832.5151/1261: Telegram
The Chargé in Brazil (Scotten) to the Secretary of State
[Received 5:09 p.m.]
294. Referring to Department’s instruction No. 251, December 10, I discussed this matter at length with Aranha this morning and subsequently presented to him the note enclosed with the above mentioned instruction. He at first evaded commenting on the note itself and instead evinced considerable disappointment at the tone of Secretary Morgenthau’s letter to Souza Costa embodied in the Department’s 145, December 16, 7 p.m., which he feels does not show a real willingness on the part of our Government to cooperate to the extent of actually extending credits to solve the exchange problem as suggested in Souza Costa’s letter. I replied that I considered Secretary Morgenthau’s letter a definite opening for Souza Costa to lay before him a concrete program both as regards exchange and the other matters dealt with but I also urged that Aranha treat the exchange question as an immediate problem and not allow it to become involved in the other [Page 373] matters dealt with in the exchange of correspondence between Souza Costa and Mr. Morgenthau. He finally consented to do this and added that he will discuss our note with the President this afternoon with a view to making concrete suggestions as to a method of improving the exchange situation.