On the very day that a German major-general urged the wholesale peaceful invasion of Latin America by the cultural prophets of the German Reich, in the economic sphere the United States launched its first major counter-attack against Nazi penetration of South America. The United States-Brazil trade agreements put a sudden halt to the growth of the German economic domination of Brazil, and provided a strong impulse to the growth of closer economic alliance of the United States with its Latin-American neighbors.

The most important terms of the agreement are the arrangements for a vast extension of credits by the United States to Brazil, and the latter's agreement to free its foreign exchange for commercial transactions. Here is a country with a large German population, loaded down with Nazi propaganda, which decided that the best hope for economic improvement lay in the establishment of a free exchange market. It means that Germany which has had a steadily growing Brazilian trade through her barter arrangements and use of restricted foreign exchange, will find Brazilian market's open to other countries, especially to the United States.

For the United States, the Export-Import Bank's advance of nearly twenty million dollars of acceptance credit will provide exchange to pay American exporters for unpaid merchandise. Moreover, the large amount of government aid will tend to encourage new American capital investments in Brazil. The pact marks an important step in the development of free trade relations between North and South American countries.

Two important consequences may follow from this agreement. Close economic ties with Brazil may result in close cultural relations and quite possibly military arrangements. Although the latter were ummentioned in the pact, there has been considerable discussion about making America's armament supplies available for her poorly armed Southern neighbor. Secondly, the Brazilian Pact may set in motion a series of United States, Latin-American trade arrangements that will change the whole complexion of the South American situation. The closer the Pan-American ties become, the less the danger of European totalitarian philosophy, and the brighter the future of freedom and free trade, at least in the Western Hemisphere.