632.6231/236: Telegram
The Ambassador in Brazil (Caffery) to the Secretary of State
[Received 2:11 p.m.]
112. The Minister for Foreign Affairs30 last evening spoke to me about the termination of the German agreement on September 5 and said that the Minister of Finance desires to replace the provisional agreement by a definite arrangement for a period of one year. This arrangement would differ from the previous one in that the amounts of coffee and cotton which Brazil may export to Germany, receiving [Page 338] payment in compensation marks, would be limited not only by volume but by value. The Minister of Finance does not consider it necessary to include any other commodities in the treaty, because the other Brazilian exports to Germany are negligible (and also because he desires to avoid whenever possible domestic political opposition).
The Minister for Foreign Affairs then said that he does not agree with this but believes that the arrangement should be extended for a period of only 6 months, limiting coffee and cotton exports as proposed by the Minister of Finance, and during the 6 months period draw up a schedule of all the other Brazilian exports to Germany with a view to making at the end of the 6 months period a definite schedule of all Brazilian exports to Germany, limiting the same both as to volume and value.
(As the Department is aware, although amounts were fixed in the last arrangement with Germany, valuation was not included and during the period of 12 months the value of the exports rose greatly, although the volume did not, resulting, of course, in a marked increase in the quantity of bloc marks in the Banco do Brazil.)
I told the Minister for Foreign Affairs that I would endeavor to ascertain immediately the Department’s opinion. (Having in mind the prominence hitherto played by the Brazilian Ambassador at Washington in these negotiations, it is my opinion that it will be well to obtain his views). I invited attention to the promise in the Aranha letter of July 14 to the Department to protect our commodities against subsidized imports from Germany. The Foreign Office assured me that an article will be included in whatever arrangement is made to take care of this.
As the Embassy has frequently pointed out of late (and this was emphasized yesterday at the Foreign Office), the Germans are bringing all possible pressure upon the Minister of Finance to extend the previous arrangement for a 12 months period with no limitations whatsoever. (I emphasize that the present arrangement expires on September 5 next).
- Mario de Pimentel Brandão, who had been Acting Minister for Foreign Affairs since January 1937, was appointed Minister for Foreign Affairs by presidential decree of September 1, 1937.↩