825.85/176: Telegram

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

892. Referring to previous correspondence regarding negotiations for the purchase by WSA of three motor vessels of the CSAV.

On May 12, 1943 the leader of the indigenous Fascist Party of Chile, Deputy Gonzales von Marees, spoke in the lower Chamber of Congress approving the negotiations and recommending that the sale be consummated. He outlined the facts regarding the long negotiation in a substantially correct form, except that he implied that the price demanded by CSAV of $6,640,000 was practically agreed upon. He stated that the sale would be advantageous for Chile and for the company since the latter would then have 200,000,000 pesos in additional capital and after the war might be able to buy double the number of motor vessels now sold.

He stated that this new capital would be invested in Chile, Argentina, the United States and other countries where it would increase during the war assuring Chile a powerful merchant marine later. The Liberal Party Deputy Smitmans objected that the greater speed of the motor vessels in question was their sole defense against submarines. Gonzales von Marees replied he was informed that Chilean vessels now were traveling in convoy in the Caribbean at 8 knots speed. Finally he defended the legality and convenience of the proposed [Page 872] sale saying that the Government did not need to permit the sale if it did not agree.

The CSAV could not have found a more bitter enemy of the United States to defend its interests in the Chilean Chamber of Deputies. This is further evidence of the Fascist orientation of the CSAV leaders.

I feel it would have a salutary effect if the negotiations could be dropped. However, strongly recommend that the money paid for the vessels be tied up so that Carlos Vial and the CSAV cannot make this large sum in dollars available for Axis [garbled word] in the United States, Chile, Argentina or elsewhere. One cannot but wonder whether such a deal has not been made with secret Axis agents which explains the support Gonzales von Marees has given the CSAV in Congress.