Papers Relating to the Foreign Relations of the United States, 1918

File No. 832.73/115

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

[Extract]

No. 998

Rio de Janeiro, August 16, 1917.

Sir: In amplification of the Embassy’s telegram of August 13 last, reporting that the President of Brazil and the Minister of Public Works had signed the concession which gave to the Central & South American Telegraph Co., “without monopoly of whatsoever nature and without subsidy from the (Brazilian) Government,” the right to lay submarine cables—one between Rio de Janeiro and Buenos Aires, and another between Santos and Buenos Aires, I have the honor to enclose herewith a translation of the presidential decree relating thereto which was signed on the 11th¹ and announced on the 13th instant, and which will soon be published in the Official Gazette. The full text of the concession will be forwarded to the Department when it is made public.

The establishment of all-American cable communication between the United States and Brazil, even though messages must pass through Argentine and Chilean territory, will be an event of considerable international importance, both because it will break the British monopoly which has been exercised for many years by the Western Telegraph Co., and because it is the beginning of that free telegraphic interchange between Brazil and the United States which it is hoped will be extended and developed in the future.

The Department’s telegram of August 3, announcing that Mr. Nelson O’Shaughnessy was about to visit South America as the representative of the Western Union Telegraph Co., indicates that the latter company is interested in this phase of the matter and contemplates laying a submarine cable between Brazil and the United States under the Atlantic Ocean. Since the Central & South American Telegraph Co. has secured its concession, the Embassy is in a position to give the same assistance to the Western Union Co. that it has given to the Central & South American. The moment for Mr. O’Shaughnessy’s visit appears opportune and I shall be glad if the Department will communicate that fact to Mr. Newcomb Carlton, the president of the Western Union Telegraph Co. …

I enclose a memorandum containing a résumé of the negotiations between the United States and the Brazilian Governments in behalf of the Central & South American Telegraph Co., as well as an editorial² from the Correio da Manhã of this city, of August 14, 1917, advocating a direct Atlantic submarine cable between the United States and Brazil, via Porto Rico.

I have [etc.]

Edwin V. Morgan

[Enclosure 1—Memorandum]

Negotiations Between the United States and the Brazilian Governments

First instruction from Department—Mr. Seward to J. Watson Webb, No. 228, March 30, 1868—Mr. Scrymser’s proposition refused by Imperial Government of Brazil.

British interests which have since been merged into the Western Telegraph Co., Ltd., obtained, in March 1870, a cable monopoly between all the Brazilian provinces (which monopoly will not expire until 1933), thus making it impracticable to extend American cables to Brazil via the Atlantic, which touched points on the Brazilian coast.

Several similar attempts made by Mr. Scrymser were unsuccessful up to June 1893, when the Brazilian Government granted the Western Telegraph Co. a 20-year monopoly of submarine communication between Brazil and the River Plate countries, in order to prevent the extension of the Central & South American Co.’s lines to Rio de Janeiro from Buenos Aires, a point which the cables had reached by slow extension down the west coast of South America from Panama and across the Andes by land line. This measure effectively blocked further progress for 20 years.

In July 1907, it was hoped that it might be found possible to bring an American cable from Buenos Aires to Brazil (see this Embassy’s despatch No. 39 of July 11, 1907¹). It was later determined that that hope was unfounded and that nothing could be done until June 30, 1913.

The Department’s instruction No. 207 of April 6, 1910,¹ to Ambassador Dudley started active negotiations which have been constantly continued since. The Ambassador’s note to the Foreign Office, based on this instruction, bore the date of May 10 of that year. The Government of Brazil decided that it could not grant the concession until the Federal Supreme Court decided whether the Western Telegraph Co. was right in its contention that a preferential clause in its 1893 concession gave it a prior right to decide whether or not it should accept whatever arrangements the Government and the Central & South American Telegraph Co. might propose to enter into. The Supreme Federal Court took two years to consider this point but on January 29, 1917, the Embassy cabled the Department that the decision was in favor of the American company. The Executive decree of August 11, 1917, terminates a matter which has been the subject of negotiations for 49 years.

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