832.5151/1232
Memorandum of Conversation, by Mr. Leroy D. Stinebower of the Office of the Adviser on International Economic Affairs
| Participants: | Mr. Eugene P. Thomas, Mr. Heman Greenwood and Mr. Micou, of the National Foreign Trade Council, Inc. |
| Mr. Sayre,37 Mr. Briggs,38 Mr. Woodward,39 Mr. Collado,40 Mr. Deimel,41 Mr. Stinebower |
Mr. Thomas and his associates called by appointment to discuss with Mr. Sayre and other interested officers of the Department the question of what might be done to improve the Brazilian exchange situation as it bears upon payments for imports from the United States. After briefly summarizing the exchange situation in Brazil, as it is known to the Department, Mr. Thomas went on to say that there had in the past been a very considerable degree of support among exporters for the trade agreements program of this Government, in large part as a consequence of the activities of the National Foreign Trade Council in organizing and directing this support. There was observable, however, a decided weakness in the enthusiasm of exporters for the program, and Mr. Thomas feared that this weakening would be accentuated if situations like that now prevailing in Brazil were to be allowed to continue without interference by this Government. Specifically, exporters were of the opinion that in the face of bilateral arrangements negotiated by Germany and other countries, including the United Kingdom, the least that this Government could do would be to insist upon the full observance of all commitments made to it by foreign countries. In the case of Brazil this would mean the insistence (a) that full exchange coverage for imports be granted as promised in the note of February 2, 1935 annexed to the agreement and (b) that we should at least get equality of treatment on the Brazilian market. With reference to the latter, he thought we were not getting equality of treatment so long as German imports were being promptly paid as a result of the German compensation mark system and as long as prompt payment was being made for a large volume of armament purchases by the Brazilian Government from the United Kingdom and elsewhere.
Mr. Sayre replied that there was very real appreciation of the support of exporters for the trade agreements program and for the work [Page 360] of Mr. Thomas and his organization in this connection. It seemed to him, however, that there were two types of commercial policy in the world, one the American system and the other the German system; that American exporters had to choose which kind they preferred; that if the United States went in for a system of bilateral balancing, barter arrangements and all the other aspects of the German system, this would involve for American exporters all of the disadvantages of that system, including a complete regimentation of all aspects of economic life and trade in this country. While there was a direct conflict between these two systems, which were battling for supremacy, he could not agree with Mr. Thomas and his associates that the events connected with Munich42 had completely changed the face of economic relationships or necessitated a reversal of our commercial policies. The conclusion of the pending trade agreement with the United Kingdom, which he believed would be signed within the next few weeks, would constitute a major event in the support of the liberal type of trade policy.
Nevertheless, Mr. Sayre went on, it was necessary to face the problems created for American trade by the other system with a view to determining what could be done to meet them without surrendering the principles upon which we have been conducting our trade relations. For this reason he would be very glad to consider any suggestions that Mr. Thomas had to make.
Mr. Thomas referred to previous discussions and correspondence which he and other American business interests had had with the Brazilian Ambassador and with other officials of the Brazilian Government with a view to working out some arrangement between the Bank of Brazil and New York banks by which the Brazilian Government would make available full coverage for all imports from the United States without any delay. In all of these attempts, however, they always came up against the fact that they could not get such arrangements without the positive assistance of the State Department, stating that such an arrangement was desired. Mr. Thomas thought that this was not an unreasonable demand to make upon Brazil in view of the expressed willingness of the latter Government in 1934 to grant a substantial portion of its exchange payments for imports from the United States, in view of the commitment of the Brazilian Government in the Ambassador’s note of February 2, 1935, and in view of the promise in the unfreezing agreements of 1933 and 1936 that by accepting the unfreezing notes American exporters would not have to be faced with any further delays in payments for their exports. Mr. Greenwood expressed the belief that the request for such an arrangement would not be a request for preferential treatment but [Page 361] only for equality of treatment (he was not very clear as to how he reached this conclusion in as much as he specifically stated that he did not have merely Germany in mind) and for the observance of previous commitments of the Brazilian Government. Mr. Sayre stated that this kind of an arrangement did in effect constitute a request for preferential treatment as compared with the treatment received by countries other than Germany or Italy and that we could not well continue to attack the system of preferential arrangements after we had once negotiated one ourselves.
Mr. Thomas further suggested the possibility of a loan, perhaps through the Export-Import Bank, by which the slate might once again be wiped clean so far as the exporters themselves were concerned, providing there could be some assurances that in the future no delays would be allowed to arise. Mr. Sayre again stated that he was quite ready to examine all possibilities, that he had not yet had an opportunity to discuss the Brazilian situation with Mr. Pierson, who had just returned, but that he would be very glad to do so as soon as possible, and if there seemed to be any promising action which could be worked out along these lines, to get in touch with Mr. Thomas again.
- Francis B. Sayre, Assistant Secretary of State.↩
- Ellis O. Briggs, Assistant Chief, Division of the American Republics.↩
- Apparently Robert F. Woodward, former Vice Consul at Rio de Janeiro, on temporary duty in the Department.↩
- Emilio G. Collado of the Division of the American Republics.↩
- Henry L. Deimel, Jr., Assistant Chief, Division of Trade Agreements.↩
- See vol. i, pp. 657 ff.↩