611.2531/141: Telegram

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

68. Department’s 41, June 21, 7 p.m. Local Manager of the International Machinery Company informs Embassy that while the Minister of Finance at one time apparently contemplated making available Danish exchange at a rate lower than the commercial rate, he subsequently for reasons not clear apparently abandoned this plan. The Melon Cement Company has now agreed to purchase $60,000 of motors and mill equipment from the International Machinery Company and is purchasing about $40,000 of similar Danish equipment. The Manager of the International Machinery Company states categorically that the placing of portion of the order with a Danish firm is due entirely to the latter’s willingness to concede longer credits and certain guarantees which the American company is not in a position to give.

The Embassy is satisfied that no discrimination took place in the case mentioned above. However, in spite of assurances made by the Foreign Office when exchange treatment was under discussion, the Embassy is convinced that the Minister of Finance would not hesitate for political reasons if he deemed it expedient to make available exchange from blocked nitrate accounts at rates lower than the prevailing commercial rates and in fact, although almost impossible to prove, it is believed that he has discriminated in this manner on more than one occasion. In addition to the question of exchange rates a tendency has developed during the last 2 or 3 weeks on the part of the Exchange Control Commission to refuse or delay granting authorization for the importation of such typically American products as automobiles, radios and tires. The Foreign Office has been asked in an [Page 400]informal and friendly way if there is now any change of policy on exchange matters and has promised to look into the question carefully. A full report by air mail will be forwarded as soon as possible.

Scotten