825.85/44: Telegram

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

120. James Heavey, Chilean manager Grace Line, called today. Believes nationalistic movement in Chile will result in passage of ship subsidy law substantially as reported. Says there will be probably many purchases of new boats. Braun and Blanchard, owners of existing service between Valparaiso, Punta Arenas and Buenos Aires, already have plans ask Government for guarantee of loan for purchase of at least four new ships for European and North American trade. He also said Government member of nitrate board contemplates immediately putting into effect section 17 of nitrate law authorizing additional [subsidies?] to Chilean ships that carry nitrate. Moreover all shipping interests are greatly agitated by provision in the report of joint committee appointed to study revision of tariff which authorizes President to grant additional reduction of duty equal to 25 pesos per ton on several classes of merchandise including structural steel, vehicles, agricultural machinery and many other articles. Heavey estimates this represents at least 70 percent of American exports to Chile. Foreigners, especially British, greatly agitated by this provision claiming that inasmuch as existing Chilean lines to foreign countries only touch American ports this will give great advantage to American exporters. Undoubtedly this proposed tariff provision as well as all features of shipping law would stimulate American export trade at least until Chile purchases new ships and establishes services to Europe. This provision should be carefully considered by the Department but I assume that you wish your instructions in your cipher telegram 37, August 31, 6 p.m., complied with and I will do so unless otherwise instructed.

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