Economic Warfare in Brazil

Without yet setting up a Ministry of Economic Warfare (TIME, June 23) the U.S. nevertheless saw the start of such warfare last week on the chief Latin-American front: Brazil. A strategic loophole was plugged with a preclusive buying arrangement. Brazil stopped exporting--except to this Hemisphere and Britain--important war materials such as manganese, rubber, industrial diamonds, quartz crystal, mica.

Diamonds, essential to certain machine-tool operations, have been shipped regularly to Europe on Italy's Lati planes from Rio. Such exports are now to cease. Japan, large buyer of strategic Brazilian commodities a few months ago, can buy them no more.

This important news first became known not in Washington, but in Rio de Janeiro. It was not even acknowledged as a U.S. affair by the U.S. State Department, or by the U.S. Export Control Administration, where a staff of 350 has long been mapping a preclusive buying campaign under Brigadier General Russell L. Maxwell. No American claimed credit. But it represented some smooth, discreet work on the part of the State Department, RFC, and the No. 1 needler for economic warfare, Leon Henderson.

Notable fact about this setup: it was not concerned with Brazil's agricultural commodities that compete with U.S. products and surplus. That meant it was no mere bailing-out of Brazil, but an effort to encourage Brazil to develop products (especially manganese, mica and rubber) that the U.S. needs in greater quantities.

Similar preclusive deals with other South American countries are in the cards. Economic diplomats in Washington look to Colombia's platinum and mercury; Bolivia's tin and tungsten; Chile's copper and nitrates; Venezuela's asphalt and oil--many another product the U.S. can use and ought to keep out of Axis hands.

One big problem of this buying is transport from the mines, etc. to South American railheads and ports. Reason: Preclusive buying means an option to take whatever Latin Americans can develop, much of which may be far from present transportation facilities. Hastily preparing for a peak load on her own rails, trucks and ships, the U.S.--if serious about her new democratic imperialism--must find some way to keep the freight trains of South America rolling too.

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