832.852/75a: Telegram

The Secretary of State to the Ambassador in Brazil (Caffery)

3803. War Shipping Administration has discussed informally with the Department the question of amending or writing a new agreement to replace that of September 30, 1942 in view of the return of the chartered Brazilian ships. As you are aware, the replacement features of the 1942 agreement were granted in return for the chartering of the 13 Brazilian vessels at one dollar a month per ship. The fact that the Brazilians agreed to maintain 23 other ships in the United States trade was also taken into consideration.

WSA can now, upon the return of the chartered vessels, terminate the entire agreement leaving the number of ships which Brazil would operate to the United States to subsequent determination between the WSA and the Brazilian Merchant Marine Commission. We should also expect that the United States Government coastwise cargoes would be given satisfactory attention. On the other hand, it is quite possible that a new agreement might be written which would cover (1) maintenance of 21 Brazilian ships in the United States trade; (2) priority on movement of United States Government cargoes in Brazilian coastwise trade; and (3) maintenance of the replacement feature with respect to the Brazilian ships retained in United States trade. WSA would take such action only upon the strong recommendation of the Department. The Department would therefore appreciate your views and recommendations as to whether the maintenance [Page 739] of the replacement feature is desirable or necessary from the point of view of our relations with Brazil.

The Brazilians have laid great stress upon the fact that they are maintaining a number of ships in service to the United States. It is our belief that if they do not obtain the replacement feature, they may plan to run some of the vessels now coming to the United States to South Africa. As you are aware, war and marine risk insurance covering the total loss of a vessel is not now prohibitive.

As a matter of fact, all of the Brazilian ships other than those now chartered to WSA have moved southbound since the conclusion of the agreement in September 1942 only 143,000 tons or a monthly average of 12,000 tons. This is not an impressive total, and we do not believe this represents Brazil’s fair share of the target tonnages.

In the case of no other country do we have to have special agreements whereby they will run their vessels to the United States in a service which is obviously of equal importance to them and to the United States.