825.6374/1072: Telegram
The Chargé in Chile ( Norweb ) to the Secretary of State
[Received 7:05 p.m.]
12. Alessandri’s reply to Whelpley’s letter of protest was published today and a good summary cabled by United Press. This extraordinary document embodies a purely legal interpretation by the Executive attacking the legal foundations of Cosach. The only favorable feature appears to be the Government’s expressed intentions to respect rights “legitimately acquired”. On the other hand it denies that the Government has legally contracted any obligations, leaves it complete freedom of action regarding its treatment of Cosach and by inference challenges all the Ibañez decree laws and the rights acquired thereunder. Upon hearing of the President’s reply, Whelpley officially filed a copy of his protest at the Embassy and at the British Embassy.
Also published today is a new bill to Congress extending the powers of the liquidators granting the right “to accord preferences in payment on all other claims on the company notwithstanding any provision to the contrary” and 40 days in which to appoint a third liquidator. This delay should give both the Government and the company a much-needed opportunity to reach a working agreement and may help to relieve the tension and confusion of the moment.
The details of the Government’s program are still not clear but it is becoming increasingly evident that those now directing policy are prepared and able to use the strongest and most astute methods maintaining a semblance of legality to cover proceedings essentially arbitrary.