825.51/3–1546
The Secretary of State to the British Ambassador (Halifax)
The Secretary of State presents his compliments to His Excellency the British Ambassador and has the honor to refer to the Embassy’s note (Ref. 966/15/45 No. 316) of October 25, 194588 which invited the Government of the United States to join with it in representations to the Chilean Government with a view to securing the observance by the Chilean Government of its undertakings under the Chilean External Debt Settlement of January, 1935.
As is well known, it is the traditional policy of the United States to avoid formal interposition or the assumption of direct representation of American bondholders in cases of default. The Government of the United States in such cases customarily limits its action to the use of informal good offices on behalf of the holders or their representatives.
In the instant case the Department of State soon learned that on October 29, prior to the receipt of the above-mentioned note by the Department of State, the Foreign Bondholders Protective Council, Inc. had quite independently and through the open mail addressed a letter to the Chilean Minister of Finance asking the Chilean Government’s consideration of protests of American holders of Chilean bonds on the same points specified in the Embassy’s note. The Council made no request for action by the Department. Early in January the Council reported receipt of a reply from the Minister of Finance which on the first point expressed the hope that the termination of the war will bring about a stabilization of the general economic conditions which will permit a more satisfactory performance in respect of amortization, but on the second point presented argument in rebuttal of criticism of Law No. 7160.
The Council subsequently informed the Department that it had been visited by Mr. Alfonso Fernández, the General Manager of the Caja de Amortización in charge of the foreign debt service of Chile who in lengthy discussion assured the Council of his expectation that diversion of sums from the annual amortization quotas will soon terminate and provision will be made for restoration by installments of amounts already diverted. Mr. Fernández subsequently visited the Department of State and repeated these assurances, while stating that he was not prepared to make public announcement thereof at the present moment.
In these circumstances the Department of State does not feel that it should do more than continue informal support of the Council’s. [Page 593] efforts, any benefit from which should inure also to the advantage of British and other holders of Chilean bonds.
- Not printed.↩