825.5151/315: Telegram

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

45. My cable 40 of May 16, 1 p.m. During a conference with the Minister of Foreign Affairs this morning I requested information on [Page 346] the following points: (1) Has the Chilean Government decided to refuse all exchange for the financing of imports of automobiles and radios; (2) does this restriction affect countries having compensation treaties with Chile; (3) does the restriction affect any other foreign products and, (4) what will be done in regard to automobiles and radios now in transit to Chile.

Dr. Cruchaga called in Undersecretary Vergara and Mr. Cohen37 and replied in the following sense: (1) His Government has decided upon this measure primarily as a means of preventing depreciation of the peso and the measure probably will remain in force until a contemplated schedule of more or less prohibitive duties on certain types of automobiles and radios can be enacted; (2) the refusal of exchange permits for automobiles, radios, and other products of countries having compensation agreements cannot, it is believed, be made so long as the total of such imports does not exceed that of Chilean products purchased; (3) no decision as to the refusal of exchange for other luxury articles has yet been arrived at; (4) I was requested, if possible, to furnish a list of all American automobiles and radios in transit for or now landed in Chile and was assured that the Foreign Minister will at once take up the question of granting exchange permits for these consignments with the Exchange Control Commission.

Dr. Cruchaga and his assistants were all emphatic in their assurances that no intention to discriminate against the United States exists here. The Minister stated that a very alarming shortage of dollar and pound exchange exists and that the rapidly increasing number of orders for automobiles and radios is believed to constitute a grave danger for the Chilean financial situation. He mentioned in this connection the existence of a great discrepancy in the balance of cash payments between the United States and Chile in favor of the former. Mention also was made of the serious effect upon the peso which had followed the removal of the exchange restrictions urged by me, etc. I replied that a very thorough study of the question by the Embassy had shown that the removal of the restrictions alluded to had affected the value of the peso practically not at all; that I regarded the adoption of the above policy without previous advice as a serious blow to our commercial relations and one which can hardly be contemplated as other than a discrimination against American interests. Commercial Attaché requests Department of Commerce be advised regarding shipments in transit situation.

  1. Benjamin Cohen, Chief of the Diplomatic Bureau of the Ministry for Foreign Affairs.