I am also appending for your interest copies of the letter of submission
by the sub-committee and the letter accompanying the Agreement40 which is
being sent to all firms having these blocked currencies advising them as
to the steps to be taken to convert them into American currency.
This matter has engaged the attention of the Council for several months
past and we feel the solution now arrived at will greatly aid in
overcoming one of the greatest handicaps to the restoration of normal
trade with Latin America. It further provides a definite settlement of
the frozen balances and it enables American firms to resume their normal
trading position with Brazil, with a greatly improved prospect of their
future drafts for sales being met at maturity.
It is proposed to continue this work with other South American countries
where similar problems exist, and your interest and cooperation will be
appreciated as this important work progresses.
Draft Agreement Between the Banco do Brasil and
Certain American Firms
Agreement, executed in the City of New York, New York, this . . . . .
of June, 1933, between Banco do Brasil, as
Principal, hereinafter called “Banco”, and the Federal Government of the United States of Brazil, as
Guarantor of Banco, parties of the first part, both herein
represented by His Excellency Dr. Rinaldo de Lima e Silva (Brazilian
Ambassador to the United States, or his designate) and—
- The Texas Company (South America) Ltd.
- Electric Bond and Share Company
- American & Foreign Power Company, Inc.
- Standard Oil Company of Brazil
- Atlantic Refining Company
- Westinghouse Electric International Company
- The Caloric Company
for and on behalf of themselves, or their subsidiary
companies, and on behalf of other companies, firms and individuals
who may hereafter become parties signatory hereto, in the manner
hereinafter set forth, parties of the second part;
Whereas, the parties of the second part of
their subsidiary companies have in Brazil, on the date of this
agreement, Brazilian currency awaiting conversion into currency of
the United States of America, in amounts set opposite their
respective signatures, and
Whereas, the parties of the first part
desire to supply such exchange without delay or restriction,
Witnesseth:—
In consideration of the mutualities hereof it is agreed as
follows:
1. Banco agrees to receive from each of the parties of the second
part the respective sums in Brazilian currency set opposite their
signatures, which Banco agrees to convert into New York dollar
funds, as hereinafter set forth.
2. Upon payment by any party of the second part of the above
respective amounts in milreis to Banco, which payment shall be made
on or before June 30, 1933, Banco shall deliver to the party of the
second part so paying its seventy-two (72) bills of exchange in U.
S. A. dollars in equal amounts accepted by Banco, or at its option
[Page 58] its promissory notes in
like amounts in either case guaranteed and endorsed by the Federal
Government of the United States of Brazil payable in New York funds
calculated as follows:—
The total amount of milreis delivered by such party of the second
part to Banco shall be converted into U. S. A. dollars at the rate
of exchange of 13.965 milreis per dollar. The resultant amount of
dollars shall be increased by twelve percent (12%) representing
interest at the rate of four percent (4%) per annum for three (3)
years. The seventy-two (72) bills of exchange or notes shall be
dated July 1, 1933 and shall mature one each calendar month
following the date of issue and shall be payable without discount or
extension of time by the fiscal agent appointed by the Brazilian
Government, in the City of New York, in U. S. A. dollars.
3. Banco agrees to reserve from the exchange made available out of
exports from Brazil the necessary amounts to meet on maturity any
and all bills of exchange or notes delivered by it hereunder.
Banco further guarantees to each of the parties of the second part,
on the request of the latter, out of said exchange and after the
payment of such bills as and when matured, a preference in the
supply of U. S. A. dollar exchange sufficient for the current needs
of each of the parties of the second part, from the date of this
agreement on and until payments of all of the bills of exchange
delivered hereunder. By current needs the parties intend to refer to
amounts necessary for the importation of merchandise, for earned
interest and dividends and any and all other essential charges.
4. Banco agrees to provide, within ninety days (90), at its current
official rate, U. S. dollar exchange for the conversion of all
blocked milreis deposits held on the date of this agreement by
parties entitled to become signatories of this agreement having
blocked milreis, on the date of this agreement, not exceeding in any
one case 665,000 milreis, subject to the verification of the amounts
by the Banco do Brasil; the aggregate of such dollar exchange not to
exceed one million ($1,000,000.00) U. S. A. Dollars.
5. All questions which may arise relative to the interpretation or
fulfillment of this agreement shall be decided by arbitration in the
form and manner to be agreed upon between the parties.
6. Banco and the Federal Government of the United States of Brazil
agree that no arrangement relative to exchange shall be made with
any other country or the nationals of any other country, more
favorable than the terms of this agreement or make any other
arrangement which may interfere with the orderly carrying out of
this agreement.
7. Any company, firm or individual national of the United States of
America, or subsidiaries of any such company having on the date of
this agreement blocked milreis or blocked dollars awaiting exchange
[Page 59] in Brazil, may become a
party of the second part hereto by executing and delivering to Banco
or the fiscal agents referred to in paragraph 2 on or before June
30, 1933, a counterpart hereof with the amount of such blocked
milreis so presented by him, it or them set opposite his, its or
their signature.
8. This agreement shall become effective immediately upon the
fixation of signatures of the representative of the parties of the
first part and of the parties of the second part, provided the
aggregate amount of blocked milreis possessed by the latter on the
date of this agreement, as set forth opposite their respective
signatures, shall at least equal the sum of one hundred and fifty
thousand (150,000) contos of reis.
9. It is understood and agreed that the parties of the first part may
address any or all communications intended for the parties of the
second part as a whole to the Chairman of the Council on
Inter-American Relations, 1 Hanover Square, New York, who will be
authorized to act for each of the parties of the second part in the
manner and to: the extent that each such party, in its discretion,
may hereafter state in writing. Duly authenticated attestation of
any such authority shall be transmitted to the parties of the first
part.
This does not preclude either of the parties of the first part or any
of the parties of the second part from communicating with or
negotiating directly with the other party in respect to any question
or matter relating to the interpretation of this agreement or
arising in the operation thereof.
10. The Banco do Brasil will satisfy themselves that milreis balances
tendered by trading concerns under the provisions of this agreement
conform to the description set out according to paragraphs 1 and 7
hereof, and for the purpose of dealing with questions or
difficulties arising under this agreement the Bank hereby appoint
Messrs. Haskins and Sells to act in conjunction with the Bank.
In Witness Whereof the parties have caused
these presents to be duly executed in ten original counterparts the
day and year first above written.
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Banco do Brasil
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By |
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Federal Government of the United
States of Brazil
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By |
Signature of company, firm or individual accepting, and becoming a
party of the Second Part, to this agreement:
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Amount |
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Attest: |
Name |
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Officer’s Signature |
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Secretary
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Title |
