Memorandum by the Assistant Secretary of State (White)

The Chilean Chargé d’Affaires called and, with reference to his inquiry of the eighteenth of Mr. Phillips whether Ambassador Culbertson, in taking up the matter of frozen assets and exchange of Americans in Chile, was acting under instructions of the Department, I told him that when Mr. Culbertson was here last winter he advised the officers of the Department that the Chilean Government had expressed its willingness to conclude a compensation agreement with this Government along the lines of the ones concluded between Chile and France and with Spain. I said that Mr. Culbertson had been told then, and this had been confirmed in a written instruction afterwards, that this Government would not ask Chile to enter into a compensation agreement, but, in its place, would like him to ask the Chilean Government for more favorable treatment of Americans in the release through the Exchange Control Commission of dollar deposits and foreign exchange for peso deposits belonging to American citizens. I told him that there were many cases of Americans who, under Chilean law, had contributed part of their salaries to a retirement fund. On account of the depression, the activities of American companies in Chile had been greatly curtailed and many of these American employees in foreign countries had been called home. Some of them, on account of conditions in this country, are now without work, and it is a very great hardship on them not to be able to obtain the funds which they have on hand in Chile, and I said I thought the Chilean Government should take care of these cases and also give more favorable treatment to American companies who had peso deposits in Chile.

Mr. Cohen emphasized the difficulties of the economic situation in Chile and of the exchange restrictions which made it hard even to get exchange to send abroad to Chilean Embassies and Legations. I told him that I realized the difficulties that Chile was under; that I had sympathy for its problems, and that for that reason we had refused to present a number of matters to his Government. I pointed out, however, that a large proportion of Chile’s exchange is monopolized by the French and Spaniards under their compensation agreements and that while we are not asking a similar compensation agreement for ourselves we would like, and felt we were entitled to, more [Page 130] favorable consideration than American interests have heretofore received in the question of exchange. I said that Mr. Culbertson was acting under instructions in this matter and we very much hoped that the Chilean Government would accede to what he is endeavoring to obtain.

Mr. Cohen said that he would telegraph Señor Cruchaga in that sense.

F[rancis] W[hite]