653.116/99
The Minister in Portugal (South) to
the Secretary of State
Lisbon, November 7, 1931.
[Received
November 25.]
No. 496
Sir: With reference to my despatch No. 484 of
October 20, 1931, reporting that I had delivered to the Minister for
Foreign Affairs a note on the subject of flag discrimination in the
sense of the Department’s telegraphic instruction No. 24 of October 16,
6 P.M., I have the honor to enclose herewith a copy and translation of
Captain Branco’s reply to the aforesaid note—a reply as untenable … as
is evident from the considerations hereinbelow set forth:
By Decree No. 19,306 of January 30, 1931, (see Legation’s
despatch No. 294 of February 7, 1931), the Portuguese
Government, as the result of representations made by the
interested Maritime Powers, undertook to extend, prior to June
30, 1931, national treatment in respect of maritime and port
dues to foreign merchant vessels;
Notwithstanding this commitment, no action was taken in the
matter until July 1, 1931, when, by Decree No. 19,989, (see
Legation’s despatch No. 408 of July 10, 19319), the Portuguese
Government extended national treatment in respect of maritime
and port dues to foreign merchant vessels, but simultaneously
created new tonnage dues of one escudo per gross registered ton,
thereby discriminating in effect against foreign bottoms;
By Decree No. 20,304 of September 12, 1931, (see Legation’s
despatch No. 459 of September 21, 1931), the Portuguese
Government professed to abandon in principle discriminatory
duties and undertook to effect the total extinction thereof by
means of gradual reductions. However, aside from making an
inadequate initial reduction, which in itself can have no
effect, the Portuguese Government took care to avoid committing
itself in respect of any and all further reductions;
Furthermore, under Decree No. 14,833 of December 31, 1927, (see
Consulate General’s report No. 433 of February 6, 19289), foreign
shipping in the port of Lisbon is charged from 10% to over 600%
more than Portuguese shipping is charged for the same
services;
Finally, under Section 5 of Decree No. 20,253 of August 25, 1931,
(see Legation’s despatch No. 450 of August 31, 19319), Portuguese vessels
are charged a fee of 0.50 escudo per net registered ton for the
authentication of manifests and bills of lading, whereas for the
same
[Page 973]
service, foreign
vessels are charged 1.00 escudo per net registered ton—that
which is in effect a discriminatory tax in the guise of a
consular fee.
The foregoing, I submit, is palpable evidence that it is the established
policy of the Portuguese Government to discriminate in every possible
manner against foreign shipping …
Respectfully yours,
[Enclosure—Translation]
The Portuguese Minister for Foreign Affairs
(Branco)
to the American Minister (South)
Lisbon, November 4, 1931.
No. 78/27
Mr. Minister: With reference to the
Legation’s note No. 260 of October 19, last, I have the honor to
inform you that the Government of the Republic, faithful to the
principle expressed in Decree No. 20,304, is endeavoring to adopt
all measures for the early extinction of the customs bonus by which
the Merchant Marine has been benefited and under which there has
been created a state of affairs the immediate suppression of which
would gravely affect national economics.
In the very interest of the principle decreed, ensuring the complete
effectiveness thereof, choice was made of gradual execution in
preference to an abrupt act which, while alarming public opinion,
would give rise to obstacles, to the unavoidable prejudice of the
new policy adopted. There was thus created a period of transition
during which, by means of successive measures, an endeavor will be
made to bring about the conditions which, aside from fiscal
equality, should form the basis of the maritime commerce system.
An equitable view of the problem cannot confine itself, in solving
the matter, to the pure and simple suppression of the customs bonus,
under penalty of the prevalence of an inequality to the detriment of
the national merchant marine which, operating old and uneconomic
vessels, without benefiting as do its competitors from credits at
low interest, from fuel at reduced prices and from indirect and even
preferential measures of protection, found in the customs
differential a mere counterbalance to these disadvantages.
There are even at this moment, after the publication of Decree No.
20,304, of September 12, idle vessels. Should we hasten to the
reduction of the customs bonus before the Portuguese fleet enjoys
operating conditions approximating more closely those from which
other fleets benefit, the number of vessels tied up in the ports
would increase suddenly, with the consequent unemployment and
distress of the crews, thus aggravating the difficulties of the
moment by a new
[Page 974]
crisis
which, owing to the necessity of looking after those affected, might
lead the Government back to the position it had deliberately
abandoned.
The creation of the circumstances rendering possible the future
reductions of the customs bonus is provided for by projects already
approved, relating to credits which, while benefiting the merchant
marine, will prepare public opinion—to which the Government must
give every heed—for the acceptance of the definitive renouncement of
a system which has brought a measure of freight to the ships which
call at the ports of northern Europe and of the Mediterranean.
The good faith of the Portuguese Government thus becomes evident from
the conciliation of all points of view and interests to the extent
which is just and reasonable. And under such a criterion, doubt
cannot be cast upon the efforts employed for the rapid realization
of a complete plan of protection of the national merchant marine
(Decree Nos. 20,321, of September 18, 1931, 20,333, of September 22,
1931, and others under consideration) which through its effects may
render possible the gradual suppression of the customs bonus in
harmony with the general provisions set forth in Decree No. 20,304.
It is unfortunate that these and other efforts and in general all
those which the Government has employed for the financial and
economic reconstitution of the Country should be seriously hampered
by the atmosphere of uncertainty which the economic situation of
Europe is creating. Were the situation otherwise, perhaps the
Government of the Republic could fix, within a due period of delay,
a date for the extinction of the customs bonus so as to be able to
bring about the most rigid transformation of the present conditions
of the national merchant marine and to conform at the same time to
the desire of Your Government to have abolished within a short
period that part of the percentage of the bonus which in effect
gives rise to the advantage derived from shipping merchandise by
Portuguese vessels.
I avail myself [etc.]
