611.2531/211: Telegram

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

65. Department’s 40, October 28, 7 p.m. I had a conference this morning with the Foreign Minister, García and Bohan.35 It was agreed that García, Bohan and Randall36 would discuss the Department’s proposals this afternoon. In the meantime García took up the question of the Department’s proposed text for paragraph 3 of the above cable with the Ministers of Foreign Affairs and Hacienda. The result of the final conference is as follows:

Paragraph 3 of Department’s telegram—García remarked that the uncertainties of the world situation and commitments under compensation render it impossible for the Government to acquiesce in the Department’s draft. He submitted as a result of his conference with the Ministers the following substituted text which translates as follows:

Within the limits fixed by existing exchange availabilities the Government of Chile will accord the most favorable treatment to the commerce [Page 408] of the United States and will make every effort to avoid the imposition of exchange control measures demanding the use of exchange at rates exceeding those which would result from the free play of market supply and demand.

García tentatively suggests the inclusion in the notes of a clause providing for the establishment of a modern committee such as is now established with Peru and Ecuador. In my opinion this might possibly provide a safeguard against precipitate action by the control commission, paragraph 4 of Department’s counter proposal of February 18, 1937. The Treaty Commission of the Foreign Office yesterday decided to except the three frontier countries from future treaties embodying most favored nation treatment. The Embassy is disinclined to accept this view but would appreciate the Department’s reaction.

It would appear that all other paragraphs of the Department’s counter proposal of February 18, 1937 will be acceptable, although there remains a possibility that the Foreign Office may propose the inclusion of an immediate consideration of a definitive treaty.

Philip
  1. Merwin L. Bohan, Commercial Attaché.
  2. Harold M. Randall, Assistant Commercial Attaché.