The Acting Secretary of State to the Ambassador in Brazil ( Pawley )
795. Urtel 1079, June 9.49 Coffee proposal outlined immediately preceding telegram50 developed after Department strongly recommended average price increase approximately 5 cents per pound. Department unwilling urge decontrol over strong opposition OPA and OES in absence supply commitment involving offer sizeable quantity mild coffees.
OES took position stabilization program likely to be very seriously injured if coffee prices to consumer increase 6 to 8 cents per pound. They fear outbreak new wave of strikes unless action taken promptly stabilize cost of living.[Page 518]
We have discussed proposal with Brazilian representative here who is asking instructions Rio. We believe other producing countries will accept if Brazil accepts. Anticipate possible Brazilian opposition because proposal calls for percentage increase and because sale Government stocks may be involved. They may also object our consultation other importing countries.
OES would approve subsidy as high as 35 percent. Paragraph 2 proposal assures producers continuation of this level returns. Increase over ceilings would be 4.68 cents per pound on Santos 4 coffee.
Embassy requested to take any action possible help obtain Brazilian concurrence. Embassy may point out cost of our exports to coffee countries f.o.b. US has increased less than 20 percent since December 1941 and that high coffee prices might mean future overproduction. Please telegraph progress urgently. Repeated to Bogotá.