Papers Relating to the Foreign Relations of the United States, With the Annual Message of the President, Transmitted to Congress December 2, 1895, Part I
Mr. Thompson to Mr. Gresham .
Petropolis , January 15, 1895 . (Received Feb. 23.)
Sir: Referring to my telegram of December 19, 1894, I have the honor to report that the minister for foreign affairs informs me under date of January 4, 1895, that the circular of May 21, 1894, from the treasury department declining to refund the moneys collected as expediente duties on American merchandise had been revoked, and inclosing copy of the Government’s decision in the case.
This decision in the form of a circular from the treasury department, copy and translation of which are inclosed, reviews the origin of the claims and explains how the expediente duties came to be levied in the face of the express provisions of the commercial arrangement; revokes the circular of May 21, 1894, and directs the custom-houses to forward claims to the Treasury in order that the necessary credit may be provided for their payment, remarking that as the duties have been paid in past fiscal years it is impossible to return the sums without an appropriation.
I inclose copy of the additional correspondence had on the subject.
I have, etc.,
Circular No. 1.
Rio de Janeiro , January 2, 1895 .
Considering the claims of divers origins arising from the decisions of this department upon the interpretation of the terms of the convention celebrated with the [Page 44] United States of America on January 31, 1891, and the regulation of its administration determined by decree No. 1338 and by circular No. 6, both of February 5 of the same year; and
Considering that article 1 of the above-mentioned decree only referred to the import duties, and the order sent to the custom-house of the federal capital on March 31, 1891, declared that the merchandise coming from the United States free of duty by the abovesaid arrangement could not be free from the duties of expediente, because according to our laws they have not the character of import duties, and are levied exclusively upon merchandise imported free of duty, while the circular No. 6 formally and expressly declared that this exemption extends to all duties, whether national, State, or municipal;
Considering that these expressions of the circular were copied from the text of article 1 of the convention and did not exclude any kind of duties, including all, without distinction of origin, type, or character;
Considering that notwithstanding this, in virtue of the above-named order sent to the custom-house, this understanding prevailed based on the incompleteness or on the omission of the terms of article 1 of the decree of the 5th of February attributing to the latter of right a force that the circular could not have and by this means was observed, instead of the amplitude of the circular, the restriction of the decree;
Considering that this practice gave rise to claims on the part of the American Government to which Brazil was compromised to satisfy if it was shown that in the United States of America merchandise coming from Brazil free of duties by the convention was not subjected to any other tax whatever and that, if such was shown to be the case, not only would the collection expediente dues cease but also all sums unduly paid would be refunded;
Considering that it was demonstrated that Brazilian merchandise imported into the United States of America free of duty was not subjected to any tax whatever, and that for this reason the circular No. 28, of May 23, 1893, was issued, the result of the deliberation of the Government and justified by the terms of article 1 under the head of importation and additional of law No. 125, of September 30, 1891, which gave to expediente duties the character of custom-house imposts, thus causing to disappear any possible distinction established between the two;
Considering that in the execution of a convention duly celebrated, accepted, and carried out, the reciprocal advantages, rights, and obligations should be strictly observed, in conformity with the aim which inspired the celebration of the same and of the spirit which predominated in its conception, and that moreover the circular of May 25, 1893, in an express, determinate, and authentic manner regulated the interpretation of its clauses in entire accord with the provisions of article 131 of the commercial code, especially in relation to the good faith, the spirit and nature of what was stipulated;
Considering that for such reasons we should consider the circular as incorporated in the convention as explanatory of the decree and of any others referring to the execution of the same;
Considering that the circular No. 19 of May 25, of the past year maintained, as it could not fail to sustain, these principles, determining the exemption of the imports of American merchandise from expediente duties, but it denied the right to the restitution of the sums which had been unduly paid as such;
Considering that the latter part is not in harmony with the promise solemnly made of restitution of undue payments, and besides once established a principle it is impossible to decline its logical consequences; and consequently from the provisions of the circular of May 25, 1893, restitution naturally and legally follows, since the execution of the international convention can not fail to be uniform, nor can it depend on circumstances which have not been expressly modified by means of an agreement of the contracting parties;
Considering that the convention has been abrogated, as appears from the circular No. 43 of October 25, 1894, and all its effects declared to cease on the 1st of January, 1895, it is fit and proper that these claims should also cease to exist, as the procedure of the Brazilian Government should be absolutely free from any suspicion in the carrying out of all parts of its treaties;
I declare that the circular No. 16 of May 21 of the year past is hereby revoked in the part relative to the restitutions which may have been made in virtue of circular No. 28 of the 25th of May, 1893, that are thus hereby approved and maintained.
And whereas it is impossible to apply to the restitution of duties paid in past fiscal years the provisions of article 552 of the consolidated laws of the custom-houses, it being necessary to ascertain exactly the value of the restitutions claimed in order to furnish the necessary appropriation for the restitutions, under which heading this disbursement must be paid;
I hereby direct all custom-houses, when receiving the claims of parties interested in such claims, to forward them to the treasury after being passed on for the purpose of obtaining the proper credit and making the respective payments.
