Foreign Relations of the United States, 1958–1960, American Republics, Volume V

272. Memorandum of a Conversation, Department of State, Washington, July 8, 1959, 11 a.m.¹

Washington, July 8, 1959, 11 a.m.

SUBJECT

• Brazil’s Financial Problems

PARTICIPANTS

• Henrique Rodrigues Valle, Brazilian Chargé d’Affaires, a.i.
• Maury Gurgel Valente, Counselor of Embassy, Brazilian Embassy
• The Secretary
• Mr. R.R. Rubottom, Jr., Assistant Secretary for Inter-American Affairs
• Mr. John J. Ingersoll, Acting Officer in Charge of Brazilian Affairs

Minister Valle called on the Secretary, by appointment, at 11:00 a.m., today to deliver a personal letter to the Secretary from the Brazilian Foreign Minister and an Aide-Mémoire prepared at the Brazilian Foreign Ministry.²

Valle thanked the Secretary for taking the time to receive him. He said that Brazil has been going through an extremely serious financial crisis and that President Kubitschek is very worried about the state of affairs. He explained that Brazil has been industrializing and developing economically since the turn of the century, but that Kubitschek had adopted as the principal focus of effort of his administration the rapid development of his country under “forced draft.” He explained that Brazil has, in recent years, experienced serious balance-of-payments deficits and has sought outside assistance, most of which has come from the United States. He said that Brazil had been negotiating with the technicians of the International Monetary Fund, whom he knows personally and respects highly for their technical competence. However, these talks, which were aimed at agreement on a stabilization program for Brazil, reached an impasse a few weeks ago. Valle said that President Kubitschek realizes that some arrangement will have to be worked out with the IMF eventually, and he has every wish to reach such an arrangement. However, Valle pointed out, President Kubitschek felt very strongly that he could not at the present time undertake some of the measures advocated by the IMF technicians. For this reason, the President and the Foreign Minister had wanted to bring the Brazilian plight to the attention of Secretary Herter and request that he accord favorable consideration to their needs.

The Secretary said that he was well aware of the seriousness of balance-of-payments deficits, the insidious way they creep up on a country and the extreme difficulty of eliminating them and restoring order. He read the English translation of the Foreign Minister’s letter and assured Minister Valle that he and Mr. Rubottom, who was more closely acquainted with the specifics of the matter, would certainly approach the problem in a cooperative spirit.

Mr. Rubottom said that he had talked with Minister Valle just before the latter had departed for Rio and had assured him that we wished to accord all possible consideration to achieving a constructive solution to the financial problems besetting Brazil.

Minister Valle thanked the Secretary for his time and added that the new Brazilian Ambassador, Walther Moreira Salles, would arrive in New York July 9 and would shortly thereafter come to Washington. He said that the first-priority mission of the new Ambassador would be to try to negotiate for financial assistance and credits to help relieve Brazil’s acutely serious problems.

1. Source: Department of State, Central Files, 832.10/7–859. Confidential. Drafted by Ingersoll. The source text bears the notation that it was “approved by Secretary’s office per service message from Geneva—7/21/59.” Secretary Herter had gone to Geneva for the meeting of the Foreign Ministers of the United States, the United Kingdom, France, and the Soviet Union.
2. In the June 30 letter, Foreign Minister Francisco Negrào de Lima called on Secretary Herter to help solve the problem of Brazil’s balance-of-payments difficulties. In the aide-mémoire of the same date, the Brazilian Government stated the reasons for the impasse in Brazilian talks of May-June with the International Monetary Fund, and it called for joint action by the two governments toward finding a solution. The aide-mémoire stated that the new Brazilian Ambassador, Walter Moreira Salles, was instructed to initiate conversation with the U.S. Government upon his arrival in the United States. Copies of the Brazilian documents are attached to another copy of this memorandum of conversation, ibid., Secretary’s Memoranda of Conversation: Lot 64 D 199.