832.5151/534: Telegram
The Chargé in Brazil (Gordon) to the Secretary of State
[Received 8:07 p.m.]
49. My 45, February 20, noon. The promise reported in the Department’s 13, January 31, 6 p.m., as to the resumption of the flow of official exchange has not been made good.
As the Department is aware the first excuse for nonresumption was the formulation of the new exchange regulations published on February 11. The excuse throughout the ensuing week was that a few days’ study would be required before these regulations could be put into smooth operation.
This week the Exchange Director has no more excuses to offer but although he has been specifically and repeatedly pressed at least to indicate when resumption may be expected he has confined himself to stating that he was going to take the matter up with the President, that he has discussed the matter with the President, and that he is quite unable to give any such indication.
The small payments reported in my 39, February 14, 6 p.m., have not been followed up by an accelerated flow of official exchange and the Exchange Director’s further assertion that the spirit of the exchange of notes of February 2 would be strictly adhered to does not at present appear of much value. The situation again resembles that set forth in my 33 February 8, 2 p.m., and I am strengthened in my belief that the President’s persistence in this procrastination is motivated in the sense indicated in the penultimate paragraph of my 45 February 20. The local press this morning reports that the financial mission will not leave Europe until March 8; from the present indications it would appear that the Brazilian authorities will attempt to drift along until at least that time if not until the mission reaches here two and a half weeks later without resuming allotments of official exchange. Not the least significant factor of the situation is the creation of an apparently substantial exchange reserve, for it still remains true for all practical purposes that no actual official exchange has been supplied by the [Page 351] Bank of Brazil on exchange cover contracts since December 12 (see my 10 January 9, 2 p.m.).