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of Hacienda who assures Foreign Office that he will make changes in law which will save the United States interests from injury. The answer is somewhat indefinite but hopeful. I will watch developments. COLLIER

825.6362/25: Telegram

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

WASHINGTON, November 1, 1927-7 p. m. 58. Department informed by American interests that Chilean Government is paying little attention to protests made by their representative, Mr. Seibert, against the coal bill, which has already been approved by the Joint Committee of Congress. Department had hoped that no definite action would be taken pending the receipt of full report which it understands Chilean Ambassador, following conferences in New York, is making to President Ibañez. Please investigate and cable briefly report on present situation.


825.6362/30: Telegram

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

SANTIAGO, November 2, 1927-4 p. m.
[Received 8 p. m.]

168. Your 58, November 1, 7 p. m. It is true Chilean Government shows unwillingness to modify coal and petroleum bill. Minister of Hacienda last Sunday published full page exposition in local newspapers, criticising American companies for not having made representations as to innumerable and varied propositions and suggestions criticising methods for protecting the coal industry advanced during the last 5 years. His exposition also sought to justify Government's action and challenges statements made by local representatives of North American interests as to burden which proposed new law will impose upon them. I immediately addressed a note to Foreign Office defending companies for not having bothered Government with representations as to proposals that had not received Government's approbation and referring to Minister of Hacienda's admission that Government's proposition was not published until September 2nd, and that companies' representations were made September 29th, and the American Government's representations, based upon necessarily partial and incomplete information, were made October 14th. I requested, in view of the immensity of interests involved, that the matter be studied further by Chilean Government


and opportunity be given American Government to become more fully apprised as to the facts.

I have engagements to see Minister of Foreign Affairs and President of the Republic as to matter today. Minister of War and Minister of Fomento are dining with me tonight. Last-mentioned should be particularly interested. I will endeavor to present the matter to all of them and also will see Minister of Hacienda if possible.

Rampant protectionist sentiment and desperate condition of Chile coal industry, coupled with [paraphrase] the reported statement that powerful Chilean nitrate companies are willing to accept an increased duty on coal which they use provided that the Chilean Government will reduce the export duty on nitrate [end paraphrase], make it doubtful whether duties will be materially reduced; but I will do the best I can. Incidentally it should be borne in mind that loss of revenue caused by any possible reduction of nitrate export duties will be made up by increased taxes, probably on copper and possibly on iron ore.


825.6362/33: Telegram

The Chargé in Chile (Hofer) to the Secretary of State

SANTIAGO, November 16, 1927-—noon.
[Received 5:50 p. m.]

176. Ambassador's telegram 168, November 2, 4 p. m. Chamber of Deputies passed coal bill substantially as reported by joint committee late yesterday after short discussion. Bill expected to be sent promptly to the Senate.

[Paraphrase.] Seibert says that there is little hope for effective modifications since prestige of Government and Minister of Finance, who has suffered much embarrassment by protests, is involved if Congress does not promptly approve bill. [End paraphrase.]


825.6362/40: Telegram

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

SANTIAGO, December 10, 1927—1 p. m.
[Received 2:35 p. m.]

186. Have continued efforts to secure modification of coal and petroleum bill. Minister of Foreign Affairs on November 30th answered note referred to in telegram 168, November 2, 4 p. m., reiterating that

Chilean Government felt copper companies had delayed unduly in making protests and also challenged accuracy of their figures and conclusions and stated that it was difficult to accede to request for prolongation of the study of this measure but that "as a demonstration of its good will the Government had proposed to Congress an addition to law permitting President of the Republic for a period of one year to make resolutions as to the matter if he believed such action consistent with national interest." I understand intention is to authorize President to suspend or modify application of law if in his judgment wise. Meantime thorough investigation of the situation will be made.

William Braden 80 has had numerous conferences with President and Minister of Hacienda as to this bill and also existing tax laws and is about to leave, hopeful and fairly well satisfied with this arrangement. There has been a formal interchange of notes between him and Minister of Hacienda providing for such a study of entire situation in fulfillment of assurance given me by Foreign Office as above-mentioned.31



825.506/4: Telegram

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

WASHINGTON, May 5, 1927-10 a. m. 19. Home Insurance Company of New York calls Department's attention to a cablegram from its agent in Chile reading in part as follows:

"Minister Finance has published his intentions to nationalize insurance as soon as possible. Principal points are as follows. Government will form a reinsurance company. Foreign companies will be eliminated. Native companies must reinsure their surplusses with Government company. When law is passed companies will be considered national only if two-thirds of capital belongs to Chileans."

