832.51/1494: Telegram
The Ambassador in Brazil (Caffery) to the Secretary of State
[Received 8:40 p.m.]
205. When I saw Aranha he told me that a note (translation is being telegraphed to Department) was then on the way to the Embassy confirming the 1 million dollar payment and suggesting that the Foreign Bondholders Protective Council send representatives to Brazil to discuss the whole debt business. He wanted me to inform [Page 362] our press representatives and in my presence instructed an aide to inform those representatives that they could quote him as having made a statement similar to the one I gave them.
As far as the amount to be paid on July 1st he repeated all the well known arguments.
. . . . . . . . . . . . . .
- (2)
- He referred to the tremendous opposition that developed here against his signing the promise at Washington to resume payments on July 1.
- (3)
- … He reiterated that he has done his very best to secure a payment as large as possible and that one million dollars is all that he can get. President Vargas is not willing to pay more at this juncture (after further conversations in the last hour President Vargas and the Minister of Finance agree further sums will be deposited at New York as fast as the Government’s financial situation allows of it. They hope another payment can be made within a fortnight).
- (4)
- The Government has certain funds available but the President insists that they must be kept for repaying the Export Import Bank in regard to the exchange agreement especially in view of the threatening European situation.
- (5)
- He referred again to the weak position of the milreis.
- (6)
- He asserted that in his opinion the important points in all this is the fact that Brazil is reestablishing the principle of paying debts, it is a beginning even if only a modest one.
- (7)
- Nothing is being paid at this time to the British, French and Dutch bondholders, although the amounts due them are three times as large as the amounts due us.
- (8)
- He is afraid of the reaction here even to this small payment.
- (9)
- Finally he referred again to the poor reception the Washington agreements25 had received here. The Exchange Agreement had been interpreted as being designed only to help American exporters and he had been criticized for causing the Bank of Brazil to assume the obligation involved. There is general indifferent [indifference?] to the two other agreements signed. Aranha is a decided exception to this however and believes that the two other agreements are for the good of Brazil.
Although I discount some of Aranha’s statements … I do believe that he has tried hard to get the best settlement possible and has had a big fight on his hands ever since his return from Washington.