832.51/1743½
Memorandum of Conversation, by the Assistant Secretary of State (Berle)
Mr. Francis White telephoned me last night about seven o’clock. He stated that the Council of Foreign Bondholders agreed to our formula but it added a phrase, “pursuant to consultation with the Department of State”. I pointed out that, as phrased, this meant that the statement of the Foreign Bondholders had been issued on such consultation, and that we could not agree to that.
Mr. White then stated that he merely meant that their impression that this was the best offer that could be obtained was derived from such consultation, and agreed to shift the position of that phrase so that this impression should be conveyed.
He then stated that his committee did not like the idea of doing this; that they resented the pressure of the Department; that they had done it only because the Department had requested it; and that the Council did not care to be the mouthpiece of the Department, and it was thought that a meeting ought to be held by the Council to determine whether or not they should not close up, if they could only act as our mouthpiece.
I instantly stated that in that case the formula had been adopted by the Bondholders Council on a misapprehension. We had made no request, and would make none. We had put up to them the decision as to whether or not they would take the responsibility, in view of the condition of the Brazilian offer, of turning down the only offer which appeared likely. Under the circumstances, I could not accept their agreement. We could not take advantage of an agreement which apparently had been based on a complete misapprehension of fact.
Mr. White then withdrew some of his words about resentment and pressure; but he still said that the formula was accepted only because they understood it to be the wish of the Department.
I said under those circumstances I still could not accept their agreement.
Mr. White said that he would be guided by my judgment in the matter. I said my judgment was that he should make contact with the members of his committee in the morning, explain to them that the Department would express no wish, and the decision must be [Page 593] taken on the responsibility of the Council; that I would try to hold matters open, pending word from him.
I then sent our cable No. 54, March 5, 1940, 9 p.m., to Rio; and my own telegram, dated March 5, 1940, to Mr. White, a copy of which is attached.24