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

File No. 832.73/129

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

No. 1088

Rio de Janeiro , December 12, 1917 .

Sir: I have the honor to report that the Western Union Telegraph Co., through a special representative, has applied to the Brazilian Minister of Public Works for permission to lay submarine cables from Kio de Janeiro or from Nictheroy, the capital of the State of Rio de Janeiro, across the bay, to “one of the Antilles of Central America,” touching at Itaparica or some other point in the State of Bahia; at Aracajú in the State of Sergipe; at Olinda in the State of Pernambuco; at Parahyba in the State of that name; at Natal in the State of Rio Grande do Norte; and at Belem in the State of Para. The same company has also applied for a concession to lay a cable from Rio de Janeiro or Nictheroy to Maldonado, in Uruguay, which eventually will be extended to the Argentine, touching at Santos or some other point on the Brazilian coast.

No monopoly, special privileges or governmental subvention are asked and the rights of third parties are recognized to whom the Government may wish to grant a similar concession. It is specifically stated that the Western Union only intends to engage in international business and will not compete with the local business of the Government’s telegraph lines. The company also promises not to charge higher rates than those that are at present in force. It proposes, indeed, to reduce them and to introduce cable and week-end letters as well as other facilities which will benefit the public and the press.

I have also the honor to report, in strict confidence, that the Central & South American Telegraph Co., which recently obtained permission to extend its lines from Buenos Aires to Rio de Janeiro and Santos, will probably soon apply for a concession for a submarine cable from Rio de Janeiro to the island of Fernando Noronha, north of Pernambuco, and from there to Colon, Panama, touching at intermediate points outside of Brazilian territory.

The enclosure accompanying this despatch is a copy of Clause IV of the Western Telegraph Co.’s, concession of 1873, and Clauses I and III of the concession to the French Cable Co. of 1890. These clauses are open to several interpretations and if the interested American corporations secure concessions to lay cables they will subsequently be obliged to defend their rights in the Brazilian courts because the Western and the French companies will bring suit against them to ascertain the court’s ruling on the meaning of these clauses as well as to gain time.

The Western Telegraph Co. holds that, under its concession, the word “point” refers to the whole of the territory of a State, formerly a province, in which the Western has established an office, and that no other company can connect two points which are already connected by its lines.

The French concession appears to prohibit another concessionaire from laying cables which will operate between Brazil and North America, and raises the question whether the Antilles are covered or excepted because a cable going to them would be necessarily en route to the United States or Europe.

On account of the probability of an appeal to the Brazilian courts regarding these two questions, the operation of a cable service to the United States by either company will be delayed for several years.

I have [etc.]

Edwin V. Morgan

[Enclosure]

Clauses of concessions in force in Brazil which hinder the free entry of American cable enterprises

Clause IV of the Western Telegraph Co.’s Concession of 1873

The term of the concession shall be 60 years to count from the present date.

1. During the said term no other submarine telegraph line may be established from any one point where the enterprise shall have established the stations indicated in the present concession to another point in the same conditions in the whole extension of the lines both north and south. This provision does not prevent the Government from authorizing the establishment of submarine cables by other companies communicating provinces of the Empire among themselves, provided that these provinces be not included in the number of those which, under the present concession, are to be connected by the telegraph line forming the object of the present deed.

2. The Government reserves for itself the right to establish communications by overland electric telegraph wires in any direction, at such points as it may deem most convenient and to its best judgment, administratively or through any private enterprise, the tariffs for private telegraph lines competing with those of the company not to be lower than those of the latter.

Clauses I and III of the French Concession of 1890

I

The Provisional Government of the Republic of the United States of Brazil grants unto the French companies (Sociélé Française des Télégraphes Sous-Marins and Société Générate des Téléphones) authority to establish, direct or indirect, telegraphic communications by means of one or more submarine cables between the town named Vizeu in the State of Para and the seacoast of the United States of North America, the said companies to use all their efforts to secure the concession from the Government of the latter country to this effect.

The establishment of telegraph cables to Europe starting from any point of the line between the United States of Brazil and North America is expressly prohibited.

III

The present concession is granted for a period of thirty-five years, as from the date hereof, and during its life no other submarine telegraph line shall be authorized to operate between Brazil and the United States of North America.

It is hereby expressly understood that this provision does not limit the power of granting permission to other submarine lines between Brazil and Central America or Mexico.