317. Letter From the Assistant Secretary of State for Inter-American Affairs (Holland) to the President of the Export-Import Bank (Waugh)1

Dear Sam: I refer to the telegram dated October 27, 1955, which Finance Minister Mario Camara sent you regarding the Santos–Jundiai Railway loan.2

Until we are sure that the policies of the newly elected administration in Brazil are consistent with Eximbank objectives and compatible with United States interests in general, the loan policy of the Eximbank toward Brazil should be one of extreme caution. Every effort should be made to avoid commitments prior to the inauguration of the new administration at the end of January 1956 and until its position on economic and political matters has become more clearly defined.

You may find it impossible to make this an irrevocable policy of the Bank since the Volta Redonda loan,3 for example, might occupy such a position in the public eye in Brazil that to hold it up indefinitely would be more harmful to United States interests than extending it.

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So far as I am aware, the Santos-Jundiai Railway re-equipment loan does not fall in this category. In view of its size, it could be a very important card in our dealings with Brazil and should be held in reserve to the maximum extent possible.

I would recommend that you reply to Mario Camara’s telegram by expressing your personal interest in the loan and assuring sympathetic consideration but noting that due to the pressure of the workload, or some other appropriate technical reason, staff studies have not as yet been concluded, and it has not been received by the Board for appropriate action.4

Sincerely yours,

Henry F. Holland5
  1. Source: Department of State, Central Files, 103–XMB/11–255. Confidential. Drafted by Rowell and cleared with Corbett and Prochnow.
  2. In this telegram, attached to the source text, Mario Camara referred to the Brazilian Government’s loan application to cover expenditures for the second part of the Santos a Jundiai Railway reequipment project which was before the Export-Import Bank. Emphasizing the importance of the railroad linking Santos Harbor to São Paulo City, he confirmed his government’s “extreme interest” in the proposed loan. The Bank had authorized previous credits to the Santos a Jundiai of $8.6 million in 1952 and $320,000 in 1954.
  3. In 1941, the Export-Import Bank granted Brazil a loan of $45 million to aid in the construction of a steel mill at Volta Redonda. In 1950, the Bank granted another loan amounting to $25 million for expansion of the plant’s capacity. For information on these loans, see Department of State Bulletin, July 12, 1941, p. 19 and ibid., January 1, 1951, pp. 25–26. On July 6, 1955, Brazil requested a further $35 million credit from the Export-Import Bank for additional expansion of the plant’s capacity.
  4. Telegram 690 to Rio de Janeiro, December 14, from Waugh to Lucas Lopez, Brazilian Minister for Transport and Public Works, stated that the Bank was giving “active and serious consideration” to the Santos a Jundiai loan application. (Department of State, Central Files, 103–XMB/12–1455)

    On January 3, 1956, the National Advisory Council advised the Export-Import Bank that it had no objection to consideration by the Bank of a proposed credit to the Santos a Jundiai Railway not to exceed $20 million. (NAC Action No. 847; ibid., NAC Files: Lot 60 D 137, Actions) Shortly thereafter, the Bank authorized a $19.6 million loan. For further information, see Export-Import Bank of Washington, Report to Congress for the Period January–June 1956 (Washington, 1956), p. 30.

  5. Printed from a copy which bears this typed signature.