832.506/34
The Chief of the Division of the American Republics (Duggan) to the Brazilian Minister of Finance (Souza Costa)
My Dear Mr. Minister: I regret that I was absent when you called the day prior to your departure from Washington.
I wanted to tell you personally how much we enjoyed your visit and express the gratification of myself and other officers of this Department at the opportunity of discussing with you the trade and financial relations of our two countries. The frankness and friendly comprehension of this Government’s point of view which you brought to the discussions were greatly appreciated here.
I had intended when I saw you again also to take up one further matter which has caused some concern to American interests. I refer to the proposed Brazilian insurance law which in its present form, according to certain students of the matter, might tend to expel foreign capital which Brazil may not be prepared to replace with its own capital, and to discourage the ingress of new foreign capital by the spirit of nationalism it appears to display. The insurance companies argue also that it might result in an inconvenient withdrawal of capital across the exchanges, and that the new setup, including the monopoly of re-insurance, would result in a larger flow of premium funds out of the country than the present régime. They also argue that the “nationalization” of the insurance business might somewhat impair the insurance protection enjoyed by Brazilians, or at least impair the confidence of foreigners in such protection of property in Brazil.
In transmitting these comments I wish to make it clear that they are not the observations of this Department, but of certain American economists who have studied the proposed law and of American insurance interests which might be affected by this legislation. Since I had planned to mention them orally to you I take the liberty now of bringing them to your attention for such consideration as they merit.
We are, of course, sure that no action with respect to insurance control will be taken by your Government until all factors have been thoroughly explored and we know that American interests will receive equitable consideration.
Sincerely yours,