Memorandum of Telephone Conversation, by Mr. Charles B. Rayner of the Petroleum Division and the Chief of the Division of Brazilian Affairs (Chalmers)

Participants: Adolf A. Berle, Jr., American Ambassador, Bio de Janeiro
AP—Mr. Rayner
PED—Mr. Loftus68
BA—Mr. Chalmers

In the conversation over the telephone, Mr. Chalmers told Ambassador Berle that Mr. Braden had requested that he be given telephonic instructions to make representations to the Brazilian Government designed to postpone definitive action in connection with the granting of concessions for the refining business to two Brazilian groups in order that the situation might remain fluid until such time as the new government to be elected on December 2 could have an opportunity to review the basic commercial policy involved. Ambassador Berle made it clear that he was opposed to the Department’s views in this matter, and while he would, of course, obey instructions given him, he made it clear that he, as an individual, wished to have no part of it. At different times during the conversation, Messrs. Rayner and Loftus also talked to Ambassador Berle.

It was not entirely clear at this end on exactly what grounds Ambassador Berle objected to representations to the Brazilian Government. He stated that the Brazilians had a right to go into the refining business in their own country and that any effort on our part to oppose such a development would be construed by the Brazilians as an unwarranted interference with an internal matter, pointing out that the refineries in question, when completed, would only absorb a relatively small portion of the Brazilian market and that plenty would be left, with the development of Brazil’s activities, for continued American participation in the market. Ambassador Berle stated that he believed that the Department’s instructions, if carried out, might [Page 533]lead this Government into an embarrassing position, and cautioned the Department against making any representations to the Brazilian Government that we would not be equally prepared to make to other Governments.

An effort was made to convince Ambassador Berle that the issue in this case, in the Department’s view, was not on the relative size of the market but the theory of operations restricted only to the nationals of a given country. Mr. Loftus told him that one of our main objections to the proposal in question was the fear that a cartel arrangement would result from the supply of crude oil to these refineries, and that such an eventuality was directly opposed to our commercial policy. Ambassador Berle stated that if the Department wished the representations in question to be made to the Brazilian Government, it should telegraph the text of the precise language to be used, which he would transmit to the Brazilian Government without personal responsibility of his own. He pointed out that, in his view, it would be desirable to make the instructions sufficiently flexible so that he could, if it appeared preferable, make the representations in question to the President of the National Petroleum Council. Ambassador Berle stated that he did not expect that the concessions in question would actually become effective before November 30 and that there would therefore be time for the Department to telegraph its wishes in this connection.

Following the foregoing conversation with Ambassador Berle, it was decided that Mr. Loftus would draft a telegram to Ambassador Berle containing the text of a note which the Department would like to have forwarded to the Foreign Office, but that Ambassador Berle should be given discretion to take the matter up instead with the President of the National Petroleum Council if, in his judgment, this would be the preferable or more effective method of approach. It was further agreed, in general principle, that no request would be made to the Brazilian Government that the Department would not be equally willing to make to other Governments under like circumstances. It is hoped that the instructions in question can be drafted and cleared by Monday evening or Tuesday, at the latest, of the coming week.

  1. John A. Loftus, Divisional Assistant, Petroleum Division.