The Ambassador in Chile (Philip) to the Secretary of State

No. 57

Sir: I have the honor to acknowledge receipt of the Department’s Instruction No. 21 of the 9th instant, with enclosure, relative to the exchange restrictions imposed by the Chilean Government on imports of automobiles, tires and parts.

On the 19th instant, in the course of an informal conference with the Ministers of Foreign Affairs and Finance, I took up the subject of the Department’s instruction and handed to the latter a memorandum which embodied the chief points dealt with therein.

I emphasized the fact that our Government’s interest in the matters of exchange restrictions now existing in this country is prompted chiefly by the desire to improve the commercial intercourse between our nations by the elimination of difficulties in the way of the free exchange of commodities. I added that all that is required by the United States is full reciprocity and that fair and equable treatment be accorded our citizens in their dealings with Chile.

I added that the Embassy has had very many requests for assistance by American merchants and others who have been unable to liquidate their credits in this country owing to the existing exchange restrictions; that these difficulties are especially great in the matter of importations of automobiles, tires and parts.

I appealed to the Ministers to cause some step to be taken by the Chilean Government which would permit of the transfer of pesos credits now held here and the regulation of exchange on such a basis as not to constitute a decided obstacle to, if not a prejudice against, the trade of the United States in this country.

Señor Ross replied to my observations to the following effect: He said that his Government had imposed the exchange restrictions as a means of self preservation but that it realized certain hardships had arisen from them. He assured me that in the near future steps will be taken to improve this situation, as had been suggested by the President in his message to the Congress in connection with the sentence against the Compañía de Electricidad (see despatch No. 55 of December 20, 1935.25)

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With regard to the blocked credits in Chile mentioned by me, he expressed his belief that all American credits had been liquidated, and that before sending me a reply to the various points noted by the Department, he would appreciate a list of such credits now known to the Embassy.

In speaking of automobiles, the Minister said that his Government, although it would wish to limit the excessive number of these now purchased for use in Chile, would if desired lift all restrictions upon them. He expressed the opinion, however, that this would react disadvantageously for the importer—that the removal of restrictions tending to further depreciate the peso, would ultimately render these conveyances too expensive for popular use.

I spoke of having heard of many German automobiles now entering Chile. The Minister replied that the Germans under their bilateral agreement had the right to import such products as they wished—to a value not exceeding that of their purchases in this country.

The attitude of the Minister of Finance was entirely cordial and he gave the impression of being desirous to do all in his power to cultivate Chile-American relations.

Subsequently, I furnished him with two lists of blocked credits of which the Embassy is aware and which total some 31,557,629 pesos.

In my covering letters with these lists I stated that more of the credits will be sent as they are segregated and that, in addition, there exist large stocks of American merchandise which are held unsold here owing to the inconveniences presented by the exchange restrictions.

I further suggested in one of these letters that if the Chilean Government makes an arrangement for the granting of a certain amount of exchange each month for the liquidation of these credits, I felt sure that such a step would go far toward removing the difficulties and confusion which now confront American merchants and others doing business with Chile.

Respectfully yours,

Hoffman Philip
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