The Chargé in Chile ( Scott ) to the Secretary of State

No. 493

Sir: I have the honor to refer to the Department’s instruction No. 176 of July 3 [30], 1935, with its enclosures concerning the commercial policy of the United States, in which the Department referred to the desirability of working out a commercial agreement with the Chilean Government and with this end in view, suggested that the matter be discussed in an informal conversation with the Minister for Foreign Affairs or other appropriate officials.

Pursuant to the Department’s instruction, after the Embassy had had a chance to study the various memoranda and enclosures setting forth the policy of the United States with regard to the negotiations of reciprocal trade agreements, the matter was discussed informally with the Foreign Office, which reacted favorably to the idea of working out a commercial treaty and stated that an informal memorandum would be prepared setting forth the points which Chile would seek to have embodied in such a treaty. The question was turned over for further elaboration and study to the office of the Under Secretary for Commerce of the Ministry for Foreign Affairs, with the understanding that informal conversations would ensue when that Office had completed its studies. Several weeks ago, I made a casual reference to the question at a social gathering to Sr. García, the Under Secretary for Commerce, who stated that he was still working on the question and hoped that it would be ready for discussion shortly. However, not hearing anything further from the matter, it was felt desirable to obtain a more definite expression as to the attitude of the Chilean Government, and with this end in view I called on the Minister [Page 394] for Foreign Affairs yesterday. I referred to the fact that the matter had first been broached some time ago; that I had had no further instruction from the Department, but that as some time had elapsed I felt that perhaps the Department would be expecting the Embassy to make some preliminary report. The Minister said emphatically that Chile was very interested in entering into such a treaty; that it was true the question had been somewhat delayed, but that this was due not to lack of interest but because of the many very important matters which had arisen, such as questions relating to the Italian-Ethiopian situation, which had placed an unusual load upon the Foreign Office so that the study of numerous pending questions had been retarded. He added that he would ask Sr. Garcia to speed up the studies and that in the very near future the Foreign Office would be ready again to discuss the question informally with the Embassy.

The Embassy is inclined to accept the statement of the Minister for Foreign Affairs as an accurate presentation of the Chilean attitude. There is a possibility, however, that the Chilean Government is loath to enter into any formal agreement which may embody commitments on exchange matters embarrassing to the policy of the Minister of Finance in his attack on the Compañía Chilena de Electricidad, Limitada, on the pretext of illegal exchange operations (Despatch No. 492, October 16, 19354). Aside from this possible motive for delay the Embassy believes that Chile is anxious to enter into a trade agreement.

Respectfully yours,

Winthrop R. Scott
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