825.5151/134 supp.: Telegram

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

21. Department’s telegram No. 14, January 25. The Department is prepared to accept for a trial period an undertaking by the Chilean [Page 11] Government along the lines of its proposal as amended to date. We understand that the Chilean Government is disposed to accord the following:

Lifting of all exchange control and trade restrictions with reference to remittances to the United States. This means legal and free access to the unofficial and export draft markets for (a) repatriation of funds; (b) current commercial transactions. As regards (b) requests of persons seeking foreign exchange to pay for current purchases of American goods would be honored by the competent Chilean authorities at most-favored-nation rates to the extent that such foreign exchange is available. (We understand that in your conversations with the Foreign Office, the latter has expressed its willingness to guarantee that there shall be no discrimination in exchange rates applicable to current and future transactions, as between the United States and other countries including those having compensation agreements. This we regard as essential to protect our new business and the least that the Chilean Government can do in view of its unwillingness to bind itself not to conclude additional compensation agreements.)
Purchasers of goods from countries having compensation agreements will not be given legal access to the export draft market, outside of the provisions of the respective agreements, nor to the bootleg market.
Within the spirit of the foregoing and bearing in mind that the United States does not discriminate against the commerce of Chile the Government of Chile will give sympathetic consideration to any private proposals which subsequently may be made by American commercial interests with a view to concluding an equitable agreement for the liquidation of frozen credits.
The Chilean Government will undertake to facilitate the immediate payment of and to grant priority in the allocation of foreign exchange at the legal rate for sums owing to American citizens resulting from deposits in the Chilean Retirement Fund.

In conveying No. 3 to the Chilean Government you will point out that the recent compensation agreement concluded with Germany aggravates the long continued discrimination against American interests in the matter of the rate of conversion of frozen credits, against which the United States, as Chile’s best customer, has protested and continues emphatically to protest.

In order that we may be in a position to judge the fairness of these arrangements, would the Chilean Government be prepared to inform the Embassy monthly if practicable as to (1) the total exchange created by Chile’s exports and otherwise, (2) the amount segregated for various national interests under compensation agreements, (3) the amounts made available for purchases from the United States or remittances to the United States.