Foreign Relations of the United States Diplomatic Papers, 1937, The American Republics, Volume V

611.2531/233: Telegram

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

Washington, December 31, 1937—8 p.m.

67. The Department approves the text of the modus vivendi transmitted in your despatch no. 789 of December 15⁵⁰ except that the word “national” in Article 1 should be “nation” and that the word “ammunitions” in Article 5 should be in the singular. It is noted that in the first part of Article 3 there have been added the words “confirms its previous declarations and reiterates” but the Department has no objection to this addition.

In as much as it now appears that the Chilean Government prefers to proceed with the trade agreement conversations before negotiating the treaty of friendship, commerce and navigation, the Department believes that it would be desirable to omit Article 8 of the modus vivendi and you are authorized to do this if the Chilean Government concurs, but the Department does not object to the inclusion if the Chilean Government insists upon it.

Referring to your telegram no. 100 of December 28, 11 a.m., you are authorized, if you deem it advisable, to exchange the proposed interpretative aide-mémoire. It is suggested, however, that for greater clarity the words “treaty of commerce” in the third paragraph of the proposed Chilean aide-mémoire be replaced by the words “treaty of friendship, commerce and navigation or a reciprocal trade agreement”.

With reference to your telegrams nos. 98, December 22, 7 p.m., and 99, December 24, noon,⁵¹ it is noted that you state in the latter telegram that the rearmament bill will prolong exchange control for 10 years “thus rendering nugatory item 3 (a) of proposed modus vivendi”. Under that item the Chilean Government limits its commitment regarding the abolition of exchange control to measures affecting the transfer of payments for American merchandise. Since it would appear that the Chilean Government could fulfill this obligation and still enact the proposed legislation, no reason is perceived for delaying on this account signature of the proposed modus vivendi.⁵²

An instruction on trade agreement procedure is being sent to you by air mail.

Hull

50. Not printed.
51. Neither printed.
52. The provisional commercial agreement with Chile was signed at Santiago on January 6 and February 1, 1938, Executive Agreement Series No. 119; 52 Stat. 1479.