832.51/2215
The Ambassador in Brazil (Caffery) to the Secretary of State
[Received October 14.]
Sir: Referring to my despatch No. 12959 of October 2, 1943,29 I have the honor to enclose30 a memorandum prepared by Council and Embassy representatives, in regard to the “Estudo Bouças”, a translation of which was attached as Enclosure I to my despatch under reference. There are also enclosed copies of the minutes of the sixth and seventh meetings held on September 26 and October 1.
Debt negotiations, which had been in a state of suspended animation for several days, took a new turn on October 6 when Finance Minister Souza Costa, after formally presenting the “Estudo Bouças” as the “Estudo Brasileiro”, offered to increase the interest total under “Alternative A” to $19,936,000, compared with $17,552,000 in his original June proposal. In regard to “Alternative B”, the Finance Minister suggested 3.6 per cent on the new principal, and finally offered, with apparent reluctance, to consider 3.75 per cent. There is attached, as Enclosure IV, a copy of a memorandum, prepared by a member of my staff, which summarizes the status of the negotiations in regard to the key question of interest.
In view of the Finance Minister’s renewed personal interest in the debt settlement, it was believed desirable to maintain the negotiations in an active status. For this purpose, and pending interchange of communications with the Foreign Bondholders Protective Council in regard to the Finance Minister’s new offer, a new study was prepared for presentation at the October 7 meeting, based on adjustment of our “Alternative B” to a 3.75 per cent interest rate and additional cash payments of $17,127,000. The Brazilian representatives are now examining this study, an outline of which is contained in a memorandum, copy of which, without enclosures, is attached as Enclosure V. There are also transmitted as Enclosures VI and VII minutes of the meetings of October 6 and 7.
The facts available indicate that the Brazilian Government is approaching its maximum position in regard to interest.
[Page 777]It is respectfully suggested that a copy of this despatch be transmitted to the Foreign Bondholders Protective Council, Inc., 90 Broad Street, New York City. In as much as future communications will be related to the revised schedules of “Alternative A” and “Alternative B”, adjusted to the records of the Brazilian Government of amounts outstanding, it is requested that, unless it has already been done, a copy of the Embassy’s Despatch No. 12846 of September 24, 1943, be forwarded to the Council.
Respectfully yours,
Counselor of Embassy for Economic Affairs