811.516 Export-Import Bank/3–848

Memorandum by the Director, Office of American Republic Affairs ( Daniels ) to the Assistant Secretary of State for Economic Affairs ( Thorp )

confidential

I understand that the Export-Import Bank’s Board for several months has held up action on all loans involving Brazil pending satisfactory conclusion of the new Vale do Rio Doce financing. I am informed that this policy has been followed not only in the case of loans in which the Brazilian Government or one of its components is interested, either directly or as a guarantor, but in that of loans in which [Page 378] the obligor would be a private entity, such as that covered by the application of Laminação Nacional de Metais of Sao Paulo, Brazil.

Unless there are overriding considerations to the contrary, of which ARA is not aware, it feels that the extension of the ban on Brazilian credits to private loans unduly penalizes United States exporters and private United States and Brazilian enterprises functioning in Brazil which have not been concerned with the difficulties over the Vale do Rio Doce financing and which might otherwise qualify for assistance from the Export-Import Bank. ARA is of the opinion that such private loan applications might properly be dealt with purely on their own merits. This would appear to be particularly true in the case of the Laminação Nacional de Metais application which is understood to have been placed before the Board with a favorable recommendation from its staff.

The Brazilian Congress has recently authorized an increase in the capital of the Cia. Vale do Rio Doce to be contributed by the Brazilian Government and a guarantee by the latter of the new Export-Import Bank loan to the company and thus opened the way for settlement of the Vale do Rio Doce matter.1 This would seem to give an opportunity for reconsideration of the Board’s loan policy regarding Brazil and to increase the advisability of reaching a prompt decision on pending private loan applications involving Brazil.

It would be appreciated if, provided you are in accord with the thoughts expressed in this memorandum, you could raise the question at a Board meeting in an endeavor to have the Board agree to consider such applications.

Paul C. Daniels
  1. Telegram 903, August 13, 1948, from the Embassy, not printed, indicates the signing of an agreement by which the Export-Import Bank was to advance seven and one-half million dollars (832.51/8–1348).