Foreign Relations of the United States: Diplomatic Papers, 1942, The American Republics, Volume V

811.20 Defense (M) Brazil/515 a: Telegram

The Secretary of State to the Ambassador in Brazil (Caffery)

Washington, April 25, 1942—midnight.

1076. For Donnelly:⁴⁰ Confirming telephone conversation of today:

1. It appears to the Department to be necessary to reach an agreement as soon as possible as to the manufactured products to be purchased by the Rubber Reserve Company.

2. As to manufactured products, the Department suggested to you, and it is believed that you agree, that there should be two restrictions as to these products which should be included within the agreement to be made with the Brazilian Government.

3. The first restriction should be as to the types of the products to be manufactured. The test which is suggested is that the same standards should apply in Brazil as apply in the United States. As we said, this principle has been readily accepted by Peru in recent negotiations which have just been concluded,⁴¹ and we have suggested the same standard to certain other American republics who have indicated a willingness to go along with this principle of equality of use. This accordingly would mean that in the proposed Brazilian agreements some effort should be made to limit the types of goods to be manufactured so as to eliminate luxury products to the same extent that the manufacture of these goods is limited in the United States.

4. The second limitation would be to limit the quantity of such permissible goods as might be manufactured. It is obvious that there must be a quantitative limitation as well as a qualitative limitation. It is accordingly suggested that having arrived at the categories to be manufactured, actual quantity limitations be set up.

5. The next point which we wished to make in the telephone conversation is that it appears to the Department to be urgently desirable to reach an agreement as to internal consumption of raw rubber in Brazil at the earliest possible time. The Peruvian agreement provides for an actual number of tons which is to represent the total consumption of raw rubber in Peru. This figure, as has been stated, is based on the principle of equality of uses in the United States and Peru. The principle has, it is believed, been recognized by the United States-Brazilian agreement as to rubber, but it now remains to translate this general commitment into an actual tonnage. For the same reasons which motivate us to request an early agreement as to manufactured rubber, we urge that an early settlement be made of the actual amounts of raw rubber to be reserved for internal consumption in Brazil. We also think it advisable for you to discuss with appropriate Brazilian officials the adoption of a rationing scheme which would make tires available only for essential uses.

6. As explained to you by telephone, the reason for the Department’s sense of urgency in the above matters is the fact that there have been reports of various attempts to make forward contracts as to both raw and manufactured rubber with the Brazilian producers and manufacturers. The Department desires to prevent the creation of such agreements which might constitute fails accomplis which would interfere with the application of the principles above referred to.

7. We realize the necessity, which you referred to during the telephone conversation, of trying to agree upon figures for the requirements of the other American republics from Brazil so that any restrictions which might be reached in your negotiations could be agreed upon by Brazil after consultation and in agreement with the other American republics. The Department has attempted to get these figures as to both amount and types of raw and manufactured rubber, but as yet has not had much success. The Department will, however, attempt to obtain these figures for you and obtain agreements where possible.

Hull

40. Walter J. Donnelly, Commercial Attaché.
41. For correspondence regarding these negotiations, see vol vi, section under Peru entitled “Cooperation between the United States and Peru in the mobilization of the economic resources of Peru; agreement for purchase by the Rubber Reserve Company of surplus Peruvian rubber.”