811.51632 National City Bank/10: Telegram

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

13. The National City Bank has requested that you suggest to the Brazilian authorities for them that in order to avoid difficulties of the exchange situation, expenses of transportation and insurance in transferring the three million dollars required to be deposited with the Brazilian Government before an appeal can be made against the fine levied that the Brazilian Government consent to the Bank depositing with the United States Treasury through the Department of State, United States Government bonds to the par value of three million dollars. These bonds will be held in escrow to be released to the Brazilian Government only upon the receipt by the Department of the original or an exemplified copy of a letter from the Minister of Finance of Brazil enclosing an exemplified copy of a Court Order giving judgment against the Bank. There should also be enclosed in that letter an exemplified statement from the Minister for Foreign Affairs of Brazil to the effect that the Court rendering the judgment is either the Court of Last Resort of Brazil or that there is no appeal from that Court to a higher Court or in case there is an appeal that no appeal has been made within the statutory time. Upon receipt of these documents three million dollars or so much thereof as the judgment calls for will be held subject to the orders of the Brazilian Government.

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The funds may likewise be released to the Bank upon presentation by it of an exemplified Court Order sustaining the Bank and exemplified statement from the Minister for Foreign Affairs that the Court rendering the Order is the Court of Last Resort or if not that there is no appeal from that Court to a higher Court or if there is appeal that no appeal has been made within the statutory period. There should also be included in the arrangement a provision by which after a period of three years or some other term mutually agreeable to the Brazilian Government and the Bank the funds will be released to the Bank if no final determination of the matter has been reached. The arrangement should also provide that the funds are subject to disposition on joint order of the Minister of Finance of Brazil and the Bank. Meantime all interest from the bonds will be paid to the Bank and the Bank reserves the right to substitute cash for all or any part of the bonds at any time.

If the fine is for a part only of the funds deposited the balance after satisfying the judgment may be withdrawn by the Bank.

This Department and the Treasury Department have agreed to act in the manner suggested by the Bank in case this meets with the wishes of the Brazilian Government.

Please advise Mr. Hart of the contents of this cable for his information before acting on it.

Cotton