The Secretary of State to the Ambassador in Chile (Philip)
Sir: The Department acknowledges the receipt of your despatch No. 57 of December 21, 1935, and approves your presentation of the American foreign exchange problem in Chile and your expression of the Department’s views as to its solution at your conference with the Ministers of Foreign Affairs and Finance.
It is noted that the Minister of Finance stated that his Government would, if desired, lift all exchange restrictions from importations of American automobiles, although he believed that this would react disadvantageously [Page 328] for the importer as tending further to depreciate the peso and increase the local price of automotive vehicles.
You are requested to seek an early interview with the Ministers of Foreign Affairs and Finance and state that it is this Government’s belief and policy that artificial restrictions on exchange transactions are detrimental in the long run, and that it accordingly welcomes the suggestion of the Minister of Finance that the Chilean Government will lift present exchange restrictions on the importation of American automobiles and other products.
Please report by air mail or briefly by cable the results of your interview. You are also requested to forward by air mail copies of the list of American blocked credits in Chile, and covering letters, which you state you transmitted to the Minister of Finance. It is assumed that your reference to the exchange restrictions affecting large stocks of American merchandise remaining unsold in Chile refers to the exchange regulation forbidding the reexport of merchandise, without the return to Chile of an amount of foreign exchange equal to the value of the shipment.
Very truly yours,