625.116/26

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

No. 430

Sir: I have the honor to refer to this Embassy’s despatch No. 415 of July 27, 1935, on the subject of certain measures taken by the Chilean Government in restriction of American commerce. In this connection it will be recalled that at the conference with the Minister of Finance, which took place on July 24th, he requested that a copy of the questionnaire which had been prepared by this Embassy be left with him.

The written answer of the Minister of Finance, confirming his oral statements made in the conference, has now been received in the form of a Memorandum from the Foreign Office, which is enclosed with its translation. As may be noted, the written reply follows in all essential respects the oral explanations furnished by the Minister.

Since the last report on this subject, embodied in despatch No. 423 of July 31, 1935, there have been no new developments, although the Embassy is happy to be able to report that apparently most of the orders which were pending have been released in accordance with the promises made.

It is considered that the subject has now been fully set forth to the Department for its consideration, and no further action is being taken or will be taken pending the receipt of the Department’s views and instructions in the premises.

Respectfully yours,

Winthrop R. Scott
[Enclosure—Translation]

The Chilean Ministry for Foreign Affairs to the American Embassy

Memorandum

1. The measures adopted on June 7, 1935, by the Commission of Control of International Exchange of Chile are explained by the fears that a rise might be produced in the value of the dollar and other currencies, because of excessive demand. It was necessary to restrict the sale of export drafts for the purchase of articles which may not be considered indispensable for the national economy and whose importation would have increased unreasonably recently.

2. There does not exist and has not existed in the intention of the Government the idea of altering the situation of trade with the United States. The restriction imposed on the importation of certain articles is in accordance with the reason above set forth (1) and [Page 412]the exchange produced by exportations to that country is freely used for the importation of every kind of merchandise, with the exception of automobiles and radios which are under special regulations.

3. In order to avoid any unnecessary hardship, the Exchange Commission has authorized all of the requests for importations relative to automobiles and radios which were on July 1st in the port of origin, on board ship or in a Chilean port. With regard to the spare parts and accessories for automobiles, tires, and spare parts for radios, the Commission has arranged to authorize not only those that were in the customs, under the same regulations as for automobiles and radios, but also future importations within the usual needs of each importer.

The exchange allocated for this purpose is as follows:

For automobiles in customs, on board, and in port US $333,275.69
Parts and accessories ordered, in the customs, on board and in port 41,240.11
Tires 9,113.99
Imports of accessories and parts, tires and tubes, for the remainder of the year, according to the calculated needs of the importers 373,500.00
For radios already authorized 60,613.61
Total US $817,743.40

4. The Commission has always permitted the importation of every kind of merchandise from the United States, without any exception, with the importer’s own availabilities. It is not possible to authorize recourse to the” “bootleg market”, since it is illegal, but the importer’s own availabilities may have another origin.

5. There is no discrimination in the application of these measures, other than that imposed by the fact that a great part of the restricted articles come from the United States. Other countries have had to submit to equal treatment.

6. It is not possible to fix an exact period for the application of these measures. That will depend on the availabilities of export drafts and on the volume of importation. In any case, the Commission proposes to maintain them only as long as they are indispensable and for the period that is strictly necessary.

7. The measures referred to will be applied only to automobiles and radios. Requests for the importation of every other American product will be granted without difficulty.

8. Frozen credits. For the moment, the liquidation (descongelación) of American credits has been restricted for the same reason (1) that has been noted. A list of the frozen credits that now exist would [Page 413]be desirable, since, just as a short time ago there was no difficulty in the transfer of these credits, there is now the intention of facilitating them in the future, but on the basis of a definite list, even though only approximate, of such existing credits.

9. Re-exportation. So long as it is a question of merchandise which is not indispensable to Chile’s economy, requests for re-exportation will be favorably considered. The legal obligation to return (retorno) will be established without setting a definite period.

10. The Government of Chile maintains its previous affirmation, with respect to the maximum facilities to be enjoyed by American commerce. Temporary restrictions have been imposed because of fundamental necessities of economic policy and vital exigencies of internal stability.