653.116/43
The Chargé in Portugal ( Andrews ) to the Secretary of State
[Received May 17.]
Sir: I have the honor to report the events of the present phase of the shipping discriminations questions referred to in my despatch No. 2273, of April 25, 1928.16
At the time of the Department’s instruction No. 859, of December 31, 1927,17 and Legation’s despatch No. 2202, of January 31, 1928, in reply thereto, the diplomatic representatives, who had, concurrently with Mr. Dearing, delivered notes of protest to the Foreign Minister against the discriminations in favor of Portuguese vessels in the matter of port [Page 778] charges and reductions in customs duties on cargoes, had no inclination for renewing protests.
What stirred them finally into activity was the Decree No. 15,086, dated February 15th, 1928, but published in the Diario do Governo of February 28, 1928, paying a bounty of one and one-half (1$50) escudos per ton on coal, sulphur, and fertilizers imported in Portuguese bottoms. This bounty was indicated as payable to Portuguese shipowners in compensation apparently for the losses resulting to them from the alterations in legislation affecting Portuguese shipping by the Decrees Nos. 14,646; 14,647; 14,664; 14,665 of December 3rd and 5th, 1927, reported in Legation’s despatch No. 2150, of December 7th, 1927;18 and by Decree No. 14,833, dated December 31, 1927, published in the Diario do Governo of January 7, 1928. Refer also to the Consulate General’s voluntary reports Nos. 418, of December 22, 1927, and No. 433, of February 6, 1928.19 This subsidy is also thought to be in anticipation of losses that would result when the 10% customs reduction on imported goods, and the 10% to 20% on those exported would be abolished. The Consulate General established the fact that the subsidy is actually being paid directly to the vessel owners.
Equality of treatment in respect of cargoes from foreign and Portuguese ships had been stated by the Foreign Minister to each of the interested Chiefs of Mission on occasions, as “accepted in principle” by the Portuguese Government who “were only awaiting a favorable opportunity” for putting the intended reform into effect.
The British Ambassador crystalized the general feeling by calling a meeting for April 17, 1927 [1928]. The Dutch, Norwegian, French, and Italian Ministers, the Spanish Ambassador, the German Chargé d’Affaires ad interim, and myself were present. The British Ambassador lead off by saying that orders from his foreign office obliged him to protest the 1½ escudos bounty because of coal, but that he would include in his note a protest on the customs discrimination. He then distributed copies of his intended note. The others present—except the Spanish Ambassador, who expressed no decided opinion but remarked that probably nothing they might write would produce any result!—practically agreed in describing the subsidy as in effect a discrimination and an aggravation of the discriminations still existing, i. e., a bounty in addition to the 10% reduction. By “discriminations” they meant the customs reductions, and not the port charges. They are all fairly well satisfied with the alterations in the latter made by the December decrees.
It was agreed among all—excluding the British Ambassador, the German Chargé, and myself—that the French Minister should draft a [Page 779] note, which the others with slight modifications would follow as a model. Monsieur Pralon became ill and a delay ensued. His draft, when it finally was distributed, was not quite satisfactory to the Dutch and Norwegian Ministers, who thought it—so they told me—not sufficiently emphatic on the 10% customs import discrimination. It should here be said that the 10% to 20% customs export discrimination is only perfunctorily mentioned, as it is relatively of small importance. I noticed in this conference that it was the subsidy on coal that was talked of, sulphur and fertilizers being treated as secondary. Sulphur and fertilizers are not prominent imports, although perhaps sulphur interests Italy to some extent, and fertilizers the French.
As reported in my telegram No. 18, of April 23, 1928, the Continental diplomats at this conference declared their intention of including the bounty in their protests. The Dutch and the Norwegian Ministers have in their notes particularly stressed the 10% customs import discrimination.
The German Minister, Dr. Voretzsch, who, subsequently to the above meeting, returned from leave, has informed me that he is still in correspondence with his Foreign Office in these matters, and has therefore not yet sent a note. Dr. Voretzsch is very soon relinquishing this post on transfer to Tokio and prefers, I think, not to leave it to his successor who is expected to arrive almost at once upon Dr. Voretzsch’s departure.
The Department’s telegram No. 12, of April 27, 1928, suggests bringing to the attention of the diplomats concerned that subsidies to shipowners are a method for compensating them for losses deriving from the doing away of discriminations. This point was brought up in the meeting at the British Embassy and was declared to be a substitution of one form of discrimination for others. The Dutch Minister said that in time the Portuguese Government would probably end all the discriminations and would replace them by compensating subsidies. There was general assent and the idea seemed very distasteful.
As I did not intend to take part in discussions at the conference, I had that morning a talk with Sir Lancelot and told him I would not have authority to protest the coal bounty, but probably might send a protest on the discriminations previously protested.
The following diplomatic representations have, I understand, now sent notes of protest embracing the 10% customs discrimination and the coal, sulphur and fertilizer bounty, but not the port charges discrimination: British, French, Dutch, Italian, Spanish, Norwegian, and (through the Norwegian Minister) Danish, and Swedish.
Referring to my telegram No. 19, of May 3rd, 1928, I could see no advantage from this Legation—which protested coincidentally and in collaboration on the previous occasions—now making itself an exception. [Page 780] I do not think abstention would have produced any effect at the Foreign Office valuable for later negotiations. On the contrary, participation in the action now taken would contribute that much more towards ending the procrastinations of the Government in carrying into effect the equality of customs treatment it has already stated it accepts in principle. The inclusion in my note of port charges discriminations merely maintains a consistent position in view of the forthcoming negotiations by the Minister. The other Missions are—as stated above—sufficiently satisfied with the corrections in port charges of last December and are doing nothing further. A renewed protest on this occasion is also, I think, a natural antecedent to treaty negotiations a few weeks hence.
A copy of my note to the Minister of Foreign Affairs with that of a personal note accompanying it is included among the enclosures to this despatch.
The memorandum enclosed with the Department’s instruction No. 898, of April 11th, 1928, describes the discriminations in respect of port charges as only somewhat ameliorated by the Decrees of December, 1927. From information gathered by the American Consul in Chargé, Consulate General, it is obvious that, through qualifying clauses, such as stipulate that foreign vessels must pay certain charges in gold or in pounds sterling and in differentiations in percentages favorable to national shipping, the improvement supposed to have been effected in the situation of foreign shipping is to a considerable degree more apparent than real.
Three weeks ago I talked with Senhor Gomes, a member of the commission created by the Government to study the question of changing the legislation affecting shipping in order to find ways of meeting the wishes of the diplomats who were objecting to the discriminations. He said that the influence of the leading Portuguese shipping man, Alfredo da Silva, President and Manager of the “Companhia Uniao Fabril”, was so powerful in opposition to concessions that he did not think there was any chance in a relatively near future that the 10% customs import reduction discrimination would be abolished.
With regard to the project of obtaining full national treatment for our shipping in connection with a treaty of commerce and friendship, Mr. Dearing with his great ability and long experience may be expected to succeed, if possible at all. I think it improbable that this Government, which, though well disposed, is that contradiction in terms, a weak dictatorship, will have the courage to accord equality of treatment to American shipping on the basis of a treaty or on any other basis, until it is prepared also to grant equality to the other chief maritime nations, particularly Great Britain. In which case it would give the equality irrespective of a treaty.
I have [etc.]