Miller files, lot 53 D 26, “Brazil”

The Assistant Secretary of State for Inter-American Affairs (Miller) to the Ambassador in Brazil (Johnson)


Dear Herschel: I have three matters on which I wish to comment in this letter as follows:

  • First, I have received a letter from Burke Knapp1 telling me that he wishes to be relieved of his assignment in Rio no later than the end of August. Merwin Bohan has told me that Knapp is adamant and I believe we have no alternative except to honor his desires in this matter. The problem immediately arises as to who should be his successor. My very strong conviction is that there is one and only one person for the job and that is Merwin Bohan. However, Merwin seems to be reluctant to do it although I believe he would if he were pressed to. Would you [Page 578] let me know what you think of this suggestion and also let me have any ideas that you may have about alternatives. I think Merwin is ideal, first, because it will be hard to get a top-notch man to take over from Knapp; second, because Merwin already knows the job; and, third, because, in so far as concerns competence and ability to get along with the Brazilians, I know of no one who could do this as well as Merwin. Please let me have your thoughts on this as soon as possible.2
  • Second, I have your letter of May 13 concerning the Secretary’s visit to Brazil. It seems to me that we were extremely wise to postpone this visit until after the remittance problem got settled. It now seems to me that it would be preferable to postpone it until the latter part of June by which time I am hopeful that not only will the remittance problem have been settled on the basis of the proposed free market bill,4 but also because by then I should think we might have gotten the two banks to have made some sizeable loans, all of which would provide a happier atmosphere. If you should agree with this timing, it would be possible to relate the visit to the trip which the Secretary has to take to England around June 24 to receive an honorary degree from Oxford University and to preside over a meeting of U.S. Ambassadors in the European area.5
  • [Here follows additional discussion of the Secretary’s prospective trip to Brazil.]
  • Third, with regard to the problem of remittances, the formula for creating a free market seems to be meeting with considerable approval up here and I hope that we can get word to you and Knapp very soon about it and that the banks will be able to move ahead very quickly on certain pending loan applications. It is too bad that this problem has created so many difficulties that really weren’t necessary but I take it that it is part of diplomacy to be continually staving off disaster rather than to be working towards positive and constructive goals. Merwin and I will do everything we can to get over a hundred million dollars [Page 579] of loans made in the next six weeks by the two banks which should create a much better feeling about the U.S. in Brazil.

I am looking forward very much to having Walther6 up here.

Sincerely yours,

Edward G. Miller, Jr.
  1. J. Burke Knapp had been serving as the Chairman, U.S. Section, JBUSEDC since Sept. 28,1951.
  2. Ambassador Bohan became Chairman, U.S. Section, JBUSEDC on Aug. 19, 1952.
  3. Not printed (Miller files, lot 53 D 26, “Brazil”).
  4. On Apr. 24, 1952, Brazilian Deputy Adolpho Gentil introduced into the Chamber of Deputies a bill establishing an official free exchange market for capital transactions. The bill, inter alia, authorized the executive to divide the foreign exchange market into official and free markets; the International Monetary Fund parity rate would prevail in the former, while rates in the latter would be determined by supply and demand. Capital and profit remittances would be regulated by the executive and effected through both the official and free markets. The Portuguese text of the bill was transmitted to the Department of State under cover of despatch 1784, from Rio de Janeiro, dated May 2, 1952 (832.131/5–252).
  5. Regarding Secretary Acheson’s European trip in June 1952, see the editorial note, vol. v, Part 2, p. 1544.
  6. Walther Moreira Salles.