825.6374/1124
Memorandum by the Assistant Secretary of State (White)
I saw Mr. Cohen, the Chilean Chargé d’Affaires, at the Secretary’s reception yesterday afternoon and told him that I was sorry to see that a difficulty was apparently developing between our two countries. I said that we had a telegram from Mr. Culbertson indicating that the Chilean Government was contemplating abolishing the 60 peso export tax on nitrate which was hypothecated for the service of the Cosach bonds. I said that there was one report that this measure had already gone into effect by decree and that two ships had already sailed, having been charged the old export tax on the basis of the law of 1897. I said that we had no confirmation of this as yet from our Embassy in Chile.
I told Mr. Cohen that while we of course appreciate the economic difficulties of the Chilean Government and their necessity for funds and the problem presented by their unbalanced budget, and are able, on account of our own situation, to sympathize with them, there is nevertheless a right and a wrong way of doing everything. Any ex parte action of the sort reported as being under contemplation and, more recently, as being in effect, would certainly be the wrong way of doing the thing and would hurt Chile’s credit. I said that the Cosach interests apparently had a representative in Chile who had been endeavoring to work out a satisfactory solution with the Chilean authorities and that our Ambassador had been lending his informal [Page 165] good offices to this end. I told Mr. Cohen that that was the basis on which we wanted to proceed; that we did not want to have to make formal protest and that I sincerely hoped his Government would not take any irrevocable step which would make impossible a friendly working out of the problem.
Mr. Cohen said that he agreed and that he would send a telegram to Señor Cruchaga to that effect at once.
This morning, on reading Mr. Culbertson’s cable No. 46 of March 16, 6 p.m., I telephoned Mr. Cohen and told him that unfortunately the step seemed to have been taken already and gave him, for his information, the contents of portions of the telegram in question. Mr. Cohen said that yesterday he had sent a cable, as promised, to Mr. Cruchaga. He was expecting to hear from him at any moment and would let me know as soon as he had anything. I told him that I much appreciated this and again expressed the hope that his Government would not take any irrevocable step that it would be hard to go back on later. I said that while I understood some protests were being made I hoped the situation had not gone so far that it would not be possible to work it out on the basis of cooperation. Mr. Cohen said that he agreed and that he would let me know anything he gets from his Government in the premises.