840.51 Frozen Credits/11006

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

No. 6939

Sir: I have the honor to transmit a despatch No. 6923 of July 3, 1943,20 entitled “Observations on Chilean controls of Axis assets and the German, British and American post war positions in Chile” prepared by Mr. Butrick, Counselor for Economic Affairs, and Mr. Franki. I signed the despatch without change because I find it thoughtful, timely and stimulating.

The thesis, however, “It…21 behooves us to withhold favors from the present cabinet-administration in order that we may have something substantial in the basket to pass out to a pro-United Nations cabinet, not only to show our appreciation but to enable it to obtain the confidence and support of the Chilean people” needs perhaps some definition and amplification.

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We are continually being requested to authorize the export of products or services, or furnish aid above the absolute minimum necessary to keep the Chilean economy functioning. Compliance with such requests is often mutually advantageous and politically desirable, and it is my understanding that neither Mr. Butrick nor Mr. Franki desire to suppress such service entirely but rather only when such requests are substantial.

I am, of course, in entire accord that any commitments for sizeable grants of capital or for post war markets of Chilean copper, nitrates or other commodities should be withheld for negotiation between the two governments and for any concessions on our part there should be a quid pro quo much more important than the enactment or enforcement of control legislation of Axis assets. We desire, of course, the passage of such legislation to enable the Chilean government to control Axis assets and we want such legislation enforced since it would stiffen the operation of the Proclaimed List.

However, as a practical matter, it is not possible, except with the occurrence of a fanatically Leftist administration, which is not in the cards, that the control legislation would result in the liquidation or nationalization (vesting) of the several hundred Axis firms that we have listed as dangerous or non-essential. The comment of the Department, as to whether such wholesale action against Axis firms is practically desirable, is invited.

We would, however, like to see certain key firms which have been leaders or agents in the Nazi work here in Chile at least nationalized with their income and capital blocked. But I do not feel any such action would need to be paid for by any particular “favors” or concessions on our part, beyond perhaps occasionally furnishing facilities or perhaps capital, in exceptional cases, to Chilean groups taking over Nazi firms.

Respectfully yours,

Claude G. Bowers
  1. Not printed.
  2. Omission indicated in the original despatch.