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

811.20 Defense (M) Brazil/1521

The Assistant Chief of the Division of Defense Materials (Cissel) to the Chief of the Division of the American Republics (Bonsai)

[Washington,] October 2, 1942.

Mr. Bonsal: Telegram 3937, October 1 from Rio⁸⁴ requested that we telephone Donnelly and Russell⁸⁵ with respect to the tire and tube agreement. This was done this morning. Donnelly advised that they had had an extended conference with the Foreign Minister yesterday and had obtained complete agreement on the tire and tube contract in the form submitted by Allen with the changes requested in the Department’s telegram of September 24.⁸⁶ Several additional changes were suggested by Aranha. Most important was as follows:

The agreement now provides that 25% of tires manufactured in Brazil will be sold to the United States. Brazil wishes the right to increase or decrease this figure, so long as the manufacture does not exceed 10,000 tons. Donnelly stated that the Foreign Minister had made a very strong statement to the effect that strict conservation of tires would be instituted in Brazil and that in his opinion it is unwise to attempt to get a better arrangement on this point. In view of this and in view of the fact that the lack of petroleum has automatically reduced the use of tires in Brazil, it was decided to accept the proposal.

The other changes were accepted, and Donnelly was instructed, with the concurrence of Rubber Reserve Company, Board of Economic Warfare and myself on behalf of the Department, to proceed with the execution of the agreement,⁸⁷ which is expected this afternoon or tomorrow morning.

While the subject was not mentioned specifically, I gathered from the telephone conversation that any difficulty with respect to Bouças’ proposed resignation had been eliminated.

84. Not printed.
85. James A. Russell, official of the Rubber Reserve Company.
86. Telegram No. 2827, not printed; in it the Department recommended a number of changes in the phraseology of the agreement (811.20 Defense (M) Brazil/1392).
87. Copies of the exchange of notes of October 3, 1942, between the American Ambassador in Brazil and the Brazilian Minister for Foreign Affairs which constituted the agreement were transmitted to the Department by the Ambassador in his despatch No. 8678, October 7, 1942, not printed. According to its terms the United States was to determine the allocation of tires and tubes for the other American Republics, and Brazil was to determine the portion she could supply and communicate the allocations to the other American Republics. The normal channels of trade were to be employed. In addition this agreement embodied a ratified form of agreement reached on April 30. According to the latter the essential requirements of Brazil, the United States, and the American Republics were to be provided by a reserve of 10,000 tons of crude rubber of which Brazil was entitled to 75% and from which Brazil was also entitled to acquire the quotas of the other American Republics for export to them. The Rubber Reserve Company was to purchase all tubes and tires not essential for internal consumption in Brazil. Brazil agreed to discontinue the manufacture of non-essential products. The United States was not to export to Brazil’s neighbors. Efforts were to be made by Brazil to make extensive use of re-claimed rubber and by the United States to supply essential materials for the rubber manufacturers, (811.20 Defense (M) Brazil/1634)