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as to the Panama Canal toll dues will be stricken out. I also believe preferential duties will be eliminated and possibly also in near future payment to ships of peso per ton of nitrate carried by them. He made following interesting statement “Although this payment is made to ships it is intended to benefit producers who unquestionably will decline to send nitrate on Chilean ships unless freight is reduced by this amount paid to ships by the Government.” Practically, this payment therefore is considered by him as bounty to producers. I believe Government eventually will substitute law granting lump sum subvention or payments for maintenance service on designated routes.

COLLIER

825.85/60 : Telegram

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

SANTIAGO, October 28, 1927-3 p. m.

[Received 8 p. m.] 163. Government has published ship subsidy bill substituting [bill?] mentioned in my 141, October [September] 21, 6 p. m. and previous telegrams. Summary of new bill is as follows:

Article 1. President of the Republic authorized to spend up to 2,000,000 pesos annually as subventions to national companies which have maintained for more than 3 years a regular service through the Panama Canal. This subvention to be regulated in proportion to the quantity of cargo carried by the respective companies.

Article 2. Companies accepting these benefits are to share net proceeds with the State as follows:

Reserves are first to be deducted and from balance a dividend of 10 percent is to be paid stockholders and the residue distributed proportionately between stockholders and the State, the latter being considered as holding shares of a value equal to 10 times subvention paid during the year. Government to name a director on the companies that accept the subsidy.

Article 3. President of the Republic authorized to contract for account of companies, and with Government guarantee, loans that may be required for acquiring ships destined to foreign commerce or coastwise trade. These loans to be guaranteed by mortgages on the ships, companies to arrange to take care of the service of the loans.

Article 4. Expenses occasioned by the law are to be met by increasing all consular duties 10 percent.

Article 5. New law to go into effect January 1st, 1928.

Consular fees are frequently based on value of invoice. I assume proposed increase affects consular invoices of imports from all coun

tries whether Chilean vessels maintain service with them or not. If so proposed increase seems to me unobjectionable in principle and possibly beneficial to American exports. Personally, cannot see ground for objection to new bill but would appreciate Department's instructions.

COLLIER

825.032/47 : Telegram

The Chargé in Chile (Hofer) to the Secretary of State
SANTIAGO, November 9, 1927—5 p. m.

[Received 11:45 p. m.] 172. The President has formally called Congress into special session November 15th. Subjects on the agenda affecting American interests

are:

1. Appropriate measures for Chilean delegation to the Pan American Conference at Havana 21_which will be definitely appointed according to the Minister of Foreign Affairs within a week.

2. New ship subsidy bill.
3. Revision of the tariff regulations.
4. Insurance bill.22
5. Coal bill.23

The petroleum bill for the exploitation of Chilean oil fields so far not on the agenda.

Fearing that proposed legislation may contemplate the payment of a further Government bounty for nitrate carried by Chilean vessels and the proposed tariff revision may contain a provision as rumored that shipments of iron and steel carried by Chilean bottoms are to receive a 25-peso per ton rebate, I have reiterated to Minister of Foreign Affairs point of Department's telegram 41, September 14, 2 p. m., the first four paragraphs of Ambassador's note 802, September 12th to Foreign Office transmitted to the Department in despatch number 1184, September 13th.24 Netherlands Chargé d'Affaires is protesting against any legislation providing for bounties or [rebates].

I understand the President desires to railroad all legislation, the exact status of which is in many cases obscure, through Congress as fast as possible.

HOFER

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825.85/66a : Telegram

25

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

[Paraphrase)

WASHINGTON, November 22, 1927–1 p. m. 62. Department's telegram No. 61, dated November 19, 1 p. m. In regard to any proposed tariff or shipping legislation by which discriminating import duties would be imposed in favor of cargo carried in Chilean ships, you are instructed, unless you see some objection, to invite the attention of the appropriate authorities to the following laws of this country.

1. Subject to the stipulations contained in section 4228 of the Revised Statutes, mentioned below, section 2502 (as amended) provides that a discriminating duty of 10 percent shall be imposed on merchandise imported into the United States in foreign ships. However, the President, by section 4228, is empowered to suspend the application of this measure in favor of ships of any nation which presents satisfactory evidence that it does not lay discriminating duties on the cargoes of American ships. In accordance with this stipulation a Presidential proclamation dated November 1, 1850,26 suspended the application of such discriminating duties insofar as Chilean ships were concerned, the suspension to continue effective as long as reciprocal exemption of American ships from discriminatory treatment was continued by Chile.

