The Ambassador in Brazil (Berle) to the Secretary of State
[Received 5:55 p.m.]
3026. ReDept’s tels 2321, September 26, 12 noon and 2349, September 29, 5 p.m.58 This afternoon Daniels59 asked Souza Costa whether Brazil could make commitment to offer for sale Government-controlled coffee stocks at ceiling prices to stabilize market if US ceilings were eliminated. It was made clear to Souza Costa that release of any coffee behind coffee realization bonds should be handled in such a way as fully to protect bondholders’ rights.
Souza Costa said that it would be desirable to liquidate coffee realization loan and saw no basic difficulty to accomplishing this. He pointed out however that sale of coffee stocks would be unpopular in trade circles and would present political complications. He said he would study the matter carefully and would give a more specific answer by next Saturday or Monday. Further and more detailed explanation of how release of loan coffee would be handled will be sought from Souza Costa at that time unless his assurances are adequate.[Page 693]
Daniels impressed upon him urgency of matter pointing out that reaching agreement on aforesaid basis would be easier now than it might be later in view of speculative influences in coffee market. Souza Costa agreed; and specifically requested that this proposal be discussed with no person other than himself to which Daniels agreed.
Santos market still higher as apparent result of further reports from Washington and New York on ceiling price agitation and accordingly utmost discretion in Washington desirable pending conclusion of agreement with Brazil.
Embassy believes no further public statements or action in Washington necessary or desirable pending further word from Souza Costa which is expected by next Saturday or Monday and which will be cabled promptly to Department.