832.802 Lloyd Brasileiro Navigation Co./31

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

No. 3604

Sir: Referring to the Department’s telegrams No. 20 of March 20, 6 P.M., No. 23, of April 14, 3 P.M., and No. 34 of May 16, 12 noon, also to this Embassy’s telegrams to the Department No. 19, of April 15, 11 A.M., and No. 24, of April 29, 3 P.M.,4 all of which referred to Article 7 of Brazilian executive decree No. 19,682 of February 9 last, I have the honor to report that the Foreign Office insists that by granting a reduction of 50 per cent on the cost of the manifests and consular invoices of goods embarked on vessels of the Lloyd Brasileiro Line, no discrimination is created in favor of the Brazilian flag, because vessels of other Brazilian steamship companies, which ply between Brazil and foreign ports do not enjoy this favor, which is granted to the Lloyd Brasileiro in replacement of a subsidy because the Government is the owner of over 90 per cent of its shares. Although Brazil signed the Convention and Statute on the International Regime of Maritime Ports of August 26, 1927, which was deposited with the League of Nations on September 15 of that year, the Brazilian Government [Page 879]has not ratified that Convention and is, therefore, not bound by Article 13.

A number of my colleagues, whose governments are interested in shipping, and who have discussed the question of Article 7 with the Foreign Minister as I have done, are of the opinion that while the present Provisional Government continues in office, no steps are likely to be taken to alter the 7th article and that if an official attempt should be made to secure alteration, the Government might be incited to action which would be seriously injurious to the welfare of foreign shipping companies, such as the levying of an income tax upon them, or, an adoption of the example of Portugal which has reduced the import duty on foreign goods imported into Portugal in Portuguese bottoms. The additional expense to exporters on vessels which are not included in the Lloyd Brasileiro fleet will be inconsiderable, partly because the service of the Lloyd is uncertain and irregular and also because shippers are disinclined to employ Lloyd vessels on account of the unsatisfactory manner in which goods are stored, handled and delivered. The Lloyd ships which ply to the United States take a considerable amount of coffee which is embarked as a matter of convenience and not as a matter of preference.

The British Ambassador and the Swedish, Dutch, Norwegian and German Ministers hold the views stated above, the Swedish Minister being seriously apprehensive lest an official attempt to obtain a modification of Article 7 during the life of the present Provisional Government will cause that Government to take impetuous action which would be more injurious to foreign shipping interests than the slight injury to which Article 7 of Decree No. 19,682 subjects them.…

Respectfully yours,

Edwin V. Morgan
  1. Telegrams No. 23, April 14, and No. 19, April 15, not printed.