File No. No. 763.72113/791½
The Brazilian Chargé ( De Ipanema Moreira) to the Secretary of State
Mr. Secretary of State: Having telegraphed my Government, on the 2d instant, conveying the sense of the memorandum which was communicated to me on that date by the representatives of the United States, Great Britain, France, and Italy at the conference held here to consider Brazil’s cooperation in the war, I have to bring to Your Excellency’s knowledge that I have just received in reply the telegram transcribed below:
The Federal Government, after giving due consideration to the reply of the Allied nations, understands that those nations did not have a knowledge of the economic means for reprisal and defense which Brazil has taken against the common enemy. Referring here only to the principal measures, we cite the following: In November, 1917, the Minister of Finance sent instructions to the customs houses prohibiting commercial relations (importation and exportation) between citizens of Brazil or foreigners resident therein and [Page 357] enemy subjects resident in countries other than Brazil. Also in November, 1917, by decree No. 12709, the Government instituted the taking over of the German banks, including affiliated banks, branches or agencies in all the Republic. The instructions which were sent by the Minister of Finance for the execution of this decree invested the fiscal officers with true functions of directors of these banks. In November, 1917, by decree No. 12710, the Government of Brazil established the special and permanent taking over of insurance companies which have head offices in Germany. Also in November, 1917, the Minister of Finance organized the taking over of all enemy companies, considering as such all those more than one-half of whose capital belongs to German subjects. In the Federal Capital the taking over was entrusted to a central bureau, and in the different States to fiscal delegates of the Treasury. Also in November, 1917, the Minister of Finance instituted the taking over a posteriori of operations of international exchange with special reference to the movement of funds which might give aid to the enemy. On the 9th of July, 1918, by decree No. 13110, the taking over a priori of transactions of international exchange was instituted. On the 4th of January, 1918, in accordance with the law of the 16th of November, 1916, the Government declared void the contracts which were concluded between the Ministry of War and the firm of Krupp, of Essen, represented in Brazil by Haupt & Co. On the 6th of March, 1918, by decree No. 12907, the Federal Government canceled the contract for the building of the Santa Catharina Railroad, which had been made with the German company. On the 6th of September, 1918, by Decree No. 13177, the Federal Government canceled the authorization for the establishment of a German submarine cable at Pernambuco. Finally on the 16th of October last, decree No. 13235 was issued canceling authorization for all the German banks to do business in Brazil and giving to them a period of six months to finish their liquidation.
The Federal Government begs leave to advance the consideration that, both on account of the institution of these measures and on account of the loyalty with which they have been executed, it is not to be understood why the black list for Brazil should be kept in force; besides being of no necessity today they have caused a feeling of antipathy to the policy of commercial penetration and expansion of the Allies in Brazil—a policy which interests us so much that we desire to see it prosper and increase. Nilo Peçanha.
I have [etc.]