U.S.A. AND BRAZIL

Evening Post, Volume CXXVII, Issue 83, 10 April 1939, Page 10

U.S.A. AND BRAZIL

TREATY CONCLUDED

STABLE TRADE RELATIONS

(From "The Post's" Representative.)

NEW YORK, March 15

The long-sustained battle between Germany and the United States for economic supremacy in Brazil has been won by the United States, which has just concluded with Brazil a treaty that is of more than economic significance.

The Brazilian Government undertakes to resume payment of principal and interest on about 350,000,000 dollars in defaulted bonds held by American citizens. A central bank will be created, patterned on the Federal Reserve, which will stabilise Brazilian currency in terms of dollars, and eliminate the violent fluctuations that have made reciprocal trade difficult. Restrictions will be removed from the exchange market, and a free monetary economy established. American financial experts will be engaged to set up this machinery. American investors will be given equality of treatment with Brazilians. For this purpose, discriminatory legislation, which has been under preparation in Brazil, will be dropped. The United States, on its part, will advance up to 50,000,000 dollars in gold to the proposed Brazil Central Bank, to be repaid out of Brazil's gold production. Brazil produces about 9,000,000 dollars' worth of gold annually; onefourth of it will be hypothecated as collateral for this loan. The United States Export-Import Bank will advance 20,000,000 dollars, on a two-year credit, to enable, Brazil forthwith to abandon controlled foreign exchange, in favour of a free exchange, in trade with the United States. The ExportImport Bank will co-operate with American manufacturers and exporters in assisting them to extend long-term credit for the purchase of railway equipment and other capital goods needed for Brazilian development. The United States Government will loan to Brazil experts to assist in developing rubber, quinine, certain hardwoods, and other non-competing products, which the United States needs.

Great satisfaction is expressed in official quarters at the result of the deliberations, which have been carried on for several months, and which were consummated as a result of the recent visit of the Secretary for State, Mr. Cordell Hull, to Lima, to attend the Pan-American Convention. It is understood that, in compliance with the treaty, the Government of Brazil will issue decrees which will make it extremely difficult for Germany to make further progress with the system of "blocked" marks that have been a feature of the trade between the two countries hitherto.