Dollars for Ingots

"When I go back to my country," said Oswaldo Aranha, Foreign Minister of Brazil, last year in Washington, "I shall propose that we erect a statue to Herr Hitler. For it is Hitler who at last succeeded in drawing the attention of the United States to Brazil."

Had Minister Aranha carried out his intention, he could have added a wreath to the statue last week. It was the sinister shadow of Adolf Hitler hovering over South America that inspired the U. S. Government to open its purse strings for a fat loan to help Brazil develop her steel industry.

Loadstone to steel magnates and international industrial groups for many years has been 15,000,000,000 tons of iron ore (one of the largest known high-grade deposits in the world) pocketed away in the State of Minas Geraes. The Minas Geraes fields are within 200 miles of the coast and north of Brazil's great port, Rio de Janeiro. Coal for smelting is available in Santa Catarina and Rio Grande do Sul. The Brazilian Government had dreamed of developing its steel industry independently, but, finding the financial burden too great, it offered the concession to the highest foreign bidder. Interest lagged except in iron-hungry Germany, where the Krupp combine, according to the Brazilians, tried hard to get the monopoly. Hitler's commercial agents, they said, had offered to transfer the entire Skoda Works from Czecho-Slovakia to Brazil. When World War II began to devour more steel than Europe could produce, Axel Wenner-Gren, Swedish steel baron (Bofors), was also supposed to have turned up in Rio de Janeiro with an offer for exploitation by a Swedish-German consortium said to include Krupp. Hoping to interest U. S. capital, Brazil issued pointed warnings that unless the Yanquis became more ardent in their financial wooing she would leap into the arms of Hitler.

Early in 1940 U. S. Steel Corp. finally drew up a plan for a $35,000,000 project which caused impetuous little President Getulio Vargas to announce that the U. S. and Brazil were at last ready to collaborate. But inability to agree on property rights led U. S. Steel to break off negotiations. Yankee imperialism was damned in Latin metaphor and Japan was added to those desiring to bundle up with Brazil in her bed of ore.

Then the U. S. Government, whose finger had never been lifted from the South American pulse, intervened. In March 1940 it was reported that other U. S. interests desirous of assisting Brazil in developing her steel industry had begun to survey the field. In April it became known that the U. S. Export-Import Bank had advanced Brazil a loan of $6,075,000 for railroad construction. When a mission headed by Brazil's industrial tsar, Guilherme Guinle, and including her foremost steel expert, Lieut. Colonel Macedo Soares, appeared in Washington to talk business with Federal Loan Administrator Jesse Jones, the new partner proved to be the U. S. Government.

Last week the details were announced. The Export-Import Bank would lend Brazil $20,000,000, which with $25,000,000 to be provided by the Brazilian Government and private investors would be used to establish Brazil as an important steel producer, with smelting furnaces at the ore fields and a steel mill in the State of Rio de Janeiro. U. S. equipment and technical skill would be used, and the loan would gradually be retired when the plant began to produce.

The object of the U. S. loan was to help Brazil, deprived of her European coffee and cotton markets, to recover economically. Chief drawback to industrial development in all Latin-American countries has been lack of transportation, but with an important South American steel centre to turn out rails and rolling stock, railroads can be extended, stimulating agriculture and providing access to still other unexploited raw materials. In lending a hand, the U. S. Government was also aware that a prosperous neighbor with a high standard of living is a good customer.

All smiles, the Brazilian press proclaimed the loan as mutually beneficial to both partners, a sock in the eye to Adolf Hitler. In Washington it was regarded as a milestone since it indicated that with this loan and with the $500,000,000 appropriated last week in the Export-Import Bank bill, the Government was implementing its good-neighbor policy with cold cash.

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