832.5151/601: Telegram
The Secretary of State to the Chargé in Brazil (Gordon)
74. Department’s 73, May 1, 8 p.m. Disregard last sentence of third paragraph of Department’s cable which reads “these individual communications would not, it is understood, constitute a contract”.
The procedure envisaged in the conversations with Aranha for dealing with the deferred indebtedness in Class C was, that the Bank [Page 367] would address individual communications to each creditor, in which it would be stated, in a form meeting the legal and constitutional requirements under the new constitution, that the Bank by order of the Government, recognized that this individual creditor was waiting for the specified amount of exchange which was due him, and then setting forth the dates on which specified portions of this amount would be made available to him. The individual creditor, it was understood, would then acknowledge this communication, corroborating the amount of the exchange obligation as set forth in the Bank’s communication, and stating that he would present himself at the Bank at the specified date in order to secure the specified amounts of exchange. Aranha stated that this exchange of letters would constitute a definite evidence of indebtedness between the Bank of Brazil and each individual creditor.
It would be important that this exchange of communications should be worked out in a form which while meeting the Brazilian constitutional requirements should also provide an evidence of indebtedness on which the individual creditor, if necessary, could borrow and which he could transfer.
If this method of handling the situation is adopted, Department believes it essential, that before the form is agreed on, it should be discussed with the Foreign Trade Council or some other body representative of the American creditors.