Memorandum handed to the Portuguese Minister of Foreign Affairs respecting Banco Nacional Ultramarino at Lourenço Marques

Memorandum handed to the Portuguese Minister of Foreign Affairs respecting Banco Nacional Ultramarino at Lourenço Marques

Banco Nacional Ultramarino in Lourenço Marques

From Earl Curlzon to Lancelot D. Carnegie

In July 1920 His Majesty's government learnt that the interests of the National Bank of South Africa and the Standard Bank of South Africa were being seriously prejudiced by the action of the Banco Nacional Ultramarino at Lourenço Marques. The charter of this bank gives it the right to issue notes in foreign currency, and for some years it has been issuing sterling notes which are not legal tender outside Portuguese East Africa. Lately it has decided to make no payments to the South African banks except in these sterling notes, which it has declared inconvertible, and it maintains that by virtue of their inconvertibility they are good and sufficient tender for the payment of any amount, however large. The managers of the South African banks concerned maintain that these notes are practically valueless outside Portuguese East Africa, as they cannot be used by them to discharge their own obligations or exchanged for any value.

The Portuguese Bank refused to accept a compromise suggested by a committee which met under the chairmanship of the governor of the, province, and stated that they had been forced to declare the notes inconvertible by order of the Lisbon Government.

On the 24th August His Majesty's government instructed Sir L. Carnegie to request the Portuguese government to effect a satisfactory settlement. The situation has now become worse; the British banks cannot under the circumstances finance any export trade to Portuguese East Africa; goods to a considerable value are being warehoused, as no satisfactory form of payment can be obtained; and the financial stability of' the province is prejudiced.

His Majesty's government have received no reply to their representations, and although this question is not one of long standing, it is of considerable urgency.

Source: PRO FCO 11743/55 (i)