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

File No. 832.73/125

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

No. 1047

Rio de Janeiro, November 8, 1917.

Sir: Referring to the Embassy despatch No. 998 of August 16 last, relative to the act of the Brazilian Government in granting a concession to the Central & South American Telegraph Co. to land submarine cables at Rio de Janeiro and Santos coming from the Argentine Republic, I have the honor to enclose a single copy of an English translation of the Executive decree No. 12,599 of August 11 which conceded the concession. Further copies will be transmitted as soon as they are furnished the Embassy by the representative of the company.

The contract between the Minister of Public Works and the local representative of the company was signed on October 27 and the contract published in the Official Gazette of November 1, 1917.

I have [etc.]

Edwin V. Morgan

[Enclosure—Translation]

Executive decree No. 12,599 of August 11, 1917

Grants unto the Central & South American Telegraph Co., for itself or the enterprise it may organize, authority to lay out, anchor in the coast of Brazil, maintain and operate a submarine telegraph cable connecting any point of the territory of the Argentine Republic with the city of Rio de Janeiro, as well as a submarine telegraph cable connecting any point of the territory of that Republic with the city of Santos, with no privilege or monopoly whatsoever or subvention from the Government.

The President of the Republic of the United States of Brazil acceding to the request made by the Central & South American Cable Co.; and

Whereas, by virtue of contract of the 30th June 1893 approved by an addition to the budget law for the year 1894, the Government agreed with the Western & Brazilian Telegraph Co., Ltd. not to grant, during the period of 20 years, as from the date of execution of the agreement, authority to any company, enterprise or private party whatsoever for the laying out of a cable or cables or telegraph line or lines between any point of the territory of the United States of Brazil and any point of the territory of the Uruguayan and Argentine Republics;

Whereas the monopoly thus granted unto the Western & Brazilian Telegraph Co., Ltd., and assigned by the latter to the Western Telegraph Co., Ltd., by decree No. 3,307 of the 6th June 1899, expired on the 30th June 1913;

Whereas, in conformity with the terms of Clause II of the said contract, on expiry of the period of 20 years, its clauses should continue to hold good until renewal thereof or until the Government should contract for the establishment of another cable in which case preference should be given to the Western Telegraph Co., Ltd., on equal terms;

Whereas, before expiration of the period of the monopoly the Central & South American Telegraph Co. petitioned permission to lay out and operate one or more submarine telegraph cables connecting the Argentine Republic with the cities of Rio de Janeiro and Santos, but soliciting this concession under a régime of free competition, i. e., without monopoly or Government subvention;

Whereas, on expiry of the privilege and upon presentation of the draft of the clauses of the contract submitted by the Central & South American Telegraph Co. to the Western Telegraph Co., Ltd., for consideration in order that it might use its preferential right under Clause II of its contract, the latter declared that it did not accept Clauses I, VI, and XXIII, thus rejecting the principal clauses of the proposed contract, that is to say: the one excluding the monopoly, that in which it was endeavored to guarantee the interests of the National Treasury and secure the collection of the import duties;

Whereas on cessation of its contract the Government could not continue to respect the privilege, when it had the faculty of entering into a new contract, with full liberty to adopt the régime of free competition;

Whereas the fact of the proposal of the Central & South American Telegraph Co. being acceptable gave rise to an injunction brought by the Western Telegraph Co., Ltd., against the Union to prevent the execution of a contract for the laying out of submarine cables on the terms proposed;

Whereas said action was accepted in the first instance but the Supreme Federal Court rejected the judgment rendered by the court of first instance and declared the period of the contract of the 30th June 1893 to have expired, and recognized the Government’s entire liberty to effect the proposed contract with the Central & South American Telegraph Co.

Whereas the advantages which will result from the linking up of the United States of North America and Brazil by means of a new telegraph cable permitting the free exchange of messages between the two countries without the interference of the existing lines belonging to companies of other nationalities, doth hereby decree:

Sole Article. Authority is hereby granted unto the Central & South American Telegraph Co. itself or through such enterprise as it may organize to lay out, anchor on the coast of Brazil, maintain and operate a submarine telegraph cable connecting any point of the territory of the Argentine Republic with the city of Rio de Janeiro, as well as a submarine telegraph cable connecting any point of the territory of that Republic with the city of Santos, without privilege or monopoly whatever or subvention from the Government under the clauses issued together with the present act and signed by the Minister of State for the Affairs of Roads and Public Works.

Rio de Janeiro, August 11th, 1917; 96th [year] of Independence and 29th of the Republic.

