711.532/4
The Minister in Portugal (Dearing) to the Secretary of State
[Received July 1.]
Sir: I have the honor to refer to the Department’s Instruction No. 898, of April 11, 1928, instructing me to propose a Treaty of Friendship, Commerce and Consular Rights to the Portuguese Government.
During a conversation I had with the Foreign Minister on the afternoon of Thursday last, June 21st, it seemed to me that the moment was one in which I could very well discuss the matter with him. The Minister has always been frank and easy to approach and is fair minded and friendly. He at once expressed interest in the matter, inquired whether I had a draft of such Treaty and said he would be glad to examine it; but he did not commit himself in any way.
The Department doubtless recalls that the head of the Consular and Commercial Division of the Foreign Office is Doctor Oliveira Soares. It is he who has the most direct charge of Portuguese Treaty matters, and who is the best informed concerning them. His attitude with regard to a Treaty will be found set out in my despatch No. 1538, of July 1, 1926.21 I have no reason to think that he has changed, and I expect there may be still some difficulty from that quarter. I shall endeavor, however, after receiving the Department’s draft, to speak to Doctor Oliveira Soares as well as to the Minister for Foreign Affairs.
With regard to the Legation’s telegram No. 7, of February 24, 1928, and the Legation’s despatch No. 2220, of February 24, 1928, stating that the Portuguese Government has accepted in principle equality of treatment, I am not so sure that the Portuguese Government has really done so. In the first place, and as the Minister for Foreign Affairs told me on the 21st, the so-called acceptance applied merely to Portugal and the Adjacent Islands, and in no wise whatever to the Portuguese colonies, where, the Foreign Minister says, the adoption of such a policy would mean the wiping out of Portuguese shipping lines. In the second place, the Minister constantly talks—even in the case of Portugal proper and the Islands—of finding some means of compensating shipowners before putting that policy into effect. The means he suggests is a subvention; but even this, he remarked, is not likely to be forthcoming soon, as the program of retrenchment and economy adopted by the Minister of Finance, who is now the dominant member of the Cabinet, makes it impossible to find money with which to pay a subvention.
[Page 785]I must say that I rather share the feeling of my Colleagues here that efforts of this sort on the part of the Portuguese Government will leave foreign shipping exactly where it was, if not in a more difficult position. A reduction of the charges and the doing away with the discrimination in favor of Portuguese vessels may bring the burden upon foreign ships down to a reasonable figure, but Portuguese vessels will have the same advantage over them as before, that is, the measures the Portuguese Government is seeking on behalf of Portuguese shipping lines will be, as the Department states in its telegram No. 10, of April 13, 1928, “so similar in their effectiveness as to render illusory the removal of discriminating import duties in favor of national vessels”.22
The Portuguese shipping interests are largely controlled by one Alfredo da Silva, who has been protected, probably rather too tenderly, by the Portuguese Government, and it may be unwise to sacrifice the interests of the country at large to this shipping magnate. One can understand, however, that the Portuguese Government will wish to retain its shipping.
The Minister explained to me that it was hoped the increased traffic under the lower charges would produce enough money to provide that subvention to the Portuguese shipowners, and compared this subvention to the subsidies and mail contracts given by Great Britain and other Nations. The Department will, however, note from the Reports from the Consulate General, particularly Mr. Pinkerton’s Report No. 433, of February 6, 1928,23 that a really national treatment is not yet accorded to foreign vessels.
The Foreign Minister has for a long time been promising an early and final solution of the shipping matter. I feel sure that he really wished and expected to be in a position to send to all the Missions here a comprehensive Note on the subject in reply to the original protest made in January 1927. The strenuous opposition of Mr. Alfredo da Silva and the slowness of the Commission headed by Mr. Carlos Gomes to pass upon the matter has brought about the delay. The Commission has been hearing the complaints of every one concerned.
Mr. Andrews laid the situation comprehensively before the Department in his despatch No. 2281, of May 4, 1928. The situation now is much the same, as one is always presented with the statement that final action will be taken when some means can be found to compensate the Portuguese interests that will suffer.
I am inclined to think that Mr. Alfredo da Silva will make an effective opposition for some time to come; and the economy program of the Finance Minister will also cause delay. My Colleagues are at [Page 786] present not doing very much, as most of them have recently been changed.
I think there is nothing to be lost in the meantime in talking to the Foreign Minister about placing our commercial relations on a more definite basis and in seeking a Treaty which will give reciprocal effect to national treatment of shipping.
As I see it, the point about which we should be particularly clear, and on which I shall appreciate as much guidance from the Department as possible, is what constitutes real national treatment and the extent to which that is offset and nullified by subventions, subsidies, special payments or other measures. I should appreciate having from the Department an elaboration of the situation described in its telegram No. 10, of April 14th [13th], which shows the difficulty of the situation. I gather from what the Department says that direct subsidy or subvention paid by the Government to Portuguese vessels, in spite of the fact that they give Portuguese vessels the same advantage over foreign vessels they had before, cannot be objected to. If this is the case, it would seem that there could be no effective reciprocal national treatment and that, while charges might be made the same for both national and foreign vessels, nothing would really have been accomplished. A general lowering of the scale of charges, however, will enable foreign vessels to do business on more advantageous terms, in spite of the fact that Portuguese charges, by virtue of the subsidy, are in effect lower still.
I have [etc.]