653.116/37
The Chargé in Portugal (Andrews) to the Secretary of State
[Received March 9.]
Sir: I have the honor to refer to the Department’s Instruction No. 859, of December 31, 1927, and to the Legation’s despatch No. 2202, of January 31, 1928, and telegram No. 7, of February 24, 5 p.m.
No relief has as yet been afforded by the Portuguese Government in the matter of the 10% reduction on all imports carried in Portuguese bottoms. Mr. Dearing in the above despatch gave it as his opinion that it would be a mistake of the Legation to make an isolated new intervention [Page 771] on this subject, for at least another month, thus concurring with the opinion of the Chiefs of the other Missions who took concerted action last year.
I was recently told by the Counselor of the British Embassy that the Embassy contemplated no formal representation at the Foreign Office in the immediate future; and that he knew of no new representations by the other Missions. The British Ambassador, however, has informally referred to the matter whenever he has had conversation with the Minister for Foreign Affairs.
I raised the question yesterday with the Minister for Foreign Affairs who replied that his Government accepted, in principle, equality of treatment of cargoes in foreign and Portuguese bottoms, but that the reason for the delay lies in the necessity of finding a way to compensate the Portuguese merchant marine for the losses it would sustain from abolition of the favored treatment; that he hoped, in fact thought, means had been found to do this, and that a decision would be given very soon.
Personally, I think that if the projected League of Nations loan goes through at Geneva—see my despatch No. 2219, of February 23, 19288—it would have a considerable effect in influencing the Government to clear up the shipping question, if it should not have done so meanwhile. The Government would not wish to have any dissatisfaction felt by foreign Powers.
With regard to paragraph 3, of the Department’s Instruction, I have, by reason of the absence of the Commercial Attaché, residing abroad in Spain, obtained from the Consulate General the following recent commercial information on the importation of tobacco.
The Managing Director of the “Companhia Portugueza de Tabacos” stated that the 10% reduction in duty on shipments entering the country in Portuguese vessels is still being applied; and the diversion of importations referred to in the Department’s Instruction, paragraph 1, is taking place. The “Companhia Portugueza de Tabacos” is now receiving its tobaccos by way of Rotterdam, Amsterdam and Antwerp. The Companhia buys its American tobacco twice a year, the dark about February first, and the light in July; shipments of these being made at various times. The Companhia also buys tobacco from the East Indies, West Indies, and other places, but these tobaccos, being of different types, are not in competition with American tobaccos.
In 1927, up to October, American vessels brought to Lisbon five separate shipments of tobacco. Since that month no more tobacco has been imported in American bottoms because the shipments have been diverted to Northern European ports for transshipment into Portuguese vessels in order to obtain the 10% reduction in import duty. The last American freighter to Lisbon brought no tobacco.
[Page 772]The purchases of the Companhia Portugueza de Tabacos are believed to be influenced by personal considerations, such as nepotism, rather than by the ordinary processes of trade, and price consideration. When a year ago the Government sold these factories, the Companhia Portugueza de Tabacos came under the control of the Burnay banking interests.
There was also about that time a new Tobacco Manufacturing Company organized, the “Tabaqueira”, controlled by the “Sociedade Geral de Commercio, Industria e Transportes, Lda”. The “Tabaqueira” recently declared a dividend, but, in the Consulate’s opinion, this dividend must have either been paid from capital or from profit by importation of already manufactured tobacco, as this Company itself has not, according to information received, manufactured any tobacco.
Among the data furnished me is the following résumé of the present situation in tobacco, as described by an agent of an American Exporting firm:
- (a)
- A change from Government control to private enterprise and a free market;
- (b)
- The imposition of a very heavy import duty which did not enter into consideration during the period of Government control;
- (c)
- The existence at present of a practical monopoly in the manufacture of tobacco, cigars and cigarettes, because of the existence of only one company, being that which took over Government factories; and
- (d)
- The continuation under private ownership of the purchasing methods that existed under the Government control.9
The tobacco situation may within a few months be influenced by the proposed loan to be made to this Government under the auspices of the League of Nations—see Legation’s despatch No. 2219, of February 23, 1928—which would in part be secured by the Customs duties (possibly increased) on importations of tobacco and by taxation on its sale, which also might be raised.
I have [etc.]
- Not printed.↩
- For previous correspondence on this subject, see Foreign Relations, 1926, vol. ii, pp. 880 ff.↩