"Let Us Dress in Cotton"

"Brazil," said newly appointed Finance Minister Oswaldo Aranha last week, "is a sick patient that needs to be told the truth." The truth, as Diagnostician Aranha bluntly told it, was even worse than the patient had thought: "Our total trade debt amounts to $1 billion. We owe the U.S. nearly $500 million." At home, "the cost of living has increased 11% more in the last five months; new money in circulation has increased 4 billion cruzeiros."

Called to the bedside at the urgent request of his old friend President Getulio Vargas, Dr. Aranha prescribed a harsh remedy for the high-living patient: "We must live under a regime of real austerity [and] do without luxuries. We have plenty of cotton--so let us dress in cotton like Hindus. It is time to start living within our means. We must work, we must pay what we owe--and we will pay."

By week's end, Aranha had promised to pay even if he had to dip into Brazil's gold reserves. When he said he would not devalue the currency now, the cruzeiro free-rate firmed up from 52 to 45 to the dollar. In a move to trim ship, he decided to unload Brazil's overpriced cotton stocks on the world market, though it might mean taking a $27 million loss on the treasury books. It was a tough line, but it won support at home and abroad. President Getulio Vargas called in his old-time lieutenant for advice on all sorts of matters. And Washington, greatly pleased with Aranha's approach, released a further $60 million installment of the $300 million credit set up last February to help tide Brazil over its financial crisis.

This file is automatically generated by a robot program, so reader's discretion is required.