825.5151/373
The Ambassador in Chile (Philip) to the Secretary of State
[Received December 18.]
Sir: Adverting to previous correspondence relative to the exchange situation here, I have the honor to report that in the course of the past week considerable pressure appears to have been brought to bear upon the importers of automobiles from the United States by the President of the Exchange Control Board in an endeavor to cause them to place their orders for the current year on a basis of exchange of 35 pesos to the dollar.
This official is reported to have informed the local dealers that exchange would be granted to them at this rate for the automobiles within the existing quota limits should they make their requests at once. It is further reported that the importers were informed that the Exchange Control Board would grant the permits involved on deposit of 30% of the value of automobiles imported under the quota instead of requiring the payment of the full sums involved by the transactions. Those interested were informed at the same time that the Government is being “obliged” to lower the gold exchange rate in the near future and that if they did not avail themselves of the suggested arrangement no assurances could be given that exchange will be granted for automobiles.
I may say that these reports have reached the Embassy through the importers concerned, who state that the question is still under consideration.
I understand that in a few individual cases orders for automobiles have been placed at the gold rate of thirty-five to one.
I sought an interview with the Minister of Hacienda on the 11th instant and mentioned the fact that no acknowledgment has yet been received of the Embassy’s note of November 6th.57 Without directly referring to the information received from the importers of automobiles, I requested information as to the exchange situation.
Señor Ross replied emphatically that the Government has definitely determined to fix the rate of gold exchange for all imports, including automobiles, at 26 pesos to the dollar and that he would shortly convey this information to me officially. I said that it seemed regrettable that the free market rate of approximately 29 pesos to the dollar could not be fixed upon for the time being.
The Minister stated that my Government had protested against discrimination and that in consequence the rate 26 pesos had been set and would be maintained for the time being. He went on to say that [Page 367] his Government has found it absolutely necessary to restrict imports from abroad; that Chile is buying more foreign goods than she can afford and that a halt must be called, in spite of the loss involved—through resulting shrinkage of customs revenues, etc. As for automobiles, Señor Ross said he believed they could well be sold here at the 35 peso rate and he considered the importers were making a great mistake in not availing themselves of that rate while it was offered.
I inquired if this statement meant that there would be less exchange granted for such imports at the 26 pesos rate and he replied this would be the case.
I mentioned the Minister’s previous statement to me that the Government would find it impossible to maintain the quotas fixed for the importation of automobiles from compensation treaty countries. He said that, in spite of very strong protests from those countries, it has now been decided to enforce the quota allotments as originally set.
In the course of this conversation I observed that one of our greatest difficulties lay in the lack of authoritative information as to the quantity of exchange actually available to foreign commerce at one period or another. Señor Ross smiled and said it was impossible to furnish me with this information.
I beg to report that I gained the impression from my talk that, under cover of the new rate of 26 pesos to the dollar, the Chilean Government may be planning to restrict or prohibit importations of automobiles by the simple and much used device of refusing exchange permits on the score of “no exchange available”.
Respectfully yours,