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

No. 103

Sir: I have the honor to acknowledge the receipt of the Department’s instruction No. 42 of January 29th last, relative to restrictions upon the importation of American products into Chile.

I may say that in my cable message No. 14 of January 23rd., I sought for the purpose of record to convey the precise assurances which had been given me verbally by the Minister of Hacienda on that date.

The Minister left Santiago on the 7th instant for Europe, and I am obliged to report that, with the exception of certain facilities which are now being accorded to the importers of American automobiles and radios, the exchange situation presents the same difficulties for American business as heretofore.

The Department’s instruction above acknowledged was received on the eve of Señor Ross’ departure and I sent an informal note on the 5th instant, of which I transmit a copy,28 to the Minister for Foreign Affairs, who has assumed the portfolio of Hacienda, requesting him to speak with the former on the subject of my previous conversation with him.

Señor Ross was exceedingly occupied during his last days in Santiago with the debates in Congress relative to his agreement with Mr. Calder, President of the American and Foreign Power Corporation. The final vote which approved the Agreement was taken but a few hours prior to his leaving for France.

I have received the impression from those among the Americans and Chileans who are most intimate with the Minister of Hacienda that he is a man whose word may be thoroughly trusted. In my own dealings with him I have found him apparently frank and very friendly. Undoubtedly he has been under strong pressure by the British, Spanish and probably other Governments as well as our own in the matter of blocked credits, which is an exceedingly embarrassing one for Chile at this time. I am of the opinion that his decision in the course of my conversation with him on January 23rd last, to liquidate the pending credits of American exporters, was genuine and that it was dictated by the desire to facilitate our trade with Chile. It would seem, on the other hand, that the Chief of the Chilean Exchange Control Commission may be retained by the Ministry of Hacienda as a sort of economic bulldog—for the purpose of impeding exchange permits in whatever manner possible. The exigencies and arbitrary difficulties [Page 331] placed by this official in the way of importers seeking foreign exchange are the source of frequent complaints to the Embassy. In the case of one recent request by the representative of an American Bank for a permit to transfer certain blocked American credits, I am informed that the reply of the Exchange Commission embodied requests for information on such points as when the merchandise was sold, the original shipping papers, when the payments were made, etc.; in short, an elaborate documentation covering many points which are now unobtainable.

So far, therefore, it would seem that the promise of the Minister of Hacienda to liquidate our credits before this [his?] departure has not been fulfilled.

This is particularly regrettable as Señor Ross is the one member of the Government qualified to carry out energetic measures in the circumstances.

In a brief conversation with the Acting Minister of Hacienda today, the 12th instant, I alluded to this question. Señor Cruchaga’s reply was not very explicit. He said that he feared his colleague may have been too occupied with the Ross-Calder Agreement29 debate before his departure to take up the matter of the American credits. He said that on the 13th instant he was entering upon his duties as Acting Minister of Hacienda and that the first matter to which he would devote his attention would be that of the blocked American credits.

Respectfully yours,

Hoffman Philip
  1. Not printed.
  2. This agreement was signed on November 26, 1935, by the Chilean Finance Minister, Gustavo Ross, and C. E. Calder, the president of the American and Foreign Power Company, and provided for a reorganization of the Compañía Chilena de Electricidad Limited and the settlement of its exchange difficulties.