832.24 FLC/3–1147

Memorandum by the Chief of the Division of Brazilian Affairs (Dawson)43

At a meeting this afternoon in the office of Mr. Chester T. Lane, Lend-Lease Administrator in OFLC, attended by various of his subordinates, Messrs. Matlock and Miller of LP and Mr. Dawson of BA, the question of the Brazilian desire for an over-all settlement of Brazil’s Lend-Lease account was gone into in detail. While, as is usual in such meetings, some of the results were not clearly defined, the consensus as to what our position should be was as follows, in broad summary:

Material furnished to the Brazilian Expeditionary Forces in the Mediterranean theater of operations (estimated at $54,000,000) not to be charged for, provided the Brazilians were prepared to state in writing that all such material either had been consumed or, if returned to Brazil, was in military use and had not been diverted to other purposes; this would be in line with the procedure followed with other combat allies on similar equipment.
No charge to be made for the use of naval vessels turned over to Brazil under charter agreement (this also in accordance with the practice in similar cases of other combat allies). The eight destroyer escorts representing some $55,000,000 of the $71,000,000 value of naval vessels Lend-Leased to Brazil cannot be disposed of by our Navy under existing legal authority which provides that destroyers (including DE’s) may not be declared surplus. Title to the remaining vessels might be turned over to Brazil, if it desired, either by being declared surplus, with Brazil bidding for them, or possibly by billing for them under Lend-Lease.
With the equipment turned over to the Brazilian Expeditionary Forces and the chartered naval vessels eliminated from total Lend-Lease figures, the best estimate now available is that Brazil will have been advanced approximately $204,000,000 under Lend-Lease but no [Page 409] precise figures are on hand. OFLC will make an effort to get more accurate data from Treasury.
If, as expected, the best estimate of pared-down Lend-Lease on which repayment will be expected comes to within 10% + or – of the $200,000,000 ceiling provided for in the 1942 Lend-Lease Agreement, the Brazilians might be asked to agree on $200,000,000 as the definite final figure so as to avoid further bookkeeping, et cetera. On this the repayment would be at 35% in accordance with the terms of the 1942 Agreement. Since the Brazilians have paid $35,000,000 to date, they would have an identical amount still to pay.
An effort should be made to get the Brazilians to assume obligation for claims against U.S. military personnel in Brazil (available figures show them to be only some $45,000 but these are purely tentative) in reaching an over-all settlement. The Brazilians have indicated a desire to assume such claims in return for our assuming obligation to pay off Italian claims against Brazilian military personnel in Italy; we cannot legally do the latter.
If the Brazilians ask for an extension of time in paying their remaining instalments for Lend-Lease (as they have indicated they would) no objection should be raised to having the three payments of $11,666,666 made in 1947, 1949 and 1951 provided agreement can be reached on other issues.
There would be no amendment to the 1942 Lend-Lease Agreement but merely an exchange of notes interpreting the loose language of that agreement.

Mr. Lane proposes to have a meeting with the Brazilians to discuss the question of an over-all Lend-Lease settlement later this week, after the latest information from the Treasury can be obtained, to see whether an agreement in principle on a settlement along the foregoing lines cannot be reached.

Allan Dawson
  1. Addressed to Mr. Briggs of ARA and to Messrs. Smith, Wright, and Braden of A–Br.