832.1561/9–2547

The Chief of the Division of Brazilian Affairs ( Dawson ) to the Counselor of Embassy for Economic Affairs in Brazil ( Brooks )

confidential

Dear Clarence: This is just to let you know that resentment against the continued Brazilian discrimination in favor of Lloyd Brasileiro ships is increasing here and that we may be faced by some unfortunate developments unless there are shortly some obvious results from the Ambassador’s last conversation with President Dutra.

One thing which has particularly annoyed the American competition here (specifically, Moore-McCormack) is the fact that the Lloyd Brasileiro representatives in New York and New Orleans have been sounding off about their privileges in an attempt to get business away from Moore-McCormack, Delta, etc. The latter consider this dirty ball and are incensed. An example is the following excerpt from the Shipping Notes section of the September 23 issue of the New York Journal of Commerce:

“Lloyd Brasileiro Priorities—Lloyd Brasileiro still retains priority in the docking of both passenger and cargo vessels at Rio de Janeiro, a spokesman for the line stated yesterday. He said that cabled advices from the Brazilian capital provide that the only freighters that can be docked before those of the line are those which have been waiting in port for berthing facilities fifteen days or longer. Passenger vessels of the line get first call on berthing space. Then come those of other lines providing they do not carry more than 500 tons of cargo and then come cargo vessels which have been waiting two weeks. After these have been accommodated, Lloyd Brasileiro vessels are berthed ahead of those of all other claimants for berth space.”

The Moore-McCormack people are making noises about bringing the question of discrimination up before the appropriate House and Senate Committees if remedial action is not forthcoming in the near future. I imagine that this, with stress on the angle of the loans with which Lloyd Brasileiro is getting the additions to its fleet, might well lead to a Congressional investigation. There are plenty of people anxious to discredit the Administration and to draw a conclusion that it is not sufficiently vigilant on behalf of American interests when it [Page 438] loans money for a rival to compete with American shipping and yet cannot prevent discrimination in favor of the rival at U.S. lines’ expense.

In this general connection, I think I have already written you that the Maritime Commission suggested to the White House that retaliatory action under the enabling legislation in one of the Maritime Acts might be considered and that the White House passed this on to the Department for its comment. This would indicate that the Maritime Commission might well go along with the trade in wanting to bring the whole thing out in a public hearing.

There is another angle which may make retaliatory action more likely. I understand that the Ingalls3 people are not satisfied with their contract with the Lloyd Brasileiro and would not be averse to getting out of it. It is consequently conceivable that they would put no obstacles in the way of suggestions that the loan on which the contract is based might be held up in the hope that this would enable them to break the contract.

All of this is pretty speculative, I know, but I have wanted to let you know that there is a good deal of smoke at this end. Frankly, I think the Brazilians have been dogs in the manger on the whole matter. They may furthermore turn out to have been stupid in pursuing a minor untenable advantage at the serious risk of losing a great deal in (a) good will and (b) actual economic benefits. It would certainly be to neither the Brazilian Government’s interest nor ours to have the shipping discrimination question degenerate into a name-calling contest.

Best luck to you,

Always sincerely,

Allan Dawson
  1. Presumably the Ingalls Shipbuilding Corporation of Birmingham, Alabama.