832.802 Lloyd Brasileiro Navigation Co./46

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

No. 3748

Sir: In reply to the Department’s telegraphic instruction No. 96, of December 10, 1 P.M., which referred to instruction No. 1662 of August 27, 1931, both of which related to Article 7 of the Brazilian Executive Decree No. 19,682 of February 9, 1931, establishing a discount of 50% on consular fees to shippers by the Lloyd Brasileiro Navigation Company, I have the honor to report that the opinion of the Ministry for Foreign Affairs that the said Article should be regarded not as a discrimination against foreign shipping companies but as a form of subvention which the Brazilian Government grants to the Lloyd Brasileiro Steamship Line has not altered, and that the Brazilian Government believes that it should be regarded as a “subvention” or “bounty” to Brazilian vessels. If the view is accepted that the Brazilian decree should properly be regarded as coming within the scope of Section 26 of the Shipping Act of 1916, it appears that the provisions of that statute should be applied.

The Embassy foresees, however, that the injury imposed upon foreign shipping companies by the terms of the said Article will not be severe in comparison with the retaliatory measures which the Brazilian Government is capable of taking, and that the favors which the vessels of the Lloyd Brasileiro Line obtain therefrom are not of great importance. The opinion of foreign governments, as expressed by their local representatives, that it is better to let the question lie in order to avoid these retaliations, is still maintained. However, if the Department [Page 883]decides that the contention of the Shipping Board should be fully supported, I cannot but advise that the terms of Section 26 of the Shipping Act of 1916 should be enforced.

Respectfully yours,

Edwin V. Morgan