AMERICA'S GAIN

New Zealand Herald, Volume LXXVI, Issue 23320, 13 April 1939, Page 14

AMERICA'S GAIN

TREATY WITH BRAZIL IMPORTANT PROVISIONS BLOW TO THE .GERMANS [from our' own correspondent]] NEW YORK, March 15 Tho long-sustained battle between Germany nnd tlie United States for economic supremacy in Brazil lias been won by the United States, which has just concluded a treaty with Brazil that is of more than economic significance, as it crushes Germany's hope of using Brazil for securing a, foothold in the Western Hemisphere. 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 climi"hnte 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 bo engaged to set up this machinery. American investors will bo given equality of treatment with Brazilians. For this purpose discriminatory legislation, which had been under preparation in Brazil, will bo dropped. Controlled Exchange Abandoned Tho United States, on its part, will advance up to ,50.000.000 dollars in gold to the proposed Brazil Central Bank, to bo repaid out of Brazil's gold production. Brazil produces about 9,000,000 dollars' worth of gold annually; one-fourth of it will bo 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 . tho United States. The Export-Import Bank will co-operate with American manufacturers and exporters, in assisting them to extend long-term credit for tho purchase of railway equipment and other capital goods needed for Brazilian development. Germany's "Blocked" Marks Tho United States Government will loan to Brazil experts to assist in developing rubber, quinine, certain hardwoods and other non-eoinpetiJig products, which tho 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 ft. result of the recent visit of. tho Secretary of State, Mr. Cordell Hull, to liima, to attend the Pan-Amor km n 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 mako further progress with the svstera of "blocked marks) that have been a feature of the trade between the two countries hitherto. i