832.51/1490: Telegram
The Secretary of State to the Ambassador in Brazil (Caffery)
121. Please inform Aranha, and request him to inform the President, that the steps reported in your 202 for meeting the debt situation on July 1 seem to us regrettably and decidedly inadequate.
We express this opinion out of a sense of the great possibilities that exist in the various fields of economic cooperation between the two countries. The agreements worked out in Washington contemplate such large-scale and permanent cooperation. This Government stands fully ready to go forward promptly with the discussions that are necessary preliminaries to translating those agreements into performance. It will be most beneficial and helpful if Brazil takes steps to regularize its debt situation in this country; that is the reason for including the matter in the arrangements worked out. Remembering that in our discussions with Aranha the sum of $9,000,000 as an annuity on the service of the dollar bonds was the smallest sum mentioned, please suggest and urge upon Aranha that the amount proffered on July 1 should be raised to $4,500,000. This would be a more adequate sign of Brazilian recognition of the debt and willingness to work out terms of settlement.
Furthermore it is believed that immediately and simultaneously an official invitation should be telegraphed by the Brazilian Government to the Protective Council to commence negotiations at once for a settlement.