When referring to the above stipulations of law, you should indicate that the adoption by the Chilean Government of the discriminatory measure in question would eliminate the only basis on which the President of the United States is empowered to continue in suspension the law by which Chilean ships would be subjected to similar discriminatory treatment in American ports.

2. If any proposal for discriminatory tonnage or other similar dues on American ships be made, you should, unless you see some objection, inform the Chilean authorities that American laws providing for discriminatory tonnage dues have also been suspended as far as Chilean ships are concerned, but that the President of the United States is empowered to hold these laws in suspension only so long as American ships receive national treatment with regard to such dues and charges in Chilean ports.

3. You should indicate that the intent of the laws to which reference is made is that the ships of each foreign government shall enjoy in American ports the identical privileges which the same class of American ships and cargo may enjoy in the said foreign country.

KELLOGG

* Not printed. *9 Stat. 1004.

828.85/67

Memorandum by the Secretary of State

[WASHINGTON,] December 6, 1927. The Chilean Ambassador called on me today in relation to the laws pending before the Chilean Congress. He said the Chilean Government was going to abandon the discriminatory tariff duties and any law to refund canal tolls and that if they did anything, they would make a straight subsidy to Chilean steamship lines. I told him of course we had no objection to that; that my objection to the other procedure was that we gave uniform rates through the Canal to all nations; that at one time we had a law giving American coastwise ships free tolls; that I had no idea that Congress would ever go back to the free toll system but if foreign countries commenced to refund their tolls, quite likely the Congress would discriminate in favor of American ships.

So far as the tariff duties are concerned, I told him we are in favor of even tariffs to all nations on all goods, whether carried in domestic or foreign bottoms, but if any countries commenced to discriminate on goods carried in foreign bottoms, we automatically would be compelled to do the same. He said he had perhaps gone farther with his Government than he ought and that he had told them he thought it was very unwise after having taken the matter up with American interests. I thanked him very much and told him I thought it was satisfactory as to the progressive tariff on oil. He said he thought he had arranged it satisfactorily to the American business interests and copper and nitrate companies. He said that the House of Representatives had passed a law; that the Senate was going to postpone it. He said it was largely on his advice; that the cost of manufacturing copper in this country had been constantly going down and the cost in Chile had been going up so that they were about equal and he thought if additional burdens were placed upon the copper companies, the companies would develop more copper in this country and less in Chile.

REPRESENTATIONS TO THE CHILEAN GOVERNMENT REGARDING

EFFECTS OF PROPOSED COAL LAW ON AMERICAN INTERESTS

825.6362/18 : Telegram
The Ambassador in Chile (Collier) to the Secretary of State
SANTIAGO, September 1, 1927—4 p. m.

[Received 5:30 p. m.] 119. Government has sent to Congress proposed law to aid coal industry. It provides for a Government coal board, imposes heavy increased duties on coal and crude petroleum, creates fund for port

works and for loans not exceeding 20 million pesos to private persons for construction of [colliers), grants annual subsidy of 10 pesos per ton of cargo capacity for ships constructed in Chile and a mileage subsidy of 2 pesos per ton of coal transported in Chilean vessels per 1,000 kilometers. Full text and analysis of bill will reach you September 29th.27 This should be considered in connection with proposed ship subsidy law.28

COLLIER

825.6362/21 : Telegram

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

WASHINGTON, October 10, 1927noon. 50. Your despatch 1166, September 1st.29 The Department has received a protest from the Chile Copper Company and the Andes Copper Mining Company on the ground that the proposed coal law singles out American copper companies for discriminatory taxation which in application will soon amount practically to confiscation of their properties. The Department is not yet convinced that a formal protest would be justified but you may nevertheless bring the matter informally to the attention of the Minister for Foreign Affairs pointing out that since it appears impracticable for the copper companies to use coal instead of oil the proposed progressive duty upon the latter will apparently prevent them from operating at a fair profit and that the exemption of Diesel engine oil suggested by the Chilean Ambassador will not help matters unless extended to include fuel oil. Please impress upon the Minister for Foreign Affairs that while the Department does not question the right of the Chilean Government to enact legislation for the legitimate encouragement of Chilean industries it is greatly concerned over the probable effects of this particular measure and cannot believe that any law which might threaten the existence of the American copper interests in Chile could ultimately benefit that country.

KELLOGG

825.6362/24 : Telegram

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

SANTIAGO, October 19, 1927noon.

[Received 2:05 p. m.] 151. Your 50, October 10, noon. Under Secretary of Foreign Affairs tells me that my representations were forwarded to Minister

Despatch No. 1166, Sept. 1, not printed.

See pp. 526. ff. * Not printed; see Ambassador's telegram No. 119, supra.

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