811.113 Senate Investigation/72

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

No. 193

Sir: I have the honor to refer to my despatch No. 188 of September 12, 1934,23 concerning the resentment which has developed in Government [Page 435] circles with regard to the aspersions apparently cast on Chilean officials by the Senate Committee investigating the sale of war materials. In confirmation of my subsequent telegrams No. 85 of September 13th24 and No. 87 of September 14th,24 I now have to inform the Department that although the reaction in the Chilean press and in Government circles was at first rather temperate toward the statements in the investigation, subsequent developments and particularly the unfortunate fact that apparently unfounded inferences of improper conduct concerning Chilean officials are being allowed to remain in the record without correction has not only seemingly irretrievably lost the immediate sale of American aviation equipment amounting to $300,000 and presumably lost to American firms the possibility of securing the balance of the $3,000,000 air development program, but is arousing general resentment toward the United States as well. There is no incident in Chilean-American relations which has arisen during the last few years likely to cause more ill-feeling in Chile and to undo the very fine atmosphere created as a result of our efforts in the Montevideo Conference.25

In connection with the developments which have taken place since this Embassy’s telegraphic reports, there is enclosed a copy of a letter24 addressed to the Minister of National Defense26 by Mr. J. Van Wagner, the Manager of the airplane factory in Chile maintained by the Curtiss-Wright Export Corporation. It will be noted that this letter attempts to undo some of the bad feeling by stating that Commander Arredondo has taken no part in business dealings with the Curtiss factory and to show that the relations of Commander Arredondo and the Curtiss-Wright Corporation have been in every way proper and perfectly normal. The second enclosure25 consists of a statement of Arturo Merino Benitez, former chief of the Chilean air corps, in which he takes exception to the inferences being made in the Senate investigation and outlines the general procedure for the purchase of air equipment which took place during his tenure of office. His letter, it will be noticed, closes with a warm endorsement of the integrity of the Chilean air force and a strong protest against the statements which have appeared in the investigation. As of additional interest there is enclosed a copy of cablegram24 sent by Commander Aracena in answer to the request of an American firm (apparently Curtiss) that bids on air equipment be kept open until October; a copy of a cable24 sent by Mr. Webster, the agent for South America for the Curtiss Company, to Commander Aracena; and a letter24 addressed to the newspaper El Mercurio by Commander Arredondo.

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As may be surmised not only is the investigation building up general resentment in Chile toward America but it is playing directly into the hands of our foreign competitors who are virtually being handed as a gift a handsome piece of business. It must be remembered that prior to these developments there was little doubt that American firms would secure the business. The Embassy is reliably informed in fact that representatives of foreign governments and foreign aviation equipment companies are literally cackling at the discomfiture of their American rivals. In this connection it is significant to note that Captain H. A. Brown, who is a retired British officer of the British air service is in Santiago at the present time to demonstrate the qualities of the Avro training planes. The French also are keeping in Santiago for the time being Captain Defourneaux of the French air service.

Respectfully yours,

For the Ambassador:
Robert M. Scotten

Counselor of Embassy
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  4. See Foreign Relations, 1933, vol. iv, pp. 1 ff.
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  6. Emilio Bello Codecido.
  7. See Foreign Relations, 1933, vol. iv, pp. 1 ff.
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