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

No. 500

Sir: I have the honor to refer to this Embassy’s despatch No. 441 of August 16, 1935, and previous communications regarding the difficulties of our commerce in Chile. In this connection, having learned [Page 422] of two new developments, it was felt desirable to discuss them in an informal way with the Foreign Office. The first point was the fact that a short time ago the British had been accorded authorization for the transfer of sterling accounts. One consisted of certain collections in the Magallanes and Valparaiso districts which were authorized some weeks ago. The second transfer consisted of certain blocked credits in Santiago. The second point which has arisen in connection with exchange restrictions concerned the apparent extension of exchange restrictions to include automobile tires and spare parts. It will be recalled that originally authorizations were held up for American tires, but after some conversation on this subject the Minister of Finance stated that it was not desired to restrict the importation of these articles and pending orders were released. Recently American tires importers have complained to the Embassy that their solicitudes for the obtention of export drafts have been held up or not authorized by the Exchange Control Commission and that it appeared, therefore, that in effect the restrictions were being extended to include tires.

A conversation was held at the Foreign Office on October 26th concerning these matters and a record of the same is enclosed.11 With regard to the transfer of frozen credits or blocked funds on deposit in banks, it will be noted that the Under Secretary for Foreign Affairs requested the Embassy to furnish a list of funds whose transfer was desired. This list was furnished in conformity with this suggestion, a copy of the Embassy’s Memorandum on this subject being enclosed.11

With regard to the extension of restrictions to tires and automobile spare parts, there is enclosed a copy,11 with translation, of a letter just received from the Under Secretary on this point. The reply is typical of the attitude now being adopted by Chile with regard to our commerce and, as will be seen, on the one hand it states that there are no restrictions on the importation of spare parts and tires, but it then states that certain authorizations for the latter have been only accorded for a future time when exchange availabilities are sufficient to prevent a rise in the dollar. In other words, tires in reality are on exactly the same basis as automobiles and radios since, according to the Chilean Government’s statements, the restrictive measures are in all cases only temporary and designed to place a check upon the use of dollar exchange.

As the thoroughly unsatisfactory treatment we are receiving on the two points mentioned above is only part of the present situation with regard to American commerce in Chile, the entire question is being made the subject of a more comprehensive report.

Respectfully yours,

Winthrop R. Scott
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