825.516/138: Telegram

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

83. Referring to first paragraph of my No. 75, June 10, midnight, Guaranty Trust Company and National City Bank dishonored on Saturday telegraphic drawing by Central Bank. New manager of this bank protested this morning to manager of the National City [Page 442]Bank and expressed hope that payments might be resumed and indicated that if they were not, retaliatory measures would probably be taken against local National City Bank and then against other American interests; for example, copper companies. I am not sure that the American banks are in a strong legal position in this matter. Moreover, they have not as yet been injured and we may even be able to obtain modification of the decree law affecting deposits in foreign currency. Central Bank claims that it is continuing remittances and therefore desires to continue drawing in the ordinary course of business. To precipitate a fight now seems to be premature and if the American banks insist upon their nonpayment policy, the impression will be created with some justification that they took the first step towards hostilities.