825.796/19: Telegram
The Ambassador in Chile (Collier) to the Secretary of State
[Received April 20—10:13 p.m.]
54. President of Chile was much gratified by the information contained in your telegram No. 27, April 13, 7 p.m. He says that the nationalistic policy of the Government will cause it to grant no more exclusive concessions, that the concessions now held by Testart will be canceled, and that all his proposals for service between Santiago, Valparaiso, and the north will be refused.
The President did not think that the existing Latécoère contract was exclusive, but the Director General of Posts has supplied me with copies of the two contracts with the Government of Chile, one for carrying its mails between Chile and Argentina, and one for mails to Uruguay, Brazil, Africa and Europe. The first contract provides that until this company is given 35 percent of the correspondence destined to Argentina, the Chilean Postal Administration cannot concede to other companies the air transport of mails for Argentina. Similar stipulations in the contract for service between Chile, Uruguay, Brazil, Africa and Europe state “35 percent of the total for these countries.” The last-mentioned contract runs for a period of 18 months from February 1, 1928, and is renewable for successive equal periods, if not denounced 6 months prior to expiration. The contract for service between Chile and Argentina becomes effective 18 months after February 1, 1928, and runs for a period of 18 months thereafter, unless denounced 6 months prior to expiration. If within the first 18 month period of the contract the company maintains service of one round trip weekly, the contract will continue in effect for 10 years.
The Director General believes that the contract does not affect the mail transit for Argentina and other countries brought from the United States or countries north of Chile and not originally deposited in the Chilean Government offices, but such an interpretation is very doubtful. The contracts contain clauses authorizing cancelation for interruptions and undue delays, but the provisions seem to be liberal [Page 807] for the company. I am sending full text of contracts by mail.83 The Government of Chile is considering the establishment of its own air mail service between Arica and Valdivia and it probably would not favor the proposed American service unless Chilean pilots were to be used within Chilean territory as soon as a competent force could be assembled. Arrangements would be facilitated if such assurances could be given to the Government of Chile. So far the Latécoère Company has failed utterly to maintain its schedules between the city of Buenos Aires and Europe. The Director General of Posts says that Chile will endeavor to annul the contract if improvement is not made within a few months, but it is my opinion that the contract restrictions will make this difficult.
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