832.61311/6–2546
The Chief of the Division of Brazilian Affairs (Braddock) to the Ambassador in Brazil (Pawley)
Dear Mr. Ambassador: I have discussed your letter of June 15, received yesterday, with the Department’s rubber and wheat people. The position, as we see it, is that Argentina is willing to ship wheat in accordance with the arrangement worked out in Rio provided it receives the rubber promised under the same agreement. Of the rubber it can be assured. The first quarter allocation of 578 tons is already under way, part of it actually on the water, and the second quarter allocation will be shipped just as soon as we get information here that Brazil is agreeable to its being sent. We believe it would be to Brazil’s interest to authorize the second quarter shipment made without delay, since a third quarter allocation of 2300 tons to be supplied by Great Britain has now been approved by the Combined Rubber Committee and it would be desirable to have the second quarter rubber arrive before that of the third quarter.
May I help clear up this situation in your mind by calling attention to two or three small factual errors that we discovered in your letter. The price of 35 pesos per 100 kilos (not per ton), works out at about $2.85 per bushel (not $3.50), and though high is the same price at which Argentina is offering wheat to other countries. We believe that there has been no question of Brazil’s wanting to offer rubber to Argentina at 60 cents, since it is not Brazil but the United States that is providing the first and second quarter allocations to that country. In short, the price disagreement seems to us more illusory than real at the present time, and we hope that a steady supply of wheat will be resumed when it is known that the rubber for Argentina is on the way.
The United States certainly intends to maintain its rubber purchase contract with Brazil until the expiration date in mid-1947. This was a wartime agreement thought necessary to get out a critically needed raw material. We entered into it not through any philanthropic reasons. It is equally certain, in my opinion, that the United States will not entertain any suggestion by the Brazilian Government that we extend this purchase contract once it has expired, and the Brazilians should not be given any encouragement to believe that we will.
At the top of Page 2 of your letter you say that “Secretary Anderson was most encouraging with reference to assisting Brazil after September with a supply of wheat”. I do not know how the Secretary phrased his statement, but from the completely negative result [Page 143] of our insistent efforts to get emergency shipments of wheat for Brazil earlier this year, I am inclined to believe that Brazil should not look to this country for help in meeting its wheat requirements any time soon. The feeling here is rather that it is up to Brazil to arrange for her wheat needs to be met by her traditional supplier, Argentina.
You will have noted that with Argentina’s third quarter allocation of rubber assigned to Great Britain to fill, our old Tripartite Agreement ceases to have any further effect as regards crude rubber. Yet it continues to obstruct our trade in tires with the Argentine, and if we are not to see that market go entirely to tire producers of other countries, we must get rid of that agreement just as soon as possible. Please continue your efforts to have that agreement cancelled.
In closing this letter, I would like to inform you of an error in a a recent Departmental telegram to you on this subject which has resulted in embarrassment to the Brazilian Embassy here, and to ask that you do what you can to put the records straight with the Foreign Office. The Department’s telegram 799 of June 15 contained the statement “consequently Brazil requested U.S. to stop shipment of rubber”. There was no request here to stop shipment, but it had been the Department’s understanding that until the agreement was signed, Brazil would not wish the rubber to be shipped, and that unless we had specific authority from the Brazilians, we could not make any shipment without violating the old Tripartite Agreement.
Sincerely yours,