this agreement which amounts practically to a discrimination against telegrams exchanged between the United States and Brazil. The Department has discussed this matter informally with Ambassador da Gama, who, as you know, will return shortly to Rio to assume the position of Minister for Foreign Affairs. The Ambassador appears to agree with the Department that the rate in question is a discriminatory one but he is inclined to believe that the question is one which can be more appropriately handled by the courts than by the Foreign Office. He says, nevertheless, that he will investigate the situation upon his return to Brazil and see if there is not something that he can do toward accomplishing the establishment of a more equitable rate.

The Department suggests, therefore, that after Mr. da Gama becomes Minister for Foreign Affairs of Brazil you reopen the question with him.

The various difficulties encountered in dealing with the Western Telegraph Co. make the importance of an American cable connecting Rio with the United States all the more evident. The Department, therefore, reiterates its instructions to you to do everything proper to facilitate attempts of American cable companies to construct such a line.

I am [etc.]

ROBERT LANSING

File No. 832.73/167

The Vice Consul in Charge at Rio de Janeiro (Momsen) to the Secretary of State

RIO DE JANEIRO, November 30, 1918. By decree No. 13,262 of November 1, 1918, a concession was granted to Frank Carney, for himself or for any company he might organize, with permission to lay, maintain and operate a submarine cable from the city of Rio de Janeiro and terminating at any point on the island of Cuba, without special privileges or monopoly, and without Government subsidy, according to the following clauses agreed upon by the Minister of Public Works:

ARTICLE 1

There is granted to Frank Carney, for himself or any company he may organize, permission to lay and connect with the coast of Brazil, as well as to maintain and operate, a submarine telegraph cable, from the city of Rio de Janeiro to terminate at some point on the island of Cuba, with a station which shall not be open to public traffic on the island of Fernando de Noronha on the coast of Brazil, and other stations at any intermediary points outside Brazil, at which the concessionaire or the company organized by him shall consider convenient or necessary for public uses, but the permission hereby granted does not constitute any privilege or monopoly of any kind whatsoever in favor of the concessionaire and the Government reserves for itself complete liberty of action, in its discretion, to grant similar permission to any individual or company which may solicit it.

ARTICLE 2

In these clauses the word "Government" will signify the Government of the United States of Brazil, and the word "concessionaire" will signify the concessionaire of the submarine telegraph service covered by this decree or the company organized by him.

ARTICLE 3

It is expressly understood that the submarine cable mentioned in clause 1 shall not, under any circumstances, connect with the coast of the United States of North America.

ARTICLE 4

The connecting of the cable at Rio de Janeiro will be done outside of the harbor in order not to injure shipping movement.

The place of connection, determined and chosen in accordance with the wishes of the Government, will be connected with the concessionaire's station in Rio de Janeiro by means of cables laid in the bay, upon permission of the proper authorities or by means of underground conductors, and whenever he deems it convenient or necessary the concessionaire may adopt both systems.

ARTICLE 5

The laying and connecting of the cable mentioned in clause 1 shall be done within four years beginning from the date of signing the contract, except in case of force majeure, at the discretion of the Government, and all plans of the places of landing in Brazilian territory as well as elsewhere, and the directions of the connecting lines between the landing point at Rio de Janeiro and the concessionaire's station in that city shall be submitted for the approval of the Government at least sixty days before the laying of these connecting lines.

Sole paragraph: The period of four years stipulated in this clause may be prolonged one or more times at the discretion of the Government.

ARTICLE 6

Whenever there shall be sufficient room in the building of the National Telegraph in the city of Rio de Janeiro, the concessionaire may there install his station, paying such rental as may be agreed upon, or the concessionaire may install his station in a private building, of his ownership or not, this station in any case to be connected with the one of the Government by means of pneumatic tubes or other perfected system for the most rapid exchange of communications.

ARTICLE 7

With respect to the telegraphic traffic, the following will be observed:

A. The concessionaire will receive and tax local telegrams which may be presented to him for sending and also deliver to homes the local telegrams received, whenever similar services of the other companies in the country are not done exclusively by the National Telegraph.

