Memorandum by the Director of the Office of Financial and Development Policy ( Ness ) to the Assistant Secretary of State for Economic Affairs ( Clayton )

Subject: Brazilian Loan Application—$50 Millions

The National Advisory Council15 will consider this matter on Tuesday (August 13).16 Consideration in the Staff Committee showed sharp differences of opinion, with Federal Reserve and Treasury being opposed to a Brazilian credit. State has continued to support the credit, largely on political grounds. Eximbank strongly favors the credit, and Commerce has also supported it.

Opposition arguments, in order of strength, are:

That Eximbank’s limited lending capacity should be reserved for urgent reconstruction loans during 1940–47 since it may not obtain additional lending authority. (Bank claims to have sufficient funds to meet urgent loan requirements but may have difficulty substantiating this.)
Brazil’s needs are not urgent and it can await International Bank or draw on its large gold and dollar reserves.
Brazil’s application is especially appropriate for International Bank and Brazilian issue in initial portfolio of Bank would serve to test and stimulate private interest in foreign lending.
Delay of Brazil’s purchases would minimize inflationary pressures in the United States.

  1. National Advisory Council on International Monetary and Financial Problems.
  2. According to a memorandum of August 14, 1946, the proposed loan was approved by a vote of three to one, with the Federal Reserve opposing and the Treasury abstaining (832.51/8–1446).