File No. No. 763.72113/758
The Secretary of the Treasury ( McAdoo) to the Secretary of State
Dear Mr. Secretary: At the meeting held at the State Department on October 7 for the discussion of Brazilian matters, Sir Richard Crawford1 handed to the representative of this Department an undated copy of a telegram from the Foreign Office, London, dealing with the Brazilian situation, and more particularly with the plan for taking over the German banks in Brazil. A copy was at the same time handed to Mr. Auchincloss2 by Sir Richard.
The telegram states that the British Government is planning to have a meeting next (this?) week with a financial group in London and if that group entertains the proposals, the Foreign Office is planning to have the group proceed as soon as possible to negotiate with American financiers.
This Department has not come to a definite conclusion as to the method in which the American share of such German-owned banks in Brazil should be taken over, but inclines strongly to the opinion that the most feasible way to handle the matter will be to secure from Congress an amendment to the War Finance Corporation Act so as to permit that Corporation to take over, at least for the present, the American share of the interest to be acquired in such banks. Whatever may be the method this Department ultimately decides upon for handling this matter, it is very undesirable to have a group of British banks undertake the formation of a Brazilian bank in which they would ask American financiers to co-operate and also [Page 352] undesirable to have British banks undertake negotiations in respect thereof with banks in this country.
In my opinion the matter should be arranged between the Governments interested who can each in turn secure the co-operation of such banks or other instrumentalities in their own country as they may respectively select. I think it desirable (subject to your approval) that this view be promptly communicated to the British Government so that our attitude may be made known before any steps are taken along the lines indicated in the telegram above referred to.
Cordially yours,