832.77/6–1747
The Chief of the Division of Brazilian Affairs (Dawson) to the Ambassador in Brazil (Pawley)
Dear Mr. Ambassador: With reference to my letter to you of June 323 concerning the visit of various representatives of the concerns interested in the Brazil Railway Company and Port of Pará cases, I [Page 448] am enclosing a copy of a memorandum dated June 12,23a prepared and sent to us by Sullivan and Cromwell, who are counsel for the Chase National Bank, trustees for bonds of the Brazil Railway Company, outlining the whole case as presented to us by the representatives of the various interests involved.
The memorandum asks for our intervention with the Brazilian Government through the Embassy on three main grounds, (a) that the companies concerned are incorporated in the United States (with several subsidiary considerations which come to much the same argument), (b) that it is to our Government’s general interest to support the stability of investment abroad whether we are directly concerned or not and (c) that the specific interests of two American banks were involved in the seizure of securities which they were holding as trustees regardless of the ownership of the paper in question. You will find these arguments on pages 10 to 12.
The whole matter is still under study in the Department and there is no telling just when, if ever, instructions to you will be going out. However, I thought you and Clarence Brooks24 would be interested in the case made by Sullivan and Cromwell, particularly as Eddie Miller, the firm’s representative will be in Rio before long and calling on you.
My guess is that the Department will maintain its refusal to intervene directly in the question of the seizure of the Brazil Railway and Port of Pará properties, as it has in the past, on the traditional ground that substantial American interest in the companies in the form of ownership has not been shown. So much for argument (a). Argument (b) can be discounted, of course, as too general. However, I think it very likely that the Department will feel that it is in a position to take a stand under argument (c) for the return to the Chase National Bank and Empire Trust Company of the securities held by them as trustees and seized in 1941 as part of the assets of the two companies, a very different matter than the general problem and one in which there is a direct American interest.
Incidentally, the French and Belgian Embassies have asked the Department for its support in démarches being made by their missions in Rio de Janeiro on behalf of the bondholders who are, of course, mainly French, Belgian and British. We have not yet been approached by the British Embassy although the French and Belgians assert that the British are also making representations in Rio. The answers which have been drafted to the French and Belgian communications but have not yet gone out take the traditional stand outlined above. Since the French and Belgians did not raise the question of the position of [Page 449] the Chase Bank and Empire Trust Company as trustees and this is a matter which concerns only this Government, this point has not been touched on in the draft replies.
With cordial personal regards,
Very sincerely yours,