832.852/82
The War Shipping Administrator (Land) to the Secretary of State
Dear Mr. Secretary: By agreement dated September 30, 1942,27 the United States of America entered into an agreement with the United States of Brazil under the terms of which the Brazilian Government bareboat chartered to the United States Government thirteen vessels and, in addition, agreed to maintain, in trade between the two countries, twenty-three other vessels.
In respect of the chartered vessels, our Government assumed all of the risks customarily assumed by a bareboat charterer and, in consideration of the maintenance of the twenty-three vessels in the Brazilian-United States Services, our Government agreed that if, as a result of a marine or war casualty, any of the twenty-three non-chartered vessels became a total loss during the period of their service in the Brazilian-United States services, such lost vessel would be replaced after the war by a vessel of similar size, tonnage, and characteristics. Our Government agreed that in the event it was unable to effect such replacement it would pay to the Brazilian Government the amount required to purchase a replacement vessel of similar size, tonnage, and characteristics.
The Brazilians are experiencing difficulty in obtaining sufficient tonnage for their coastwise trade and, in view of the importance of such trade at this time, have requested that the bareboat chartered vessels be redelivered to them. They have also requested that the replacement and insurance features be continued as to those non-chartered vessels which, by agreement, are maintained in Brazilian-United States Service.
You have considered this matter and have indicated that it would [Page 643] be desirable from your point of view for the War Shipping Administration to continue, insofar as it has authority to do so, the replacement and insurance privileges as to the specified non-chartered vessels which are, by agreement, to be maintained in United States–Brazil Services.
In view of the altered conditions contemplated in the proposed arrangements, the War Shipping Administration would have no authority to provide the replacement and insurance privileges insofar as they apply to total losses resulting from marine, as distinguished from war, casualties.
However, on the strength of your request as above stated, and in accordance with my authority, I have determined that it would be of material benefit to the war effort to provide, at a nominal rate, war risk hull insurance covering against total loss of the subject non-chartered Brazilian vessels. Such insurance would support the replacement or replacement-value undertakings in respect to total losses arising from war, as distinguished from marine, casualties and may be provided by the War Shipping Administration at a nominal premium pursuant to Public Law 523—77th Congress.28 Accordingly, it is suggested that you submit to the Government of the United States of Brazil the following proposal:
[Here follow several paragraphs on suggested points of understanding, the substance of which was embodied in the signed agreement quoted in airgram A–303, February 17, 2 p.m., from Rio de Janeiro, printed on page 646.]
The Brazilians have stated that they are unable to replace any of the twenty-one vessels which may be lost in the United States–Brazil Service and propose to bareboat charter American vessels from the United States, for operation in that service, following the pattern already established by the War Shipping Administration with British, Norwegian, and Greek Governments. This is a matter which should be determined later and only after a full study has been made. It is thought that discussion of such proposal at this time might unnecessarily hinder prompt compliance with the Brazilian request for the return of the chartered vessels.
Redelivery of the chartered vessels will be in conformity with the terms of bareboat charters under which they are presently operating and will take place in a United States or Brazilian port, as the case may be, upon completion of discharge of cargo from the Northbound or Southbound voyage on which each respective vessel is engaged at the time a preliminary understanding is reached in the premises.
Sincerely,
- Received in the Department of State December 14, 1943; a copy was transmitted to the Embassy in Brazil in Department’s instruction 5420, December 21, 1943.↩
- Not printed; for summary, See Foreign Relations, 1942, vol. v, p. 743, footnote 29.↩
- Marine War-Risk Insurance Act of April 11, 1942; 56 Stat. 214.↩