825.00 Revolutions/9: Telegram

The Ambassador in Chile ( Culbertson ) to the Acting Secretary of State

81. Organization of new government conforms with article No. 66 of the Chilean Constitution. President of Senate as Vice and Acting President of Chile is forming a cabinet with Montero as chief. Technically Ibañez has asked for permission to leave the country instead of resigning in order to avoid the constitutional obligation to call elections with [within?] 60 days.

National Savings Bank in failing condition and other banks including Central Bank threatened with serious runs. Closing of banks for four days has been authorized. During this time new government hopes to remedy situation by inviting from their foreign correspondents a loan to Central Bank of about 21 million dollars and to give as collateral the nitrate bonds of next year. If such a solution proves impossible the issue of paper money will receive serious consideration.