The Chargé in Brazil ( Brooks ) to the Secretary of State

No. 2463

Sir: I have the honor to report that on June 23, Dr. Odilon Braga, Chairman of the Committee to Write a Petroleum Law, sent two copies of a completed draft of a law to Dr. Daniel de Carvalho, Chairman of President Dutra’s Industrial Planning Committee, for the committee’s consideration and recommendations.

On the same day Dr. Carvalho gave Messrs. Hoover and Curtice one of the two copies for their use as advisors to his committee. The contents of the draft law have not been made public and no copy has been given to any of the oil companies or to the American Embassy.

Mr. Hoover has confidentially informed the Embassy that the law in its present form is unworkable and that in his opinion no American oil company would be willing to attempt to operate under it. He said that it is “naive” in that many of its provisions indicate that its authors are uninformed on the policies, economics and methods of operation of the oil industry.

Mr. Hoover said that the law does not follow the pattern of other Latin American petroleum laws and that it is distinctly Brazilian in character. He further said that since many of the bad provisions of the law are due to ignorance of the industry, he believes that reasonable suggestions for changes will be accepted. He has said that he is hopeful that the law can be so revised as to make it workable.

Mr. Hoover thinks that he and Mr. Curtice will require about two weeks to complete their study of the law and to prepare their report to Dr. Carvalho.

Respectfully yours,

Clarence C. Brooks