302. Memorandum From the Assistant Secretary of State for Inter-American Affairs (Holland) to the Secretary of State1


  • Requested Progress Report on Brazil (Reference Embassy Rio telegrams 6622 and 6793)


The telegrams from Rio, no. 662 of January 15 and no. 679 of January 20, are part of a series of over a dozen telegrams and telephone calls, the majority being addressed to the Under Secretary and to the Secretary, beginning January 1, 1955, and extending up until the Ambassador departed from Rio on January 26. The messages reflect a deteriorating political and economic situation in Brazil, together with a variety of actions to solve the problem recommended by the Ambassador with varying degrees of urgency and impatience.

The serious economic situation facing Brazil has long been recognized and lengthy discussions were held in Rio by Secretary Humphrey, Under Secretary Hoover and Assistant Secretaries Holland, Waugh and Overby, and others with the Brazilian Finance Minister. Following that an invitation was extended to Finance Minister Gudin by Secretary Humphrey and Under Secretary Hoover to appoint a special personal representative to carry on the continuing discussions with the Export-Import Bank and other Departments and agencies here in Washington. In the meantime, the Brazilian problem has had high level consideration in the Department and in many interagency meetings which included representatives from the Export-Import Bank, Treasury, Agriculture, Commerce and others, and has been reviewed in the OCB.

There exists justifiable doubt as to the urgency, the character and under what conditions financial assistance should be given to Brazil at this time. There exists no doubt as to the urgency of action to clear up any misunderstanding or lack of awareness on the part of the Brazilian Government that the United States continues to be sincerely ready, willing and able to cooperate in helping Brazil with its financial difficulties, but that the United States is reluctant to undertake an assistance program unless Brazil is ready, determined and able to take measures which will ensure that assistance will [Page 638] avert and not merely postpone a financial crisis. We are ready to sit down and discuss a concrete assistance program.

Current Action:

Mr. Paranagua, the Brazilian Finance Minister’s personal representative, met with General Edgerton of the Export-Import Bank Thursday afternoon, January 27, and plans are laid to rapidly review the current financial situation in Brazil with complete frankness. A decision will then be made as rapidly as possible by the United States Government as to the type and extent of financial or other assistance to Brazil that the United States is prepared to offer at this time. High level representatives from the Export-Import Bank, Treasury and State will then proceed to Rio to discuss the entire problem with Finance Minister Gudin, Foreign Minister Fernandez and probably President Cafe Filho, and reach final agreement on a mutually satisfactory program. This action is scheduled to take place during the next two or three weeks.

  1. Source: Department of State, Central Files, 832.10/1–2855. Confidential. Drafted by Atwood.
  2. See footnote 2, Document 298.
  3. Document 298.