The Ambassador in Brazil (Pawley) to the Chief of the Division of Brazilian Affairs (Braddock)
Dear Mr. Braddock: Thank you for your very kind letter of June 10, 1946,29 in which you in the Division of Brazilian Affairs express confidence in the contribution which you feel that I may make to United States relations with Brazil.
I arrived on Monday30 as per schedule. I had the pleasure the next day of calling on the Foreign Minister31 informally and the same afternoon Ambassador Boal32 and I had tea with the Foreign Minister at his office. I presented credentials on June 13 at 3:00 p.m. and returned to call on the President with Mr. Hoover at 4:00. We spent at least two hours discussing the world famine problem, and I feel that this conference was most satisfactory and helpful.[Page 139]
Mr. Hoover, the members of his party, and I had a meeting yesterday with the Foreign Minister and the principal members of his staff interested in Brazilian food supply and the members of his economic section. We find that Brazil has less than two weeks’ wheat supply on hand and the difficulties existing with reference to Brazil furnishing the Argentine with rubber and the $3.50 per bushel which Argentina is endeavoring to charge Brazil for wheat have caused considerable worry in Government circles.
Mr. Hoover and I have gone deeply into this subject and as a result last night we talked to Secretary of Agriculture Anderson33 and to Mr. Bill Batt.34 Secretary Anderson was most encouraging with reference to assisting Brazil after September with a supply of wheat, and Mr. Batt agreed to look into the rubber problem immediately in the hopes of breaking the present deadlock which appears to be as follows:
The tripartite agreement between the United States, Brazil and Argentina calling for the sale to Argentina of some 1,700 tons of rubber and for Argentina to supply a substantial quantity of wheat has not been signed by Argentina because it appears that we, the United States, cannot guarantee the supply of rubber but can only agree to recommend that the rubber be allocated, whereas Argentina would be making a definite commitment to Brazil for wheat. We learned that of the approximately 1,700 tons of rubber, 577 tons have been definitely allocated by the Combined Rubber Committee but the balance has not been allocated. This price problem is one in which both Argentina and Brazil alike are somewhat to blame. The United States Government because of the war entered into a contract to purchase rubber at 60 cents a pound and that contract carries on into 1947. Naturally Brazil is extremely anxious to maintain this contract at this favorable price, in spite of the fact that they know that we resell this rubber for approximately 23 cents. Brazil, therefore, wants Argentina to take the rubber at 60 cents, and as Argentina is unwilling to do this, would like for us to take the rubber at 60 cents and supply the rubber through the Combined Rubber Committee in Washington at a price of approximately 23 cents. The Argentine Government, on the other hand, feels that it is being held up by Brazil on the rubber price. In fact, President Perón told Mr. Hoover that this was the case and that therefore they were demanding the higher price for wheat. It appears that the Argentine Government is purchasing the Argentine wheat from the growers at approximately 20 pesos a ton and are selling it to Brazil and elsewhere at 35 pesos a ton, and this embitters the Brazilians. Mr. Hoover has suggested to Mr. Batt that 2,000 or possibly 4,000 tons of rubber in Brazil be released from the United States contract for Brazil [Page 140] to trade or sell to Argentina on any basis that Brazil can secure. I am afraid this would not accomplish the results desired.
I know that you in the Brazilian Division are thoroughly familiar with my attitude with respect to the United States “holding the bag”. I have no desire that the United States continue to be Santa Claus. But wherever we have a bona fide contract, even though it be unfavorable to us, we must carry it out to the letter. At the same time we must be positive that we make no similar contracts in the future. It is my sincere desire and intention to be of maximum service and assistance to the Brazilian Government and to the Brazilian people, but I am sure that they will like and respect us more if that assistance be on a basis of mutual help and mutual consideration.
I am writing at some length on this subject because I am anxious for you to help us to as great an extent as possible. Brazil’s critical period is between now and September. The world food supply will greatly increase then and we wish to help Brazil get by this period without danger to its people or to its Government. Please write me any views you may have on this subject at once.
With kind regards to all of the members of the Brazilian Division, I am