The Chargé in Brazil (Scotten) to the Secretary of State
[Received 8:47 p.m.]
107. My 100, April 1, 7 p.m. The President of Brazil signed on April 8 decree law No. 120146 establishing a new exchange policy. The text reads as follows:
“The President of the Republic, using the powers conferred upon him by article 180 of the Constitution, decrees:
Article I. Liberty for exchange operations is reestablished in the terms of this decree law.
Article II. Export drafts, as well as values [securities?] transferred from abroad, will be sold freely to banks established in this country which are authorized to conduct exchange operations.
Sole paragraph. The bank control (fiscalizacao Bancaria) will supply export permits only upon presentation of proof by the exporter to show that the respective exchange has been sold in accordance with the terms of this decree law.
Article III. The banks purchasing export drafts are obligated to sell to the Bank of Brazil, on a sight draft on London or New York, in accordance with the official rate established daily and in money of international acceptance, 30 per cent of the amount of each bill of exchange purchased.
Article IV. The purchase of exchange for the payment of importations shall also be made in the free market, with the previous authorization of the bank control.
Article V. The exchange for the payment of importations already made and the liquidation of which, in accordance with the regulations now in force, is already assured by means of deposit in Brazilian money, cannot be purchased in the free market.
Sole paragraph. The payment of these importations will be effected by the Bank of Brazil at the rate to which they are entitled.
Article VI. Transfers abroad, other than those issuing from import trade, may only be made through the Bank of Brazil.
Article VII. Foreign tourists shall sell freely to the banks, banking or exchange first, the amounts of their letters of credit, ‘travellers’ checks’ or foreign currency, and may reexchange the national money should they so desire. The funds made available in this manner to the banks, banking or exchange firms, must be applied by them exclusively in the sale of drafts, letters of credit, payment orders or money, to persons duly authorized to purchase same by the bank control for purposes of travel or living expenses abroad.
Sole paragraph. Such operations must be entered separately and reported daily to the bank control.[Page 384]
Article VIII. Exchange operations in compensated currencies will continue to be handled exclusively by the Bank of Brazil which shall alter its quotation in accordance with the fluctuations in the free market.
Article IX. With the exception of the Bank of Brazil, banks may not maintain ‘bought’ exchange needs beyond the limit to be fixed by the bank control.
Article X. The amount collected by the Bank of Brazil in accordance with the terms of article Mo. Ill, will be placed at the disposition of the Government, being utilized to meet the necessities of the public administration.
Article XI. There is maintained the tax created by paragraph Mo. 2, article II of decree law Mo. 97 of December 23, 1937,47 and subsequently modified by decree law Mo. 485 of June 9, 193848 and 1170 of March 23, 1939.49
Sole paragraph. This tax will also be imposed on transfers relating to obligations of the public administration.
Article XII. The present decree law will take effect on the date of its publication, all provisions to the contrary being revoked.
Rio de Janeiro, April 8, 1939. Signed Getulio Vargas, Arthur de Souza Costa.”
Please inform Department of Commerce.
- Brazil, Coleção das Leis da República dos Estados Unidos do Brasil de 1939 (Rio de Janeiro, 1939), vol. iv, p. 71.↩
- Brazil, Coleção das Lets da República dos Estados Unidos do Brasil de 1937 (Rio de Janeiro, 1938), vol. iii, p. 434.↩
- Brazil, Coleção das Lets da República dos Estados Unidos do Brasil de 1938 (Rio de Janeiro, 1939), vol. ii, p. 241.↩
- Brazil, Coleção das Lets da República dos Estados Unidos do Brasil de 1938 (Rio de Janeiro [1939?]), vol. ii, p. 127.↩