B. All telegrams directed to stations forming a part of the Government telegraph system, however, will be transmitted through the stations of the Department of Telegraph.

ARTICLE 8

The concessionaire shall be obliged to establish mutual traffic with the Government lines belonging to the services received from and directed to the stations of the Government, excepting such services as relate to the city of Rio de Janeiro, always observing the route directions indicated by the sender. Sole paragraph: The charges to be fixed in the contract of mutual traffic between the Government and the concessionaire shall be the same as those of contracts now in force with similar companies operating in the country.

ARTICLE 9

The concessionaire obliges himself to keep up the cable mentioned in clause 1 in condition for good service, obliging himself to inform the Government within forty-eight hours of any occurrence which may cause an interruption of the service.

ARTICLE 10

The rates shall be established by the concessionaire and submitted for approval of the Government, and such charges as are made in paper money shall not exceed those of the companies already operating in the country.

Sole paragraph: The approved rates, when reduced, may not be increased without authorization of the Government.

ARTICLE 11

The concessionaire obliges himself to pay to the Government a tax of 10 centimes of a franc per word on international telegrams which may be transmitted by the cable mentioned in clause 1.

Sole paragraph: This tax will be reduced to 5 centimes of a franc per word in cases of telegrams of Government service, press telegrams and deferred messages.

ARTICLE 12

The terminal and transmission taxes to be debited to the concessionaire by reason of international service in mutual traffic will be those in force in the mutual traffic with the other cable companies operating in the country.

ARTICLE 13

The concessionaire may not make any merger, adjustment or agreement with any other similar enterprise operating in Brazil without previous consent of the Government.

Sole paragraph: The telegrams, by reason of route indications, which must be exchanged with other companies operating in the country shall be routed by the stations of the Director General of Telegraphs at Rio de Janeiro, with which the adjustment of accounts relative to this service shall be made, the concessionaire to pay in this case, one franc per telegram under the title of indemnization of overhead expenses."

ARTICLE 14

The adjustment of accounts with the Director General of Telegraphs shall be made every three months, and the debit resulting shall be liquidated within the following period of three months.

ARTICLE 15

The concessionaire obliges himself to comply with the telegraph convention of St. Petersburg, in accordance with the international regulations issued in conformity therewith and the privileges of the said convention are guaranteed to him.

ARTICLE 16

The Government will rent to the concessionaire said foreshore lands available on the coast as may be necessary for the connection of the telegraph cable, and the concessionaire may petition the expropriation, according to law, of the lands, timber and other materials belonging to private persons which may be indispensable for the establishment of underground conductors for the purpose of connecting the landing point with the station in the city of Rio de Janeiro.

ARTICLE 17

The Government will supervise as it may deem convenient all of the service of the concessionaire in Brazil.

ARTICLE 18

For the expense of the supervision the concessionaire will pay annually the sum of rs. 12:000$000 (about $3,000 in American currency) in paper money, payable each semester in advance and deposited in the National Treasury.

ARTICLE 19

The telegrams of the Brazilian Government shall be given preferential transmission and will enjoy a reduction of 50 per cent of the usual rates of the concessionaire.

ARTICLE 20

The concessionaire will receive international deferred cable service with a minimum deduction of 50 per cent on the usual rates.

ARTICLE 21

There will be transmitted gratuitously:

First: The telegrams, each one not exceeding 20 words, transmitted by the Government of Brazil or by its agents in Central America, Mexico or North America, communicating the outbreak of any epidemic in the country from which they be transmitted or in the neighboring countries, or the facts of a notorious public calamity.

Second: Two telegrams per day (one in each case) between the observatory of Rio de Janeiro and an observatory in Cuba, the Government paying the tax of official telegrams for the number of words exceeding 20 in each telegram.

ARTICLE 22

The concessionaire obliges himself to maintain in Rio de Janeiro a representative with full powers to act upon and definitely decide all questions which may arise in the country concerning himself or his personnel, and he shall be subject to judicial summons as well as all others which may require special powers.

ARTICLE 23

By the suspension of the service in the cases foreseen in Article 8 of the telegraph convention of St. Petersburg no indemnization shall be paid to the concessionaire regardless of its duration.

