Mr. Thompson to Mr. Gresham.

No. 291.]

Sir: I inclose memorandum of a conversation I had with the director-general of the foreign office on the 20th instant. The memorandum outlines the probable action of the Brazilian Government in regard to the commercial arrangement in view of the recent changes in our customs duties.

I also inclose copy of a letter from Consul-General Townes upon the same subject, complaining that orders for American goods are being canceled on account of the possible discontinuance of the arrangement.

I have, etc.,

Thos. L. Thompson.
[Inclosure 1 in No. 291.]


During an interview with the director-general of the foreign office the Viscount Cabo Frio, referring to the recent passage of the new tariff bill by Congress, stated, unsolicited, that in view of the fact that all sugars were made dutiable it was the present intention of the Brazilian Government to give notice on October 1 signifying [Page 78] a desire to terminate the commercial arrangements now existing between it and that of the United States. The notice would be given in accordance with the provisions of the arrangement requiring three months’ notice in advance, and would be made so as to take effect on January 1, 1895. This action was regarded necessary in order to avoid questions and disputes which would be likely to result in reclamations against the Government. Regret was expressed that it had been impossible for Congress to delay the operation of the sugar schedule, so that the denunciation could have been made as the correspondence on the subject stipulated, but indicated that the Government was in no way displeased that the matter would soon come to an end. That there was a large party in Brazil violently opposed to the arrangement and that its early termination would in all respects be satisfactory.

The conversation was unofficial, and the above can only be regarded as the present intention of the Government, which may be changed.

[Inclosure 2 in No. 291.]

Mr. Townes to Mr. Thompson.

Sir: Further considering the subject of tariff changes between Brazil and the United States, I beg to advise that quite a number of merchants of this city have daily called upon me and made inquiries as to the probable effect the recent changes in our tariff would have upon articles exported from the United States to this country. The newspapers of Rio have been publishing articles on the subject, and I understand the papers at Pernambuco are urging the abrogation of the rights of commerce which our country enjoys under the reciprocity treaty.

I have received a copy of the Journal of Commerce of New York, in which is given in full the schedule of the new tariff in the United States. From a casual perusal of the same I note that there have been some changes in our tariff which should prove quite beneficial to Brazil. The rate on tallow has been reduced from 2 cents to 1 cent per pound, nuts from 5 cents to 3 cents per pound, while coffee, rubber, hoofs, horns, hides, and grass fibers all remain free, as heretofore.

Taking the exports from this country to the United States at an approximate total of one hundred millions of dollars annually, it appears that only about 4 per cent of that amount is sugar, while 96 per cent is either free or reduced in rate under the new tariff.

The district of Pernambuco alone will be affected unfavorably by our new tariff. As we are beginning to establish a most satisfactory trade for American goods here, and as the general sentiment of this country is now most favorable to American interests, I beg to suggest that, if expedient, you will take some action looking toward quieting the rumor afloat in the city to the effect that Brazil will soon put all of our exports here upon equal footing with other countries.

Foreign merchants in this city are now doing all they can through that channel to have orders for American goods canceled and to forestall the taking of further orders, as I am advised by American houses resident here and their agents. If it is possible to procure from the present Administration some indication that our country will continue to enjoy the present tariff schedule, it would be quite beneficial to American interests here, while if a treaty could be negotiated along these lines it would ultimately result in largely increased exports of our goods.

I remain, etc.,

Wm. T. Townes,