825.79635/13: Telegram

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

472. Department’s 332, September 21, 2 p.m. According to Raúl Simón, general manager in Chile of Grace and Company, Panagra has no intention of establishing a permanent additional service with [Page 567] Buenos Aires unless or until the Condor service is eliminated. It is doubtful that the mere establishment of such service by Panagra would affect Condor operations, which naturally will benefit by the summer boom. The additional service which Panagra will furnish from October would appear to be the customary seasonal extension of service to take care of summer tourist traffic from Argentina. It is to be noted that at the present time because of increased traffic, Panagra has been operating 4 flights a week to Buenos Aires as compared with 3 to the United States by the West Coast.

Simón is of the opinion that the Chilean Government has no legal grounds at present on which to break its contract with Condor which does not expire until December 31, 1942. He remarked however, that possibly Chile might find means to do so if instances like the reported arrest of nine Chileans in Germany should continue. He further remarked that grounds for breaking the Condor contract were available shortly after the start of the war when Condor failed to maintain scheduled services but the Chilean Government raised no objection at the time and full service has been since restored.

Simón says that he has been engaged for some time in intermittent negotiations with the Chilean authorities in an endeavor to establish in principle the right of Panagra to carry on cabotage now forbidden by law. Actually at the present Panagra is not much interested in cabotage business which would interfere with its international traffic. These negotiations were initiated by Panagra, not by the national company, and have not been concerned with the matter of additional trans-Andean service.…

It being improbable that the main object of eliminating Condor would be furthered by the establishment of the proposed additional service on a permanent basis, and there being no apparent connection between this question and the delicate cabotage matter, I believe with the Department that the latter should be left for separate and private treatment between the companies.

With regard to the last paragraph of the Department’s telegram, the Embassy understands that Montecinos is in the United States representing Chilean air clubs and is interested in some such number of planes similar to the Piper Cub class for civilian use. Chilean air clubs are officially sanctioned and supervised, their head being a Chilean Air Force officer, and benefit from certain special taxes but cannot be said to be an official entity.…With further reference to the Condor Line I assume that the Department is aware that it is ostensibly a Brazilian corporation. That its only source of aviation gasoline in Chile is from the Standard Oil subsidiary here and that is not on the Proclaimed List.