File No. 832.85/43

The Ambassador in Brazil ( Morgan) to the Secretary of State


The President of Brazil, who has just resumed his official duties after a month’s absence, has authorized the Foreign Office to announce through the press and to the Foreign Embassies and Legations in Rio de Janeiro interested in the ex-German vessels that the Brazilian Government will neither alienate nor charter those ships but will organize with them transatlantic steamship lines under the Brazilian flag and with Brazilian crews, which will benefit Brazil and the Allies. The formation of those lines is dependent upon a previous understanding with the nations friendly to Brazil, with which Congress has instructed the Government to combine in formulating measures to protect and defend navigation and freedom of commerce. Coincident with this announcement the Brazilian Government has informed the Embassy that the President has confined [informed?] it in a personal message that two steamship lines consisting of 58 vessels of the present Lloyd Brazilian fleet, which includes ex-German vessels, will be established or expanded between Brazil and the United States and between Brazil and Europe. A new direct line of the Lloyd Brazilian which will not touch Brazil, wholly composed of 19 ex-German vessels, will also be established between United States [and Europe to] serve Brazilian interest and those of the Allied nations in transportation supplies with a view to a more rapid termination of the war. “Supplies” will be understood to include troops.

These 19 vessels, all of which must receive their major repairs in the United States, include 1 ship, the Blucher, of over 12,000 tons gross tonnage, 2 of over 9,000, 1 of over 8,000, 2 of over 6,000, 3 of over 5,000, 5 of over 4,000, and 5 of over 3,000 gross tonnage. Total tonnage of 19 vessels is 112,227 gross tonnage.

If the American Government should approve the proposal, a representative of the Lloyd Brazilian and the Brazilian Government with full powers would be stationed at New York City to see that the employment of these vessels is wholly for the benefit of the [Page 346] United States Government, which would control their movements and utilization with the single reservation of the maintenance of the general principles indicated in the above quotation. Though the vessels would appear to continue under the control of the Lloyd their actual employment would be directed by the American Government.

The financial arrangements relating to the vessels’ employment would be made between the American Government and the Brazilian Treasury Department. They would probably be based on gross tonnage and the cost of repairs.

The maintenance of the Brazilian flag would soon have the effect of bringing Brazil actively into the war and since none of the vessels are at present provided with crews their operation would inevitably be confided to Americans.

The Brazilian Government is committed to the shipping policy outlined above which has features in common with that which Uruguay has adopted.