Wenceslau Braz P. Gomes
August Tavares de Lyra

Clauses Referred to in Decree No. 12,599 of this Date

I

Authority is hereby granted unto the Central & South American Telegraph Co. itself or through a company it may organize to anchor in the coast of Brazil, to maintain and operate a submarine telegraph cable connecting any point of the territory of the Argentine Republic with the city of Rio de Janeiro, as well as a submarine telegraph cable connecting any point of the territory of the Argentine Republic with the city of Santos, this permission constituting no privilege or monopoly whatsoever in favor of the contracting company, the Government of the United States of Brazil remaining with entire liberty of action to grant, at its discretion, the same or identical permission to any enterprise which may perchance solicit same.

II

The contracting company may connect both cables referred to in Clause I to its general system outside this country.

III

The landing of the cable in Rio de Janeiro shall be effected outside of the harbor bar and the cable in Santos at an adequate and suitable place so that the service of the port may not be affected.

Sole Paragraph. The landing points determined and chosen in accordance with the Government, shall be joined to the company’s stations by means of cables laid inside the bay, by permission of the proper authorities or by means of underground lines, the company having the faculty to use both systems, as deemed necessary or convenient.

IV

The laying out and landing of the cables connecting the cities of Rio de Janeiro and Santos with the Argentine Republic shall be made within two years as from the execution of the contract, cases of force majeure duly proven being excepted; the plans of the landing points and of the course of the lines joining said points to the company’s stations in Rio de Janeiro and Santos to be submitted to the Government for approval, not more than 60 days before the laying out of said connecting lines.

Sole Paragraph. The period stipulated in this clause may be extended one or more times at the Government’s discretion.

V

Whenever there may be sufficient room in the buildings of the National Telegraph in the cities of Rio de Janeiro and Santos, the company may install its stations therein, paying such rent as may be agreed upon, or the company may install its stations in private buildings, its property or not, these stations, in any case, to be connected to the Government stations by means of pneumatic tubing (or any other more perfected method) for the quickest possible exchange of correspondence.

VI

The following provisions shall govern the telegraphic traffic, namely:

(a) the concessionary may receive and collect charge upon such local telegrams as may be presented for dispatch, as also deliver all local telegrams received so long as similar services carried out by the other companies operating in this country are not taken over exclusively by the National Telegraph.

(b) Nevertheless, all telegrams sent to other stations or the Union Telegraph system shall be routed through the stations of the Telegraph Department at Rio de Janeiro and Santos, unless other routing be indicated.

VII

The company is bound to establish mutual interchange or traffic with the Government lines in regard to messages received from and addressed to the Union stations, excepting messages relating to the cities of Rio de Janeiro and Santos, provided the route indicated by the sender be always respected.

1. The rates to be established in the contract for mutual traffic between the Government and the company shall be equal to those existing in contracts in force with similar companies now operating in Rio de Janeiro and Santos.

2. In case of interruption of the overland lines named “Jaguarao” and “Uruguayana” to the Plate Republics, the company cables shall constitute “loaned routes “on the conditions set forth in Clause VIII.

VIII

In case of interruption of the Brazilian, Argentine and Uruguayan lines, the international service addressed to the Argentine Republic, Uruguay, Paraguay, Bolivia and Chili, from the northern zone of Brazil (starting from the stations situated in the State of Espirito Santo) as well as the international service, for same destination, from the southern zone (including the stations in the States of Rio de Janeiro, Minas Geraes, Goyaz and Matto Grosso) excepting that of the stations in the cities of Rio de Janeiro and Santos, shall be transmitted by the company’s cables in their quality of “loaned routes”, the amount charged by Brazil for the traffic on the overland lines to be divided in equal shares between the Government and the company.

Sole Paragraph. All telegrams transmitted by “loaned route” shall not pay the contribution referred to in Clause XI hereof.

IX

The company undertakes to maintain its cables in good working condition for the traffic requirements, it being bound to notify the Government within 48 hours of any fact which may cause or be likely to cause interruption to the service.

X

The schedule of rates shall be organized by the company and submitted to the Government for approval, said rates—which shall be collected in paper currency—not to exceed those charged by similar companies now operating in this country.

Sole Paragraph. The rates approved, once reduced can not be again raised without the Government’s authorization.

XI

The company agrees to pay the Government the sum of 10 centimes of a franc for each word of international telegrams transiting over the cables referred to in Clause I.

Sole Paragraph. This contribution shall be reduced to five centimes of a franc per word in respect of Brazilian Government service telegrams, press and “deferred” messages.

XII

The terminal and transit rates to be placed to the debit of the company for mutual international service shall be those in force for the mutual traffic with the remaining cable companies operating in this country.

XIII

The company may not amalgamate, enter into any agreement or convention with other similar enterprises operating in Brazil without previous consent of the Government.

