832.51/3–3048
Memorandum by Mr. Richard F. O’Toole of the Division of Brazilian Affairs
On Friday, March 26, I was asked to attend a 4:00 p. m. meeting in Mr. Ness’1 (OFD) office to discuss Brazilian financial problems. In addition to Mr. Ness, the following were present: Messrs Stenger, Atterbury, Bauer (ED), Corliss (FN), Shenefield (EP),2 and Leslie Wheeler (formerly of Agriculture, recently assigned to Mexico City as a career officer).
The purpose of the meeting appeared to be a discussion of pending Brazilian financial problems, but I was not asked to make any decisions for BR. The topics discussed are as follows:
1. Lend-lease Settlement.
Mr. Shenefield reviewed this case, mentioning that our proposals were awaiting approval of the Foreign Office through the Brazilian Embassy.
[Page 381]2. Surplus Property Settlement.
Mr. Ness commented on this matter, describing the technical difficulties regarding acceptance of cruzeiros for the July 1, 1947 payment. As he seemed to stress the fact that this payment was in default, I interjected a statement that, while this was technically true, the Brazilians had requested authorization to make payment in cruzeiros at the time the payment had fallen due and that this request had been transmitted to the Department which had failed to decide the matter during the intervening nine months. Mr. Ness thereupon agreed that this was the case.
3. Stabilization Loom.
Mr. Ness discussed this item and clearly indicated that the Treasury’s action in requesting the Brazilians to “bail out” this loan was due to the failure of the latter to join the International Monetary Fund. He added that, as a result, the Treasury was placed in a position of making a loan for currency stabilization purposes when, at the same time, this government is committed to support the Monetary Fund. He also commented that Brazil is really not entitled to receive World Bank loans unless it assumes membership in the Monetary Fund.
4. Brazilian Traction $90,000,000 Loan.
Mr. Ness commented that it is feared that in the event that Congress appropriates an additional $500,000,000 for Export Import Bank loans for Latin America, the Brazilians might decide to transfer this loan application from the World Bank to the Export Import Bank for the purpose of obtaining a lower interest rate. I said that I did not believe this at all likely and that I felt certain that Mr. Borden, whose company is the applicant, would not countenance any such step.
5. Brazilian Balance of Payments.
Mr. Corliss (FN) commented at some length on this matter and said that figures and other information indicated that, as of January 1948, Brazil had a deficit of about $60,000,000.
6. Export Import Bank Loans to Brazil and Present Policy of Withholding Action on Pending Applications.
Mr. Stenger (ED) went over the outstanding Brazilian loans and stated that there has as yet been no change in the policy mentioned but that it has been made clear to officials of Export Import Bank that the responsibility is theirs and that Mr. Martin3 (President of the Bank) who is now in Bogotá is undoubtedly going to be on the spot. [Page 382] These officials said that they and Mr. Martin recognized this fact and that Mr. Martin was prepared to take the responsibility.
7. The Technical Mission.4
Mr. Ness told me that he had been in touch that morning with Secretary Snyder and that three names were now being considered for the prospective Chairmanship of the Mission.
At the close of the meeting Mr. Ness asked those of his staff who were present whether they thought this type of meeting was of any value. AS the replies were all in the affirmative he said that they would hold similar meetings every Friday, to discuss financial matters related to the various ARA countries.
- Norman T. Ness, Director, Office of Financial and Development Policy.↩
- J. J. Stenger, Phil R. Atterbury, and Walter Bauer, Division of Investment and Economic Development, and Hale T. Shenefield, Chief, Division of Lend Lease and Surplus War Property.↩
- William McChesney Martin, President and Chairman of the Board, Export-Import Bank.↩
- For documentation, see pp. 364 ff.↩