832.5151/944: Telegram
The Ambassador in Brazil (Caffery) to
the Secretary of State
Rio de
Janeiro, December 24,
1937—midnight.
[Received December 25—9:29
a.m.]
194. My telegram No. 193.1
Decree law2 regulating sale of export bills and other
foreign exchange signed today as follows:
- “Article No. 1. The sale of all export bills or values
transferred abroad can only be made through the Bank of
Brazil.
- Article No. 2. The export bills referred to in article No.
1 will be distributed by the Bank of Brazil in accordance
with the provisions of this decree law.
- 1.
- Daily, after having attended the necessities of
the public administration, the remaining coverage
will be distributed in accordance with the following
order of preference: (1) Importation of merchandise
and export freight charges. (2) Expenses of public
utility companies. (3) Dividends and profits in
general. (4) Other remittances.
- 2.
- The purchasers of the bills mentioned in paragraph
No. 1, with the exception of those for public
administration, will pay in national currency a tax
of 3% of the value of the purchase.
- Article No. 3. The Bank of Brazil will distribute exchange
to the bank by means of delivery of the respective bills or
drafts substituting them and by simple exchange of
correspondence. Sole paragraph. The acts in connection with
this distribution are not subject to stamp tax nor
intervention of a broker.
- Article No. 4. The contracts of purchase and sale of
export bills may be made up to a maximum period of 6 months.
Sole paragraph. Contracts which are not liquidated within
that period by the actual delivery of export bills will be
subject to payment of new stamps equivalent to double of
that previously paid.
- Article No. 5. The Bank of Brazil may with the
authorization of Minister of Finance,3 renounce
when it judges convenient partially or totally the exclusive
purchase of exchange granted to it by the present decree
law.
- Article No. 6. The proceeds of the 3% tax mentioned in
paragraph No. 2 of article No. 2 and the profits resulting
from operations in connection with the monopoly of exchange
will be credited to the account of the national treasury for
the formation of an exchange fund, the application of which
the government will opportunely resolve.
- Article No. 7. Those infringing the above dispositions
will be punished by a fine which the Minister of Finance
will fix between the maximum limit of double the value of
the transaction and a minimum of 5 contos of reis.
- Article No. 8. This decree law will enter into effect upon
the date of its publication.
- Article No. 9. All dispositions to the contrary
revoked.”
The Minister of Finance has just advised me by telephone that the 3% tax
will be utilized to form a fund for the payment of the foreign debt.
Although the Minister of Finance states that the present decree law does
not infringe our trade agreement I am very doubtful in that connection
and would like the Department’s views thereon.
Please advise Department of Commerce.
