825.85/41: Telegram

The Ambassador in Chile ( Collier ) to the Secretary of State

111. Supplementing my 109, August 22, 11 a.m. Government’s proposed law for American [Chilean?] national mercantile marine has been published. Synopsis is as follows:

Chilean Government to repay steamers amount of Panama Canal tolls. This will give steamers Teno and Aconcagua practically $115,000 United States gold yearly. The commission which reported bill is said to have declared that this subvention is to offset “a direct compensation paid by the American Government equivalent to tolls”.
Shippers of nitrate in Chilean vessels are to receive a premium.
Ten percent reduction in customs duties to be allowed on imports in Chilean vessels.
Minister of Hacienda is empowered to raise loans for account of Chilean companies for the purchase of new vessels, such loans to be granted by the Government and vessels to be mortgaged to the Government and companies’ dividends in excess of 10 percent to be equally divided between stockholders and Government.
Law if enacted to go into effect January 1st, 1928.

British and other European shipowners have asked their Governments to make protests before Chilean Government especially with regard to points 1 and 2.

Manager of Grace Line to make protests before Chilean Government especially with regard to points 1 and 2.

Manager of Grace Line asks me to aid and says proposed measures would be decisively detrimental to Grace Line and appears to be especially directed against its service between Chile and New York, inasmuch as there are no established Chilean lines between Chile and European ports.

I request instructions and respectfully suggest that in view of strong movement for promoting national objects mere representations as to general desirability that nothing at all be done to hurt mutual commercial interests will not be sufficient. [Paraphrase.] If we are to secure moderation of Chile’s present mood, I think more concrete representations will be necessary, such as would be used between business competitors. I do not mean, however, to recommend—and not at all under present conditions—anything suggestive of retaliation, although I have a feeling that a firm policy of defense by the United States is necessary. I shall take no action until I receive instructions. [End paraphrase.]