740.00112A European War 1939/25331

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

No. 5618

Sir: I have the honor to refer to my Strictly Confidential despatch No. 5277 of December 23, 1942,98 enclosing a copy of the written discussion [Page 889] of the desired economic and financial controls for Chile which was given to the secret committee99 of the Chilean Government on December 19, 1942, and also a copy of my note No. 1601 of December 19, 1942,1 transmitting a copy of said written discussion to the Foreign Office.

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Up to the present time the secret committee has not communicated to the Embassy any information as to what conclusions, if any, it has reached. Members of my staff have, however, kept in touch with Sr. Arturo Torres a member of the committee who was delegated by its President Sr. Vigorena to keep the Embassy informed of the progress being made. Apparently the committee has thus far been unable to come to any definite understanding as to what controls should be adopted, or the administration has concluded that nothing should be done for the time being, notwithstanding severance of diplomatic relations with the Axis Governments.

On December 31, 1942, Sr. Torres stated to members of my staff that the secret committee was to hold a meeting early during the following week for the purpose of discussing what controls might be instituted and that he and other members of the committee would thereafter keep in close touch with the Embassy at frequent intervals. He added that the Minister of Foreign Affairs2 had instructed the committee to proceed with its work as if the Chilean Government had severed relations with the Axis Governments. Nothing further having been heard, Mr. Franki of the Economic Division of the Embassy again called on Sr. Torres on January 12, to ascertain if there was anything new. In this discussion Sr. Torres stated that the Minister of Foreign Affairs had recently given the committee additional instructions (the nature of which were not disclosed) in regard to the controls which it was studying, and because of this, members of my staff had not been called in for further discussions as promised. However, Sr. Torres again assured Mr. Franki that the committee would discuss the proposed controls with members of my staff within the next few days. At the same time he indicated that the Chilean Government would be obliged to proceed carefully in subjecting factories and manufacturing establishments to controls intimating that such establishments might be eliminated from the program entirely on the score that by controlling them the economy of the country would be injured. He also expressed his personal view that the controls calling for the vesting of title of certain individuals and firms, and for their liquidation, did not appear to be important as he felt [Page 890] that the disadvantages to be derived therefrom far outweighed any advantages.…

The speech of President Ríos, which was broadcasted to the Nation on January 20, announcing the severance of diplomatic and consular relations with the Axis Governments3 and outlining his Government’s reasons for taking these steps, has been carefully examined to see if there is anything in it indicating the attitude of the Government toward the economic and financial controls recommended by the Rio and Washington conferences.4 While the President points out that the Rio Conference does not legally obligate Chile to adhere to the resolutions which were adopted, nevertheless he declares that Chile is morally obligated to do so. At the same time the President’s speech makes it clear that the measure severing relations with the Axis Governments was “of a strictly diplomatic nature” and further, that Germans, Japanese, and Italians can continue to expect the protection of existing Chilean laws provided they maintain their tranquility.…

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A few days prior to rupture of relations, and in the light of the foregoing developments, the Economic Division prepared a list of preliminary measures which the Chilean Government should adopt immediately upon severance of relations with the Axis Governments to be transmitted to the Foreign Office. The listed measures included the following:5

Severance of commercial and financial relations with the Axis and Axis-occupied countries, whether carried on directly or indirectly;
Severance of all communications with the Axis and Axis-occupied territories whether carried on directly or indirectly;
Regulation of commercial and financial transactions and communications with the neutral countries of Europe;
Immediate Governmental control of all banks, insurance companies, and news agencies owned and controlled by the Axis and Axis-occupied nations together with appropriate steps to prevent such institutions from removing, changing or altering their books and other records;
Recognition of the Proclaimed List of the United States Government;
The freezing of the properties and assets of the Axis and Axis-controlled Governments, as well as of Axis and Axis-controlled persons and firms;
Prohibition of any transaction undertaken for the purpose of evading the above.

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Respectfully yours,

Claude G. Bowers
  1. Not printed.
  2. A group of Chilean officials to consider economic and financial controls.
  3. Not printed.
  4. Joaquin Fernández Fernández.
  5. For correspondence on Chile’s severance of relations with the Axis, see pp. 795 ff.
  6. For correspondence on the Third Meeting of the Foreign Ministers of the American Republics, held at Rio de Janeiro, January 15–28, 1942, see Foreign Relations, 1942, vol. v, pp. 6 ff.; for the resolutions of this Meeting, see Department of State Bulletin, February 7, 1942, pp. 117–141. For comment on the Inter-American Conference on Systems of Economic and Financial Control, held at Washington June 30–July 10, 1942, see Foreign Relations, 1942, vol. v, pp. 58 ff.; for the resolutions of this Conference, see Pan American Union, Congress and Conference Series No. 39: Final Act of the Inter-American Conference on Systems of Economic and Financial Control (Washington, 1942).
  7. The Ambassador communicated to the Chilean Foreign Office on January 29, 1943, an outline of the specific economic and financial controls desired.