825.85/84

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

No. 1369

Sir: I have the honor to transmit herewith copies of the regulations issued by the Chilean Government for putting into effect the law subsidizing the merchant marine service through the Panama Canal.5 These would have been sent to you earlier had it not been that, immediately after their promulgation, I had talks with the Minister of Foreign Affairs and later with the Minister of the Treasury and with señor Raul Simon, head of the Commission upon whose report the legislation was based. With all of these I discussed informally the language of Article 3 of the regulations, stating that, although I appreciated that the law itself subsidized only the service that was maintained through the Panama Canal, I felt that it was somewhat unfortunate that the regulation fixing the subvention per 1,000 tons of cargo carried, should so specifically relate to the Panama Canal as to create, in my opinion, the impression that it was intended to be the reimbursement of the Panama Canal tolls. I recalled to them that the original draft of the bill explicitly stated that the subvention was a reimbursement of the tolls, but that pursuant to the representations that I made under your instruction, the Chilean Government withdrew the bill and Congress passed it in a form which ostensibly did not make the subvention a repayment of these tolls. I told them that while the regulation did not specifically declare that the subvention was to be a reimbursement of these tolls, I felt that the reference to the Canal and to the tonnage carried was certain to create that impression both in the United States and abroad and that it would be unfortunate if such impression were made, based upon language which naturally suggested this interpretation.

At first, both the Ministers told me that they could modify and were willing to modify the regulations by making the subvention a payment for freight carried a certain distance, the distance being so fixed that necessarily the cargo would have to pass through the Panama Canal. The bill itself provides only for a service maintained through the Canal. Several times both of these Ministers and señor Simon have told me that such a change would be made if my [Page 117] Government preferred, and even that it would be made if I thought such language would be preferable; but at my last interview with the Minister of Foreign Affairs, he said that he would rather that I communicate the regulations to you. He intimated that if you then felt that they would generally receive an interpretation which would be embarrassing to the American Government, they would be changed.

Possibly the question is an academic one, inasmuch as whatever language is used, the subvention is for freight moving through the Canal and the tolls as an element of expense to the shipping lines will always be one of the features taken into consideration by the Government in determining the amount of the subvention. It may perhaps be immaterial that the reference is so specific as in Article 3; nevertheless, I have thought it not unlikely that our Government would prefer a regulation that did not so clearly justify the inference that the subvention is a repayment of the Canal tolls.

I await your further instructions.

I have [etc.]

Wm. Miller Collier
  1. Regulations not printed.