911.5325/9–2650: Telegram

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

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139. Grace making every effort effect settlement difficulties commercial level (Embtel 135, September 251) and have made proposal to Salinas of Chilean Line2 which Grace says represents their utmost limit and maximum Maritime Board might approve. Offer includes 50 percent participation Atlantic trade against present Chilean participation 36 percent. Also includes 25 percent participation Gulf trade and recognizes Chile’s right achieve in future 50 percent participation whereas their present participation only 18 percent. Salinas stated could not recommend to his directors and showed very stiff attitude including open statement saw no reason accept any arrangement giving Chilean Line less than straight 50 percent participation US Atlantic and Gulf trades regardless relative frequencies capacities or present participation since under system of stamping import licenses he had only wait achieve that goal. It was felt I should see President instead of working through Foreign Minister due pressure time since CSAV annual stockholders’ meeting Friday September 29 at which time Salinas stated he would like report possibility commercial settlement if any existed. We fear that failing commercial settlement he will announce government commitments in form very difficult subsequently modify.

I saw President Gonzalez this morning and as basis discussion handed him informal personal memo3 outlining main points US position. He chose construe this as formal. US note and as it contained [Page 797] word “protest” against this practice rejected memo and made many references to Chilean sovereignty and pressure by big country etc. However at end he agreed it would be good if Grace and Chilean Line could settle problem directly. This essentially met proposal in our memo. I got impression he was very tired and under tension and toward close that he was not happy over his outburst.

Shortly after my visit Salinas invited Grace for discussion tomorrow morning and Grace has some hope basis may be found for settlement.4

Bowers
  1. Not printed.
  2. Reference is to Compañia Sudamericana de Vapores (CSAV).
  3. Not printed; forwarded to the Department as enclosure No. 3 to despatch No. 294 from Santiago, September 28, 1950. (911.5325/9–2850)
  4. In a memorandum of conversation held in Santiago September 28, 1050, between President Gonzalez Videla, several Grace Line officers, and Charles P. Nolan, a transportation specialist of the Department, the latter reported in part that President Gonzalez Videla had stated he had directed CSAV to reach a settlement with the Grace Line but to remain firm in its position. (Enclosure to despatch No. 310 from Santiago, October 2, 1950; 911.5325/10–250)