832.5151/975: Telegram
The Ambassador in Brazil (Caffery) to the Secretary of State
[Received 8:31 p.m.]
8. My telegram No. 5, January 11, 3 p.m.8 The Bank of Brazil and the American Chamber of Commerce for Brazil today reached the following agreement as regards the procedure to be followed whenever exchange is allotted for merchandise imported into Brazil from the United States: The drawers or remitters of drafts have the option of accepting either a 60-day exchange contract or a 90-day date draft drawn by the Bank of Brazil on a correspondent in New York, this agreement is retroactive to January 1, 1938, and will continue in effect during the duration of the present exchange control legislation. The Bank of Brazil reserves the right to liquidate the exchange contract or draft before the date of maturity and to allocate spot exchange for any or all transactions.
The 90-day draft feature represents a distinct advance for our exporters over the former procedure of giving 60-day exchange contracts since the latter are not negotiable whereas the drafts are. Furthermore, it places our trade as regards the exchange control situation on a par with the Germans as the German banks have been willing to liquidate 60-day exchange contracts in compensation marks while the one American bank here is unable either to liquidate these exchange contracts or to loan dollars against them.
The Minister of Finance informs me that he has today instructed the Bank of Brazil to allocate exchange in accordance with the agreement cited above for the period January 1 to January 7 inclusive. When further exchange allotments are made the above-mentioned procedure [Page 335] will be followed and while it is hoped that the allotments will be staggered over short intervals no assurances have been given when the next distribution will be made.
Please inform Department of Commerce.
- Not printed.↩