Terms of Trade

Under the stiff terms of last year's $300 million U.S. Export-Import Bank loan, Brazil was required to pay off the entire sum in two years, starting this fall.

After studying his figures on foreign-exchange availabilities, Bank of Brazil President Marcos de Souza Dantas decided that there was a question Washington must be asked: Did the Export-Import Bank want Brazil to cut its purchases from the U.S. by one-third, or would it rather maintain the flow of business by lengthening the period in which the loan could be repaid?

Taking his question to Washington last week, Souza Dantas made his country's trade position clear: the U.S. share of the Brazilian market has already declined from 52% to 28% in five years, and if his country has to set aside $14 million monthly to repay the loan, there will be even less left to spend for U.S. exports. While Souza Dantas journeyed on to Manhattan to discuss the same problem with U.S. bankers and exporters, U.S. Ambassador James Kemper telephoned Washington from his post in Rio. Asked whether he talked to President Eisenhower, he said: "No, but don't ask me the next question." Reporters guessed he had put in a word for the Brazilians with his good friend Secretary of the Treasury-George Humphrey, who was mainly responsible for fixing the terms for the 1953 bail-out loan.

If so, Kemper's call was as effective as Souza Dantas' timely report on U.S. export prospects in Brazil. At week's end the Export-Import Bank announced that to "serve the mutual interests of trade and of the economies of the two countries," terms of the credit would be relaxed to permit Brazil to pay its debt over 7 1/2 years. For his part, Souza Dantas said that half of Brazil's dollar earnings in excess of $1 billion (last year's total earnings: $765 million) would also be applied to reducing the debt.

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