840.51 Frozen Credits/9618: Telegram

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

402. Reference your airgram A–548, February 19, 1943, and the following despatches on the subject of economic and financial controls and Proclaimed List cooperation since the rupture: 5618 February 3; 5621 February 4; 5687 and 5688 February 9; 5745 February 13; 5769 and 577 [5767] February 17;13 and 5868 February 27.

The work of the secret Committee produced no tangible results and its dissolution has now been confirmed. Through the medium of the Committee, however, the Chilean Government received much information on economic and financial controls and the subject is now being studied by a smaller group composed of Del Pedregal, Minister of Finance, Pablo Ramirez, former Minister of Finance, and Alfonso Fernandez, manager of the Chilean Amortization Institute. On February 25 the last named was designated by President Ríos as his personal representative to discuss Proclaimed List matters with Mr. Thayer as my representative. It is expected that discussions will be initiated this week.

Recent conversations with the Minister for Foreign Affairs and other Chilean officials indicate that the Chilean Government has fully determined to initiate soon a far reaching program of economic and financial controls some aspects of which are currently being placed in effect. Decree number 736 dated March 1, 1943, and published yesterday in the Diario Oficial provides that within 15 days of publication all real and juridical persons in Chile who have in their possession or control funds or securities of persons or institutions resident or domiciled in Axis countries or Axis-occupied territories shall file sworn statements with the Superintendent of Banks showing funds and securities in their possession and data as to domicile; and further that pending the filing of such data no transactions with respect to such property may be effected. A copy of this decree follows by despatch. It is believed that this decree is the forerunner of a general program of freezing Axis and Axis-controlled assets as suggested to the Chilean Government in my notes enclosed with despatches 5618 and 5769.

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Adriasala, manager of National Foreign Trade Council, informed Thayer and Franki on February 26 that Council was not granting import permits to Proclaimed List firms or individuals but would continue to “study” same until a definite program is adopted. Council is also considering a program for consignee control which was submitted to Adriasala during the same interview and details of which are being transmitted by despatch. Adriasala also has agreed to supply the Embassy unofficially with copies of all import permits filed by importers of United States and Argentine merchandise. This should aid materially in the prevention of cloaking by providing a check on traffic from the Argentine.

The Chilean Government believes that a comprehensive program of controls requires enabling legislation and the Foreign Minister advises me that such legislation will be submitted as an administrative measure to a special session of Congress to be called this month. Ramirez has prepared draft of a law in effect recognizing the resolutions and recommendations of the Rio and Washington Conferences and authorizing the President to issue decrees to implement the same and specifically to sever commercial and financial relations with the Axis. However, Vargas of the Ministry for Foreign Affairs indicated in conversation with Thayer and Franki last week that a more specific measure might be submitted to Congress. Thayer and Franki offered to assist by preparing draft of a suggested law and Vargas welcomed the offer. The draft is being prepared and will be submitted to Vargas soon.

Yesterday after several conferences Thayer and Franki submitted to Señores Casanueva and Ortuzar a suggested basis for further discussions concerning certain Proclaimed List agriculturists (my despatches 5621 and 5687). Briefly it was suggested to the Chileans that pending the establishment of adequate controls and to prevent a decline in agricultural production, agriculturists on the list will be reviewed and classified in accordance with the Department’s circular instruction of December 17, 194214 and that the Chilean Government deal with such agriculturists in conformity with Rio and Washington resolutions by blocking assets and proceeds of transactions, removal of objectionable personnel and management, forced transfer of title, and liquidation, in accordance with agreed classification of firms and individuals in question. Casanueva and Ortuzar, who are extremely sympathetic to our program, believe that even before legislative action many of our desired objectives can thus be attained by denial of credit [Page 898] and transportation facilities, refusal of gasoline and fuel oil, and a firm attitude on the part of the Department of Agriculture.

In the light of the foregoing résumé and in view of the present receptive attitude of the Chilean Government, I believe that it is of the utmost importance to press for the adoption of a comprehensive program of controls rather than to seek individual components of such a program. The Economic Division of this Embassy shares this view, and it is our opinion that by pursuing such a policy satisfactory results may be expected within a reasonable time.

  1. Despatches Nos. 5621, 5687, 5769, and 5767 not printed.
  2. Not printed; according to this instruction the United States Government through the Export-Import Bank stood ready to aid with funds and technical personnel firms affected by forced sales, vesting of title (nationalization), etc. (740.00112A European War 1939/22236b).