832.51/1285
The Executive Vice President of the Foreign Bondholders Protective Council, Inc. (Francis White), to the Secretary of State
[Received April 5.]
Sir: As you know, the so-called “Aranha Plan” for the payment of service on foreign bond obligations of the Brazilian Government and of Brazilian governmental sub-divisions terminated on March 31, 1938. While various State and Municipal issues defaulted on the last payments due under that Plan, all payments due on the bonds of the Federal Government under that Plan were met. However, on April 1, 1938, interest was due after the expiration of the Plan on the 6½% External Sinking Fund Gold Bonds of 1926, due October 1, 1957, and no payment was made on the coupon due at that time.
The 5% Twenty Year Funding Bonds of 1931, due October 1, 1951, had up to April 1, 1938 been paid interest service in full. However, on April 1, 1938, these Funding Bonds went into default as no payments were remitted for the coupon on that date. This constitutes a new default on the part of Brazil.
The Council understands that Mr. Aranha57 is now giving attention to the exchange situation between Brazil and the United States and is calling a meeting this week for that purpose. It is understood that what he has primarily in mind are the payments necessary for current commercial transactions. While the Council does not in anywise underestimate the importance of these current commercial transactions, I desire to call to your attention the importance to the United States of the $357,071,745 national wealth of the United States which is represented by the bond obligations of the Federal Government and of the States and Municipalities of Brazil. That much of the national wealth of the United States left the country and went to Brazil and our national economy must perforce be adversely affected if that national wealth be not returned to the United States. Pending its return, adequate interest should be paid on this amount.
[Page 378]I trust that the Department will see its way clear to instruct the American Ambassador in Rio de Janeiro to ask Mr. Aranha to give consideration to the payment of interest on the dollar bonds of Brazil at the same time he is giving consideration to the payment of the commercial balances.
I have [etc.]
- Oswaldo Aranha, then Minister for Foreign Affairs.↩