ARTICLE 24

The concessionaire will enjoy the favors granted to companies of similar enterprises which operate in the country, including those concerning cable ships which enjoy the privilege of domestic vessels, but he shall be subject to the payment of customs duties on materials imported for the installation, conservation and exploitation of the service with which he is charged.

ARTICLE 25

If any of these clauses should not be observed the Government may impose fines upon the concessionaire of rs. 200$000 to rs. 2:000$000 (about $50 to $500 in American currency) and double these amounts in case of repeated offenses. The sum of any fine imposed by the Government will be deposited in the National Treasury within 30 days after levying it, published in the Diario Official.

ARTICLE 26

The laws of Brazil shall be the only ones applicable for a decision in any question concerning the present contract if the same be not determined by arbitration.

Sole paragraph: For the arbitration, each party will name an arbitrator and if they do not concur, they will by lot draw a third arbitrator of two names presented, one by each of the parties. From the decision of the third arbitrator there will be no appeal.

ARTICLE 27

In order to guarantee compliance with clause 5, the concessionaire will deposit in the National Treasury, before signing the contract, the sum of rs. 40:000$000 (about $10,000 in American currency) in paper money, without the right of interest, or in bonds of the Federal public debt.

Sole paragraph: This sum of rs. 40: 000$000 will be returned to the concessionaire six months after the definite inauguration of traffic by the cable mentioned in clause 1. If the time stipulated in clause 5 be exceeded by the Government [concessionaire?], the deposit of rs. 40: 000$000 will revert in favor of the Government.

ARTICLE 28

The permission mentioned in clause 1 may be declared null, independent of any action or judicial interpretation and without any right of indemnization to the concessionaire:

First: If, on the termination of the period fixed in clause 5, the cable which the concessionaire obliges himself to lay, shall not have commenced regular operation, except in case of force majeure, at the discretion of the Government.

Second: If the telegraph communication by cable mentioned in clause 1 be Interrupted for more than six consecutive months except in case of force majeure, at the discretion of the Government.

Third: If the concessionaire executes any agreement with an enterprise or company of the same kind operating in Brazil, without previous authorization of the Government.

Fourth If the concessionaire neglects to deposit in the National Treasury at the proper time the amounts due for supervision, in accordance with clause 18.

ARTICLE 29

The permission in clause 1 shall be without effect if the concessionaire refuses to sign this contract within thirty days counting from the publication of the decree approving these clauses.

R. P. MOMSEN

MESSAGE OF PRESIDENT WENCESLAU BRAZ P. GOMES TO THE

File No. 832.032/16

NATIONAL CONGRESS

The Ambassador in Brazil (Morgan) to the Secretary of State

No. 1238

[Extract]

RIO DE JANEIRO, May 14, 1918.

SIR: . . I have the honor to enclose a copy of the President's message with a translation of the principal portions. These relate to Brazil's participation in the war, laws to check enemy activities and measures looking toward cooperation with the Allies. Reference is also made to the attitude of Brazil toward enemy-trading lists and the negotiations by which a large number of ex-German vessels which had taken refuge in Brazilian ports were chartered to France. One of the most interesting paragraphs to us bears upon the cooperation of a small Brazilian squadron with the Allied fleets which began with an invitation from the British Government on the 21st of December last and ended with the proposal that the Brazilian vessels, under the command of a high-ranking British naval officer, should operate in conjunction with a detachment of the American Navy. The message states:

This new resolution could not fail to be agreeable to the Brazilian Government in view of which our warships and those of the United States would cooperate with the British naval forces for the purposes of protecting and maintaining the principal maritime routes between the two continents.

This will be the second instance of cooperation between the two navies of this continent since in the middle of last year the Brazilian Government entered into an agreement by which its naval forces would patrol the Brazilian coast in cooperation with the squadron of the United States of America.

1

A summary is enclosed, also, of the financial features of the message. This shows that the Government's situation is better than it was but that resort has again been had to considerable extent to the issue of paper money which is designated as an indirect loan which distributes itself insensibly. EDWIN V. MORGAN

I have [etc.]

'Not printed.