The Secretary of State to the Chargé in Brazil (Darnels)
459. Embtel 628, Apr. 3.17 Braz Emb yesterday afternoon presented a further proposal regarding rubber and wheat as follows: Brazil to utilize 578 tons Brazilian crude rubber to fill Argentina’s first quarter CRC allocation and 1250 tons for Argentina’s second quarter allocation, deducting these quantities from deliveries Brazil required to make to RDC under Washington Agreement; Tripartite Agreement to continue in effect.
Emb is being informed in reply that US Govt would consent to sale of this rubber to Argentina under two conditions: (1) That prices not exceed those at which US will supply rubber allocations of all countries in South America, namely 60 cents per pound for first quarter allocations and approximately 22½ cents per pound second quarter [Page 126] allocations; (2) that Brazil agree to prompt termination of Tripartite Agreement.
US Govt could not be party to arrangement whereby Argentina would be misled as to price at which she as well as other American republics will be able to buy rubber during second quarter. Termination of Tripartite Agreement is viewed here as essential if allocations made by CRC to Argentina now and in future are to be effective.
US Govt would obviously be willing to release Brazil from basic Rubber Agreement of 1942 if such action desired by Brazil (Embtel 612 Apr 2) and you may in your discretion use this offer to combat current press attacks on US which hold this agreement as responsible for Brazil’s inability to obtain wheat from Argentina. Repeated to Buenos Aires for confidential information of Emb.