The Chargé in Brazil ( Thurston ) to the Acting Secretary of State

No. 4161

Sir: I have the honor to inform the Department that the Rio de Janeiro newspapers of July 11 printed a Havas despatch from Paris dated July 9 transcribing the text of a decree issued by the Ministries of Commerce, Foreign Affairs, Agriculture, and Finance, in the following (translated) terms:

“In view of Article 17 of the decree of December 28, 1926, relative to the codification of the customs laws; in view of the decree of December [Page 64] 3, 1931, which established control of imports originating in or proceeding from certain foreign countries, we decree:

  • Article 1—The provisions of the decree of December 3, 1931 and the provisions of the interministerial decree of February 15, 1932, shall be applied to imports originating in or proceeding from Brazil and to transfers of French credits in that country;
  • Article 2—Inasmuch as the amounts furnished for purchases by France in Brazil greatly exceed the amount necessary for the normal transfer of French credits and for the liquidation of accumulations within a reasonable time, reconciling the interests of both parties, partial derogations may be conceded to the French importers with respect to special products up to a percentage which will be indicated by the Ministry of Commerce and Industry;
  • Article 3—With the purpose of facilitating an eventual understanding with the Brazilian Government the present decree shall enter into effect July 24, 1933.”

The publication of this decree provoked an immediate outcry by the Brazilian press, although the restraint which characterizes its treatment of international questions, as well as the undeniable Brazilian sentiment of friendship for France, is reflected in most of the editorial comment on this subject. A Nação, which is considered to express the views of persons closely identified with the present regime, has been especially sharp in its criticism, describing the French decree as an ultimatum, and stating that Brazil ceased to be a colony in 1822. It points out that for some time past France has sought to provoke difficulties of various kinds for Brazil, citing the application to Brazil of the French import quota system, and the sale to it of useless war material. In this connection it remarks that France has refused to pay its war indebtedness to the United States, thereby placing itself at a par with Russia, which after the advent of communism refused to recognize its international debts. A Nação likewise states that the aggressive policy of France in the economic field has already victimized England and the United States, its old allies, and that Brazil therefore finds itself in good company. The Diario Carioca dealt more calmly with the subject, as did the much more important Jornal do Brasil. Translations of the editorials of the two newspapers last named are enclosed herewith.43

On July 16 the Ministry for Foreign Affairs issued the following (translated) statement:

“Several newspapers of this capital have recently commented on the decree of the French Government, dated the 8th instant, which authorizes the retention of a part of the visible commercial balances, favorable to Brazil, to be applied to the payment of accumulated commercial credits (frozen credits) and the transfer of French credits in Brazil.

The Ministry for Foreign Affairs makes known that a note from the Brazilian Government has already been sent to the French Government, [Page 65] in which it sets forth the true situation of the matter under discussion, and submits arguments which in its opinion prove the invalidity of the motives upon which that decree was based.

Duly appreciating the disposition shown by the French Government in the text of the decree in the sense of an understanding between the two Governments before it should be put into operation, the Brazilian Government hopes that a formula will be found capable of conciliating the interests of the two countries, whose relations always have been characterized by a sincere and loyal spirit of cooperation.”

On July 18, the Correio da Manha published an extensive interview with the French Ambassador on this subject, a translation of which likewise is enclosed herewith44 and to which the Department’s especial attention is directed. In connection with the statements made by Ambassador Kammerer, it should be mentioned that the agreement between the Bank of Brazil and N. M. Rothschild & Sons apparently was designed (Article 1) to apply to all milreis creditors other than nationals of the United States or of Brazil. It also will be recalled that the agreement entered into by the Bank of Brazil and the American milreis creditors provided (Article 6) that no arrangement relative to exchange would be made with any other country or the nationals of any other country more favorable than the agreement with the American milreis creditors.

Today’s newspapers publish a United Press despatch from Paris, stating that the Brazilian Ambassador has announced to reporters that he is hopeful that negotiations being conducted by him with the French Ministries of Foreign Affairs and Commerce may result in a satisfactory arrangement before July 24, the date on which the French decree would be effective. The despatch concludes with the statement, presumably made by the Brazilian Ambassador, that the Ministry of Commerce bases its action upon three arguments, namely: that Brazil has concluded an agreement with the United States relative to credits; that the present French-Brazilian trade balance is favorable to Brazil; and, that the French are obtaining their funds under enormous difficulties.

Respectfully yours,

Walter C. Thurston
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