File No. 832.61333/153.
The Ambassador of Brazil to the Secretary of State.
On the 18th of May of last year action on the charge of violation of the Sherman law against Hermann Sielcken and other members of the Coffee Valorization Committee of the State of São Paulo was brought before the United States District Court of New York by the [Page 64] Attorney General of the United States. Neither the Embassy of Brazil nor the Department of State itself received notice of this suit instituted against the acts and property of the State of São Paulo, represented by its agents specially commissioned to liquidate a stock of coffee acquired in 1906 with the object of stopping a continuous depreciation of the commodity caused by an abnormal crop, which depreciation was proving ruinous to the cultivation of coffee in that State. It is proper to note that until the beginning of 1912 the regular annual storage and sales of that coffee had not been considered to be in violation of any law of the United States. The committee for the liquidation of the valorization deposit dealt with sales only and never with purchases and the stock acquired by the State of São Paulo had already been reduced about 60% when proceedings for conspiracy and restraint of trade were instituted. The Department of State did not see fit to intervene in the case which was in some way within its province affecting as it did international relations and preferred to let the suit take its course.
The New York court having declined to issue the warrant for the seizure of the coffee deposited in that city, for a judicial sale “in the open market” as petitioned in the bill of complaint, the Attorney General recommended to the Congress of the United States an amendment known by the name of Norris bill which would authorize such seizure or confiscation and the Congress passed that measure ad hoc, as appears from the Attorney General’s report, and it is now the law of the land.
In the meanwhile and to the end of showing that there was no restraint of trade nor unlawful combination or conspiracy in the operations of the valorization committee, Mr. Sielcken proposed a stay of the proceedings that were injurious to the commercial and political relations of the two countries, while he endeavored to obtain from his colleagues and the Government of São Paulo authority to sell in the regular market and within a reasonable time the coffee deposited in New York thus removing the object of the complaint without, the necessity of a hearing in court. The committee approved Mr. Sielcken’s proposition, but the State of São Paulo rejected it on account of the engagements made with the purchasers of coffee and the bankers that had lent the money required for the valorization operations. The Government of São Paulo, confident of the perfect legality of its position before the national laws of the United States, thought it preferable to go on with the suit, which the American Government had to lose if it should not first recognize the error it made in instituting it.
It was then that the Brazilian Government resorted to the friendly settlement of the incident in the terms that are known to the Department of State. While the negotiations looking to that settlement were going on in Rio de Janeiro, Mr. Sielcken asked the Court in New York to set a day for the hearing of the defense presented by the counsel for the defendants. On the American Government’s request the Brazilian Government prevailed on Mr. Sielcken to withdraw his request, as the conciliatory action of the two Governments would be embarrassed by a continuance of the case.
An agreement for the disposal of the stock of valorization coffee deposited in New York having been reached, a doubt seems to have [Page 65] arisen as to the manner of effecting that sale, the Brazilian Government understanding that the coffee under litigation was simply to be sold in the customary way and the American Government understanding that the sale was to be made “in the open market.” The Attorney General would thus achieve through friendly arrangement what he did not obtain from the court in New York as a preliminary measure in the civil suit he had instituted. But there was no time for a discussion of the disputed interpretation of the arrangement. On the 16th of January the Coffee Valorization Committee of the State of São Paulo met in London and announced that they had sold and disposed of its stock in New York to eighty roasters scattered in twenty States of the Union. In order to dispel any doubt as to the good faith of the sale, the committee confidentially furnished the Embassy of Brazil with the list of the eighty several buyers. It was explained that secrecy was enjoined in accordance with the usage of trade, it being contrary to practice for sellers to publish the names of buyers. But this does not prevent the Embassy from asserting, from the enumeration it has before it, that the sale of the valorization coffee deposited in New York was bona fide, without restrictions and for actual consumption in the United States.
The Brazilian Government desires the dismissal of the case, which stands as an obstacle to perfect harmony in the relations of the two countries and was instituted by the Attorney General of the United States without previous notice to the Brazilian Embassy or the Department of State itself and is still prosecuted after the object, which was the sale and distribution of the coffee deposited in New York, has been accomplished.
And in compliance with its duty as representative of Brazilian interests abroad, the Brazilian Government would also like to hear from the American Government if it proposes that the operation of the Norris Act or of the law it amended is intended to exclude the remainder of the valorization coffee, or to prevent its deposit and regular sale in the United States or, in general terms, what will be the probable effects of those acts on the exchange of merchandise in the now rapidly growing trade between the United States and Brazil.
Washington , March 31, 1913.