825.516/129: Telegram

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

70. Following is text of decree concerning foreign currency deposits:

β€œIn order to prevent unjust profits for those persons who, to the prejudice of national economic conditions, converted their deposits into foreign money thus weakening the position of the Central Bank and causing the devalorization of the currency, the Junta of Government dictates the following decree:

  • Article 1. Credits and deposits in foreign currency which the public may have in the national and foreign banks are declared the property of the State;
  • Article 2. The commercial, national and foreign banks shall transfer to the order of the State the deposits in foreign currencies which they have for account of the public and shall credit the latter with the sums equivalent to them at the exchange rate of June 3d;
  • Article 3. The State shall credit in the National Savings Bank to the order of the private banks the amounts in currency to which the previous article refers.
  • Article 4. In order to cover the removal of the sums indicated in the preceding article from the National Savings Bank by the commercial banks, the Central Bank shall issue, with the guarantee on the above-mentioned gold deposits to the order of the State, the necessary amounts placing them at its disposal in the National Savings Bank.
  • Article 5. Anything contradictory to the present decree, contained in decree No. 486 of August 21, 1925, modified by decree law No. 573 of September 29, 1925, and by laws Nos. 4970 of July 30, 1931, 4993 of September 24, 1931 and 5028 of January 7, 1931 [1932?], shall be annulled.”

This decree raises two questions.

  • First, it virtually confiscates dollar deposits of American citizens and companies, the most important of which is the Dupont subsidiary.
  • Second, it is an attack on the trusteeship which the National City Bank has for its gold depositors.

I shall take immediate steps to bring to the attention of the Junta informally the serious threat which this decree makes upon American interest.

Culbertson