825.5151/133: Telegram

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

13. Your No. 4, January 13. Department’s position as conveyed in previous cables to you is not complicated by any considerations of general policy either related to Chile or extraneous to Chile. It merely still feels unable to measure the meaning of the Chilean proposal.

As we understand it, the Chilean Government offers to permit purchasers of American goods and those who wish to remit frozen funds to the United States freely to do so. But as long as there is an Exchange Commission functioning, and exporters of Chilean products must turn over to that Commission the main proceeds of their foreign sales, how satisfactory an opportunity does this offer to purchasers of American goods? That is the primary question under consideration here.

Is the Department to understand that all exporters to the United States and to all countries other than those with which Chile has compensation agreements will be absolved from turning over their exchange to the Exchange Commission whereby it will become available in the bootleg market for purchase by those who wish to import from the United States or to transfer funds to the United States?

The Department would be inclined to accept the Chilean proposal in principle, subject to agreement on details, provided the answer to the question set forth in the preceding paragraph is in the affirmative and provided that the Chilean Government will undertake not [Page 6] to diminish the amount of foreign exchange thus available to American interests, by the conclusion of new compensation agreements or otherwise.

Please keep Department informed of British position.