825.5151/132½: Telegram

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

3. Department’s telegram No. 7, January 6, 3 p.m. The scope of the proposal contemplates the removal of all control and restrictions [Page 3] with regard to the purchase of exchange for the needs of American business. This includes current business, frozen credits and other transfers. Exchange for American needs would no longer be subject to the Exchange Control Commission. This means that our commerce would be on a free basis; that an importer of American goods would unrestrictedly purchase the exchange required wherever available and that exchange for American business could be obtained in unlimited amounts subject only to the normal laws of supply and demand. In operation the Chilean Government would need only to be satisfied that transactions under the agreement were not effecting the transfer of non-American funds, hence the insertion of the word “genuine”.

While no immediate advantages are apparent in private agreements the proposal does not preclude them later if found desirable.

American interests which have been discreetly sounded on the general principle contained in the proposal view it with favor. Among other reasons they appreciate the great advantage of being able to liquidate their frozen assets legally and as they desire rather than awaiting a possible future liquidation at a preferential rate. Before undertaking to work out the mechanical details the Foreign Office desires to be informed whether principle is acceptable to the United States Government as a basis for negotiations. Please instruct by cable in this respect.