Memorandum by the Assistant Secretary of State for Inter-American Affairs (Miller) to the Secretary of State


Subject: Brazil

Some time ago you talked to the President about the problem of economic development in Brazil, and you and I later talked to Secretary Snyder1 and Bill Martin2 about the proposal of the International Bank to announce a $250,000,000 investment program in Brazil, provided that there be a limitation of the Export-Import Bank’s lending activities in Brazil. Nothing has come of this proposal because of (1) the failure within the government to resolve the jurisdictional problem between the two Banks,3 and (2) the feeling in Treasury that we should make no long-term commitments about development because of actual or pending shortages of materials in this country.

Mr. Thorp4 and Mr. Harriman5 have commenced a series of meetings with Mr. Martin, of the Treasury, and Mr. Black,6 of the International [Page 1190] Bank, in an effort to resolve some of these problems. A solution of the problems under discussion by this group could be expedited if the President would take a direct interest in the matter. Furthermore, the entire problem has taken on new importance and urgency because of the desire of President Vargas to work out broad programs of economic and political cooperation between Brazil and the United States, as expressed in a recent series of telegrams between Embassy Río and the Department. These telegrams are referred to in the attached draft of memorandum from you to the President.

It is imperative for the future of our relations with Brazil that we give a positive response to the proposals of President Vargas, even though the realization of the entire program is obviously not a short-term possibility, especially in view of materials shortages. Accordingly, we should express a willingness to begin to lay plans for the ultimate realization of the program and to proceed immediately with the highest priority items.

President Vargas and the Brazilian Foreign Minister have expressed a desire for negotiations to begin in February about the whole problem of cooperation between Brazil and the United States. In accordance with this, I intend to proceed to Rio about February 17. It is highly desirable that I be in a position to talk concretely by the time I get there.

Recommendation: That you sign the attached memorandum to the President.7

  1. John W. Snyder, Secretary of the Treasury.
  2. William McChesney Martin, Jr., Assistant Secretary of the Treasury.
  3. For documentation on this subject, see vol. i, pp. 1573 ff.; documentation on the problem as it related to Brazil in 1950 is printed in Foreign Relations, 1950, vol. ii, pp. 757 ff.
  4. Willard L. Thorp, Assistant Secretary of State for Economic Affairs.
  5. W. Averell Harriman, Special Assistant to the President.
  6. Eugene R. Black, President of the International Bank for Reconstruction and Development.
  7. The draft memorandum contained a recommendation requesting the president to “issue instructions to the members of the National Advisory Council and the Office of Defense Mobilization to jointly prepare a United States Government position in regard to the maximum possible implementation of the Vargas program within the limitations imposed by the emergency and, in cases where financial cooperation is required, to determine which of the two lending institutions should deal with given projects.” In a memorandum to the Secretary, dated January 26, 1951, Mr. Thorp expressed his disagreement with this recommendation, stating in part the following reasons: That assistance requirements for Brazil must be considered within a global context; that we “have no assurance that Brazil is the most urgent case at the moment”; that the United States had barely initiated an effort to solve the raw materials allocation problem; and that the jurisdictional problem between the IBRD and the Export-Import Bank was of “greater importance to the Department” and should be resolved before any action on the Brazilian question (832.00/1–2651). Department of State files contain no evidence indicating that Mr. Miller’s draft memorandum was sent forward to President Truman. The jurisdictional dispute between the two banks was not resolved prior to Mr. Miller’s departure for Rio de Janeiro on February 17.