825.6374/1169
The Ambassador in Chile (Culbertson) to the Secretary of State
[Received June 15.]
Sir: I have the honor to transmit herewith a translation of the project of law72 which reduces to legal language the Ross Plan transmitted with my despatch No. 1443 of April 29, 1933.73 This project was submitted by the Minister of Finance to the American and English groups for comment and was sent by them to New York and London. Some further changes in the text have been made today. I am informed that they do not affect matters of substance but I have had no time to make a careful comparison. Mr. Cruchaga, the Minister for Foreign Affairs, told me last night that the Minister of Finance had submitted the draft to President Alessandri and that he (Cruchaga) had been requested to discuss the project with the President today. It appears [Page 193] to be the intention of Mr. Ross to seek an agreement between the Government and the private interests on the principal features of the draft law before it is submitted to Congress. In the opinion of Mr. Cruchaga, Congress will approve the project when it is submitted by the Government.
Paragraphs 11 and 12 recognize the prior secured bonds as a preferred debt on the nitrate industry and provide for the payment of the service out of the profits of the industry, if any. Mr. Whelpley, partner of Guggenheim Brothers, regards the plan with favor but the attitude of the National City Bank and Grace & Company is not known at the present time. It is probable that the English group, of which the Anglo-South American Bank is the center, will make some objections to the provisions of the draft law which relate to the stocks of nitrate and therefore affect the provision for the so-called Ramirez debt.
The project provides adequately for the interests of the Chilean Government both from the standpoint of revenue and from the standpoint of supervision over the industry.
The project of law if enacted will not dispose of the diplomatic question raised in the original notes of the four countries and reaffirmed by the British Government in its recent formal communication (see my telegram No. 72 [74], June 2, 5 P.M.).74 The project reaffirms the repudiation of the Government’s obligation under Decree-Law No. 12 and does not provide for a fixed charge, as a cost item, on the Sales Corporation. It however gives to the prior secured bondholders a preferred position in the distribution of the profits, if any, of the industry and if the private interests should accept this solution of the question we may consider the practical issue satisfactorily disposed of. The American Government, however, should ultimately, as I have indicated in previous despatches, make its position unequivocally clear on the principles raised by the Chilean Government’s memorandum of April the 3rd.
Respectfully yours,