740.00112A European War 1939/27857
The Ambassador in Brazil (Caffery) to the Secretary of State
[Received March 30.]
Sir: I have the honor to refer to my Despatch No. 10425 of March 15, 1943,86 wherein, among other things, reference was made to conversations which were carried on during his stay in Brazil by Mr. Warren Lee Pierson, President of the Export-Import Bank, concerning financial assistance in connection with the nationalization of Axis properties.
As the result of a meeting held on March 6 between Mr. Pierson, Mr. Walmsley, and representatives of the Embassy with Dr. Santos Filho, Director of Exchange of the Bank of Brazil, there was prepared the enclosed self-explanatory draft proposal,86 which was submitted to the Bank of Brazil; General Portella, President of the Economic Defense Commission; and the Minister of Finance. Prior to Mr. Pierson’s departure the memorandum was approved in substance by the Bank of Brazil and the Economic Defense Commission. The matter was also discussed very confidentially with Dr. Roberto Simonsen, President of the Federação das Indústrias do Estado de São Paulo, who in turn strongly supported the proposal with both the Director of Exchange and General Portella.
Mr. Walmsley has remained over for a few days to endeavor to make further progress in connection with the matter. A conference was held today (March 20) with the Ministers of Foreign Affairs and of Finance,87 who indicated their approval in general terms and suggested that we continue discussions with the Director of Exchange of the Bank of Brazil. This conference was also attended by Mr. Walder Sarmanho, Commercial Counselor of the Brazilian Embassy in Washington, and the Chief of the Economic and Commercial Section of the Foreign Office.
The principal problem to be worked out with the Brazilians is the necessity of either creating a new department in the Bank of Brazil [Page 757] to handle this financing, or to modify the powers of the Exchange Department which has no lending powers at present. The two existing departments of the Bank of Brazil having lending powers (the Commercial and Agricultural Departments) are not equipped to perform this type of function.
So far as concerns the Export-Import Bank, Mr. Pierson states that, under the Bank’s restricted lending powers, it must be established that the financing will promote commercial intercourse between the United States and Brazil. Mr. Pierson feels that it will be possible to justify the lending on the over-all basis that the nationalization by Brazil of enemy-owned industrial and commercial establishments will necessarily tend to promote trade with the United States; and that our financial assistance is essential for the success of the nationalization program. It will be noted that in Paragraph 8 of the enclosure it is suggested that a basic agreement be entered into between the Export-Import Bank and the Bank of Brazil, providing for the mechanics of the Bank’s participation. It may be necessary, initially at least, to have a special representative of the Export-Import Bank present in Rio de Janeiro to work with the Embassy and the Bank of Brazil on certain specific cases, although, when the matter reaches a routine stage, Mr. Pierson envisages the delegation of authority to pass on the Bank’s participation to someone located here permanently.
Mr. Pierson has transmitted directly to the Export-Import Bank a copy of the enclosed memorandum, with the suggestion that the matter be given immediate attention in the Bank, so that we may be prepared to proceed rapidly should matters here progress as we expect them to.
Respectfully yours,
First Secretary of Embassy