Sole Paragraph. The telegrams which, by virtue of the route indication may have to be exchanged with other companies operating in this country, shall be transferred by the stations of the General Telegraph Department in Rio de Janeiro and Santos, through which shall be made the respective adjustment of accounts as regards said service, the concessionary to pay said department, in this case, one franc per telegram by way of indemnity for dispatch expenses.

XIV

The adjustment of accounts with the General Telegraph Department shall be made quarterly, the amount due to be settled within the quarter next following that to which said adjustment refers.

XV

The company agrees to accept the telegraphic convention of St. Petersburg, in accordance with the international regulations issued in conformity with the same, and enjoying all benefits deriving from the said convention.

XVI

The Government shall lease to the company such available marine lands as may be necessary at the points of the seacoast for the anchorage of the telegraph cables, the company having the right to expropriate, in accordance with the law, such lands, timber and further materials belonging to private parties, as may be indispensable for the establishment of the underground cables intended for the connection of the landing points with the company’s stations.

XVII

The Government shall supervise the whole services of the company in Brazil, in the manner which it may deem most convenient.

XVIII

Preference shall be given in transmission to the telegrams of the Government of Brazil and they shall enjoy a reduction of 50 per cent over the rates charged by the company.

XIX

Free transmission shall be afforded to:

1. All telegrams (not exceeding 20 words each) sent by the Government of Brazil or its agents in South and North America communicating the outbreak of any epidemic in the country whence they are transmitted or in the neighboring countries, or advising facts of notorious public calamity.

2. Two telegrams per day (one in each direction) between the Rio de Janeiro Observatory and one observatory in North America, the Government to pay the tax charged for official telegrams for such number of words as may exceed 20 in each message.

XX

For expenses of Government supervision the company shall contribute the sum of 12 contos of reis, in paper currency, annually, payable in half yearly instalments in advance, which shall be deposited with the National Treasury.

XXI

The company undertakes to maintain in Rio de Janeiro a representative with full powers to treat and definitely decide upon all questions which may arise in this country between it and its staff; said representative to have powers to accept service of initial summons and all others for which special powers are required by law.

XXII

For suspension of the traffic in the cases provided for in Article 8 of the telegraphic convention of St. Petersburg, no indemnity shall be paid to the company, whatever may be the duration of such suspension.

XXIII

The company shall enjoy all favors granted to similar companies and enterprises operating in this country, including those relating to material to be imported for the installation of its services and to cable ships which shall enjoy the privileges of national ships.

After installation of its stations, however, the company shall be subject to payment of customhouse duties on such material as it may import for the maintenance and operation of the services entrusted to it.

XXIV

For non-fulfilment of any of the present clauses the Government may impose upon the company fines of from 200 milreis to 2 contos of reis (paper currency) and double the amount in case of repetition. The amount of any fine imposed by the Government shall be deposited with the National Treasury within 30 days as from the date of its imposition as published in the Official Gazette.

XXV

The laws of Brazil shall be the only ones applicable to the settlement of any dispute relating to the present contract should such dispute fail to be settled by arbitration.

Sole Paragraph. For the arbitration, each of the parties shall appoint one arbitrator, and should they fail to agree the third arbitrator shall be chosen by lot between two persons presented each by one of the parties. From the decision of the third arbitrator there shall be no appeal.

XXVI

As a security for the execution of the provisions of Clause IV the company shall deposit with the National Treasury, before the execution of the respective contract, the sum of 40 contos of reis in paper currency, without right of interest, or in bonds of the public Federal debt.

Sole Paragraph. One half of the said sum shall be returned to the company six months after the definite inauguration of the traffic of the Rio de Janeiro-Argentine line, and the other half six months after definite inauguration of the traffic of the Santos–Argentine line. Should the period stipulated in Clause IV be exceeded and fail to be extended by the Government, the bond of 40 contos of reis shall become the property of the Government, to wit: 20 contos of reis for the Rio de Janeiro line, and 20 contos of reis for the Santos line.

XXVII

The permission referred to in Clause I may be declared null and void irrespective of judicial summons, the company having no right to claim any indemnity whatsoever:

1. Should, on expiry of the period fixed in Clause IV, the cables which the company has contracted to lay out, fail to work regularly, cases of force majeure excepted at the Government’s discretion.

2. Should the telegraphic communications by means of the cables referred to in Clause I be interrupted during more than six consecutive months, cases of force majeure excepted at the Government’s discretion.

3. Should the company enter into any understanding or agreement with any similar enterprise or company operating in Brazil, without previous authorization of the Government.

4. Should the company fail to deposit with the Treasury in due time, the quota due for supervision under Clause XX.

XXVIII

The authorization referred to in Clause I shall become null and void should the company refuse to sign the respective contract within 30 days as from the publication of the decree approving the present clauses.

Rio de Janeiro, 11th August 1917.

Augusto Tavares de Lyra