Mr. Thompson to Mr. Carvalho .
Petropolis , November 29, 1894 .
Mr. Thomas L. Thompson, minister of the United States, begs to refer to the conversation had with His Excellency Dr. Carlos de Carvalho, minister for foreign affairs, on Tuesday the 27th instant, in regard to the return of certain duties collected by the Government of Brazil on articles which should have been admitted free of duty under the commercial arrangement of January 31, 1891, and to submit for his consideration a few further remarks in the premises.
Representations having been made to this legation in the early part of 1893 that the Government of Brazil had been collecting an expediente tax on American merchandise which, by the terms of the accord above referred to, should have been admitted free, Mr. Markell, chargé d’affaires ad interim, acting under the instruction of the honorable Secretary of State, brought the matter to the attention of the minister for foreign affairs, protesting against this violation of the accord, asking for the revocation of the decree directing the collection of these duties, and for the restoration of the money illegally collected. (Mr. Markell to Dr. A. F. Paula Souza, February 27, 1893.)
A reply to the substance of this note was made subsequently, in which the minister stated that if no duties similar to this expediente tax were collected by the custom-houses of the United States on goods exempted by the commercial arrangement proceeding from Brazil, then the “expediente tax” would cease, and the moneys collected under its operation would be refunded “cessará no Brasil a cobrança em questão e serão restituidos as quantias individamente pagas.” (Dr. A. F. Paula Souza to Mr. Conger, April 12, 1893.)
Mr. Conger, replying to this note, after ascertaining directly that no such duties were collected in the United States, conveyed the information to the then minister for foreign affairs, and after some weeks’ delay he was informed, May 31, 1893, that no further duties would be collected upon the merchandise exempted by the commercial arrangement.
This very satisfactory action of the Brazilian Government closed the first part of the question originally raised.
The importers of American merchandise who had been subjected to the illegal tax, acting upon the assurance given by Dr. A. F. Paula Souza that the money illegally collected would be refunded, prepared claims and presented them through the regular channels, expecting that they would be early disposed of. But, on the contrary, they laid without adjudication, or apparently any action whatever, until May of this year, when there appeared in the public journals a circular from the minister of the fazenda reviewing the cases and deciding that they were not entitled to favorable consideration upon many grounds. The two apparently upon which most stress was laid I will briefly notice, viz: (1) “That similar duties (for the dispatch of merchandise) were collected by the custom-houses of the United States; (2) That the North American importers, having sold the goods at a time when the duty was in operation, had added the amount of the duty to the selling price of the goods, and were consequently fully reimbursed by the national consumer.”
As to the first of these grounds Mr. Conger’s note of April 19, 1893, fully disproves the premises, as well as mine of October 22, 1894, and it consequently fails, as does the second, when we consider that the [Page 46] selling price of goods is regulated by the market in which the goods are sold, and it is impossible to determine whether they are sold at a loss or a gain. But leaving this entirely out of the question, the imposition of the tax was a discrimination against American merchandise illegally collected in violation of an accord, and the money received under it can not justly be retained, as it is one of the first principles of law that property acquired through an illegal act can not be withheld from its rightful owner under any circumstances. It does not appear nor can it appear that the American importers have been reimbursed for the losses which the collection of the “expediente tax” entailed; The losses are innumerable and can not be estimated, not only to the importer but to the market for American goods, which was the only object the arrangement was designed to conserve. The effect of the tax was certainly to favor importations in competition with American goods. For this, and in full compensation, all that is asked is to have the money unduly collected refunded, a simple request which both equity and justice demands. The Government of Brazil has acknowledged that the collection of these duties was irregular, and the money obtained by or through that act should be refunded.
While this circular has never been officially brought to my knowledge, I do not refrain from adverting to its provisions because it has been given an official character by publication in the Diario Oficial and is a decision on the merits of this case by one department of the Government. The impossibility of accepting the reasoning expressed in it as a bar to the final restitution of the money must be apparent, as it contravenes the letter and spirit of the accord as well as the principles of law and equity.
Following this circular I had the honor, acting under instructions from my Government, to call the attention of your excellency’s esteemed predecessor to the explicit and distinct agreement of the Government of Brazil to refund these moneys, as expressed in the note of April 12, above referred to and quoted. Accordingly, in my notes of June 7, August 31, and October 22 the matter was discussed and a speedy disposition of the cases requested, as the Government of the United States had a right to expect. But, notwithstanding the notes and several personal solicitations, no response has been given to the essence of the representations. Now, I am in receipt of more imperative instructions, which makes it necessary to urge favorable and speedy action on them.
Mr. Thompson offers, etc.
Mr. Carvalho to Mr. Thompson .
Rio de Janeiro , January 4, 1895 .
I have the honor to communicate to Mr. Thomas L. Thompson, envoy extraordinary and minister plenipotentiary of the United States of America, in response to his notes of October 22 and November 29, last, relative to the collection of expediente duties, that the Government, on the 2d instant, determined to revoke the circular of the department of the treasury dated May 21, last, as appears from the inclosed cutting from the Diario Oficial.
I renew, etc.,