825.00 Revolutions/79: Telegram

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

63. Minister of Finance7 yesterday notified manager of the Viña Sugar Refinery, a limited liability company owned by Chileans, that the Government would have to take over the refinery in order to comply with its program. When asked about compensation he replied that if delivery were made promptly and without trouble payment would be in bonds of the State. This refinery is the only one in Chile with capacity to supply total needs of the country and, if the Government should allocate to this refinery all exchange available for sugar Grace and Company would be seriously affected. Also operation of refinery with reduced overhead expense would enable it to undersell commercial concerns. On account of severe censorship please convey this information to Grace in New York.

At the same time Minister asked for information about woolen factories apparently with the intention to follow the same policy in that field.

Apparently this is the first step toward the organization of the Commercial House of the State referred to under number 15 of my telegram No. 53, June 5, 5 p.m. The plan is to name as director of this House the present director of the State Railways. Dávila says [Page 437]that the Government will organize immediately State mining, agricultural and industrial companies.

It is entirely possible that this step against Chilean private interests may have an immediate effect upon American interests. The first effects will come through price competition from State operated industries and also from a policy to give all available exchange to the Commercial House of the State.

  1. Alfredo Lagarrigue.