825.51/1287
The Ambassador in Chile (
Bowers
) to
the Secretary of State
No. 1021
Santiago
, December 5, 1940.
[Received
December 10.]
Sir: I have the honor to refer to my telegram
No. 294, 5 p.m. of December 4, 1940, and to transmit a copy of the note verbale, and a [Page 692] translation thereof, which the Foreign Minister handed
me this morning on the suspension of the retirement of the foreign debt.
There also is transmitted a copy, and a translation, of Decree No.
375336 providing for the suspension of the retirement of
the foreign debt.
As indicated in my telegram No. 296, 5 p.m. of today’s date, the Foreign
Minister stated that the Government’s action was “embarrassing”, but he
insisted it was forced by circumstances. He also was emphatic in
declaring that the suspension only was temporary, that the resumption of
the retirement of the foreign debt would be undertaken just as soon as
conditions permit, and that interest payments on the external bonds
shall continue to be made in the manner followed until the present.
Respectfully yours,
[Enclosure—Translation]
The Chilean Ministry for
Foreign Affairs to the American
Embassy
Note Verbale
The Ministry for Foreign Affairs presents its compliments to the
Embassy of the United States of America and has the honor to inform
it of the following:
The grave circumstances which arose in our country due to the
catastrophe of January 24, 1939,37 which destroyed numerous cities and affected
the agricultural and industrial production of a vast and rich region
of the national territory, made necessary the issuance of a law for
the reconstruction of the devasted zone, to repair the damage and to
strengthen the economic structure of the nation. One of the measures
taken by the National Congress to this end was the authorization
conferred on the President of the Republic to make use of the
resources referred to in Article 1 of Law No. 5580 of January 31,
1935; namely, to suspend the redemption of foreign debt bonds, so
that these funds may be applied to the requirements of
Reconstruction and Development Law No. 6334, until such time as
these funds might be replaced through the contraction of loans, or
through funds made available by the strengthening of national
economy.
Up to the present, Chile has faithfully met the obligations of its
foreign debt and had made an effort, likewise, not to use the
authorization which permitted the use of funds destined to the
redemption of that debt for reconstruction and assistance to the
devastated zone and for the development of its economy. But the fact
that it has not obtained [Page 693]
the necessary amount through loans required to maintain its
economy,—which was affected by the catastrophe mentioned
above—,together with the general conditions arising from the present
European conflict, have obligated its Government to decide to
suspend transitorily the redemption of foreign debt bonds, though
the provisions of Law No. 5580—which refer to the funds allotted for
interest service on said bonds, a service which shall be continued
in the uniform manner followed until the present,—shall subsist in
their entirety.
So that the Embassy may be duly informed, the Ministry for Foreign
Affairs has the honor to enclose a copy of Finance Decree No. 3753,
which embodies the above.
The Ministry for Foreign Affairs trusts that the Government of the
United States of America will understand and appreciate the just
motives, arising from the domestic and international economic
circumstances indicated, which have led the Government of Chile to
make the decision herein stated. Furthermore, it reiterates that
this decision shall endure only as long as circumstances warrant it,
and shall be applied only until the efforts of the Government to
contract abroad one or more loans, and the sustained endeavor of the
Nation to better its economic progress, permit a return to the
complete operation of Law No. 5580.
The Ministry for Foreign Affairs avails itself [etc.]
Santiago, December [5], 1940.
