary of State

3534. Department’s 2986, September 29, 7 p.m.20 Immediately following last night’s telephone conversation with the Department I conferred with Souza Costa who was greatly surprised to learn of the developments in the U S because he had just received reports from Penteado that the coffee stock position there was sufficient for 5 months consumption. He showed me several telegrams received on Saturday from the U S alleging that price ceilings would be increased shortly.

Despite this information and severe local pressure which has very important political aspects (especially in the state of São Paulo) Souza Costa gave me emphatic assurances that his understanding with the Department would be carried out to the letter. We then drafted the text of the official communiqué. President Vargas was informed and gave his unqualified approval, Guedes of the DNC was also present. He informed that (1) entries at Santos would be increased from 30,000 to 45,000 bags daily effective October 2 (Souza Costa released the press statement only after he had obtained assurances of rail priorities for the quantities mentioned from interior points to Santos); (2) the coffee will consist of strictly soft types to be drawn from the DNC and bankers stocks; (3) the coffee will be made available to exporters against proof of sales in the United States and within the price ceilings there.…

  1. Not printed.