811.51632 National City Bank/11: Telegram

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


12. The Department considers that the fine imposed on the National City Bank has created a most serious situation. Even should the National City Bank be guilty of the infraction of a regulation as charged the fine is out of all proportion to the offense. All profits of the Bank in Brazil will be wiped out if this fine is levied.

For your strictly confidential information you are informed that the Directors of the National City Bank have authorized the closing of all of its Brazilian branches and liquidating its business there should this fine be levied. The National City Bank does not want to make any threats to the Government of Brazil and, of course, is not [Page 468] advising it of the decision it has reached. The Department, of course, does not desire you to make any reference to this in your conversations with the Brazilian officials. On the other hand both the Department and the Bank do want you to know how seriously they consider the situation. If the Bank should withdraw, you can readily appreciate the effect this would have on American interests in Brazil.

Please take up this matter actively with the Government of Brazil pointing out how greatly disproportionate is the fine to any infraction of regulations even on the basis that the Bank is guilty of all the charges made, and the Bank alleges that this is not the case. Please consult the opinion of Dr. Clovis Bevalacqua,29 a copy of which was submitted by Mr. Hart to the National City Bank on March 10. You should endeavor to have the fine, which is an administrative matter, very greatly reduced with opportunity for the Bank to file a bond instead of depositing cash or securities. Cable comprehensive report as soon as you can.

  1. Brazilian attorney and independent counsel for the National City Bank.