It is stated that British and German companies doing business in Chile have asked for diplomatic intervention. Home Insurance Company desires this Government to protest against measure as being confiscatory. Please inquire of Foreign Office concerning proposed measure and report fully by telegraph, especially with regard to extent to which it appears to be confiscatory. Department has requested


Mining engineer and capitalist of New York.

In telegram No. 29, Feb. 8, 1928, 3 p. m. (not printed), the Ambassador in Chile informed the Department that the coal law had been signed by the President on Jan. 9, 1928 (file No. 825.6362/43).

company to furnish information concerning nature and extent of its business and property interests in Chile.


825.506/5 Telegram

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

SANTIAGO, May 13, 1927—5 p. m.
[Received 11:15 p. m.]

64. Your No. 19, May 5, 10 a. m. Just prior to its receipt I had made informal representations to Minister of Foreign Affairs as to proposed insurance law, and have subsequently conversed with him. He says my representations will receive serious consideration but have been sent by him to the Minister of the Treasury whose project this is. Its provisions are correctly stated in your cable. As yet it cannot be said to have had indorsement of Cabinet although probably reflecting the avowed policy of this administration to promote national interests in every way possible. German and British Ministers who have made rather vigorous protest owing to their large interests, believe project will be adopted and this is not unlikely, although not apt to occur at once, and some substantial amendment may be made. Ministers of Treasury, Interior and Public Works dined with me last night. The first-named told me the matter was not ready for immediate enactment, although he felt that much if not all insurance should be effected in Chilean companies and that French companies had been driving them out of the field by rather unfair methods. I pointed out mutual advantages that would permit French companies to continue business and unfairness, practically amounting to that which might be considered destruction of property rights, if French companies were prohibited from carrying [on] a business which they had established in the past at considerable expense. Except in this respect I do not see anything confiscatory. Chilean Government appears inclined to consider this as simply withdrawal of a license to each business issued without any consideration entitling it to be considered permanent and does not consider it confiscatory. Am acting independently of British and German Ministers but in close touch with them. Minister of Hacienda in submitting his project to commission appointed to consider insurance question said that it was not official and should be considered only as basis for study. I know of no inquiries as to their business yet made from foreign companies but if law is enacted new companies will be subject to inspection by Superintendent of Insurance and required to furnish all pertinent information that may be desired by him.


825.506/8: Telegram

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

SANTIAGO, August 1, 1927-4 p. m.
[Received August 2-3:15 p. m.]

97. My telegram number 64, May 13, 5 p. m. and despatches 1079, May 21st, and 1135, July 16th en route,32 with enclosures to the last. I report that insurance bill, modified and made more drastic, was sent recently to Congress with urgent message requesting immediate passage in form presented. This draft of law limits insurance business in future to nationally organized companies and requires that all reinsurance be effected through the caja of reinsurance. However, it permits foreign companies now doing [business?] in Chile to reorganize as national companies. Minister of Hacienda tells me that the general provision that two-thirds of stock must be owned by citizens or residents of Chile does not apply to last-mentioned case and that existing foreign companies may reorganize and stock may be held by foreigners in the same proportions as at present. Agents for American companies dread requirement of reorganization as national companies because of great powers given to Superintendent of Insurance who may not only fix rates but determine amount of risk that may be carried and dictate with what company reinsurance may be effective. Nevertheless agents of American companies believe that the grant of such powers to Superintendent of Insurance, although apt to be exercised capriciously for the purpose [of] driving foreign insurance out of business, cannot be questioned in principle as violative of international or constitutional right. Proposed legislation does not appear confiscatory unless refusal to allow continuance of a business which has acquired a goodwill value can be so considered.

In order to prevent insurance from being written by foreign owners of property located in Chile in foreign companies, the act as now drafted in section 59 imposes tax on such policies equal to half of premium that would be charged by Chilean national companies and imposes very heavy fines in addition to [for?] failure to pay. Prior to incorporation of this provision in the bill, the big American business interests had expected to avoid hardships of the law by insuring in New York with New York companies and the foreign insurance doing business in Chile had hoped this possibility of the insurance business being thus diverted from Chile to foreign countries would convince the framers of the bill of the inexpediency of the proposed legislation.

All are greatly perturbed by new provision and wish assistance. of our Government.

* Despatches not printed.

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