Office of the Historian

832.852/49: Telegram

The Secretary of State to the Ambassador in Brazil (Caffery)

Washington, February 1, 1943—9 p.m.

403. Your 5568, December 31.28 In order to present a definite offer to the Brazilian Government, the Department has found it necessary to get formal clearance of the Requirements Committee of the War Production Board and to this end has had the full support of the War Department. After full discussion, and in accordance with Donnelly’s29 telephone conversation with Collado,30 the Requirements Committee has authorized the Department to make the following offer, the substance of which you should embody in a reply to Aranha:31

(1)
The Brazilian Government to turn over to the United States Government, through the War Shipping Administration, the six Brazilian passenger vessels of the ITA32 class.
(2)
The War Production Board will make available to Brazil a total of 40,000 tons of rails and track accessories. These would be 60 pound rails, to be delivered over 12 months. With respect to these rails, the steel will not be charged against any Brazilian steel allocation nor will their transportation prejudice the shipping which otherwise would be allocated to Brazil.
(3)
The War Production Board will facilitate the purchase and delivery to the Belgo-Mineira Steel Company of the items which Hebard and Company has indicated require priority assistance. These are:
(a)
One 2000 HP, 750 volt D. C. motor, which requires a AA–1 priority.
(b)
72 hot saw blades, which also require a AA–1 priority.
(c)
One cast iron pinion box.
The other items, 16 rolls, 1 lathe, 1 pair of shears, and 1 speed reducer, the Hebard Company reports can be obtained under present priorities or second-hand.
(4)
The six ITA ships are desired rather than with [sic] the Dom Pedro II replacement.
(5)
It has been deemed desirable in order to simplify this transaction to establish a price for the six vessels and to arrange for the purchase by the Brazilian Government of the rails and accessories with the proceeds from the sale of the vessels. However, if you believe that the Brazilian Government will insist upon a straight transfer of the ships for the rails and accessories, it will be possible to arrange this.
(6)
It is estimated that the cost of the rails delivered in Rio will be approximately $79.00 per ton or approximately $3,160,000 for the 40,000 tons. These prices are based on shipment from Pittsburgh and therefore shipment from any other point may cause slight variation in price.
(7)
You are authorized to make a maximum offer of $3,500,000 for the six vessels although if extensive repairs are necessary on the Itaquice, this figure may be reduced somewhat to cover at least partially the cost of such repairs.
(8)
The Department’s views on your item 3 have been expressed in its A–767 of January 15, 1943 and telegram no. 3051 of October 12, 1942.33
(9)
Your item 4 was covered in Department’s 4130, December 31, 1942.34 The value of this project is fully appreciated here, but it is not desired that it be connected with the present arrangements.
(10)
Therefore, in addition to the fact that the price to be paid for the vessels will exceed the delivered cost of the rails, the benefits which Brazil will derive from this transaction are facilitation of the production of the rails in this country, the movement of them to Brazil, and the delivery of the materials required by Belgo-Mineira for the emergency rolling of rails.

Please proceed on the basis of the above information.

Hull
  1. Foreign Relations, 1942, vol. v, p. 755.↩
  2. Walter J. Donnelly, Economic Counselor of Embassy in Brazil.↩
  3. Emilio G. Collado, Special Assistant to the Under Secretary of State.↩
  4. Oswaldo Aranha, Brazilian Minister for Foreign Affairs.↩
  5. Classification of Brazilian passenger vessel.↩
  6. Neither printed; item 3 called for rotary drills.↩
  7. Not printed; item 4 called for a marine dredge.↩