825.6374/1116: Telegram
The Ambassador in Chile (Culbertson) to the Secretary of State
[Received March 18—12:19 a.m.]
48. Referring to my telegram No. 47, March 17, 10 a.m. The Minister for Foreign Affairs handed me late this afternoon a lengthy and diffuse memorandum which attempts to justify Government action with reference to the 60 peso charge on the ground that the President at the time exceeded his powers in waiving the Government’s rights to payment In cash under the original Cosach law and that in any case public necessity justifies the action which has been taken. The main objective of the Government is reaffirmed, namely, to deprive all bonds of the security to which they are entitled under contract and law and to use the funds thus appropriated for balancing the Chilean budget. As a palliative the memorandum states that the Government will seek to earmark other and unspecified sources of revenue for the purpose of servicing the prior secured cash bonds but obviously such a promise has little value compared with the guarantees taken away.