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I have had three opportunities to discuss matter directly with Minister of Hacienda who earnestly advocates this legislation. I got him to withdraw the request for urgent action by Congress but matter has been referred to a joint committee of House and Senate and it is possible that measure will be rushed through notwithstanding he assured me his purpose in withdrawing urgency request was to permit me to communicate with you and obtain instruction.

There have been intimations that article 59 would be stricken out if we would not oppose rest of legislation. Best-informed agent for American companies believes this will be the maximum which we can accomplish and that if this section is eliminated it will result in either abandonment of the bill or eventual repeal.

I know of no treaty obligations preventing Chile from limiting insurance business to its own citizens. I request Department's instructions as to any principles of international law that may be invoked. I have made representations to Ministry of Foreign Affairs that proposed law is injurious to mutual commercial interests, inconsistent with fundamental idea of insurance to spread loss and that it is particularly hazardous to Chile to seek to insure itself, considering possibility of catastrophe by earthquake with enormous incidental loss.

I have told Minister of Hacienda that in my opinion section 59 infringes upon sovereignty foreign countries and trespasses upon right of foreigners to make legitimate contracts in foreign countries with other foreigners. I believe he is impressed by this reasoning and that it is for this reason there have been intimations that he may change this provision especially if optional provisions were withdrawn. But I have specifically declared that I have no authority to compromise in this manner and that I await your instructions. British, French and German colleagues, who have been cooperating, are much pleased with my success in getting Minister to notify Congress that measure may not be considered urgent.

Foreign Chamber[s] of Commerce in Chile have all or practically all petitioned Government not to pass measure and some Chilean business interests are expressing doubt as to wisdom of legislation and it is said that some national insurance companies fear workings of law but hardly dare oppose it.

I have been careful to say nothing that indicates possibility of any retaliation afterward and other so-called nationalistic legislation intended to promote Chilean industry.

[Paraphrase.] If the Department believes it wise to point out that this legislation which is intended to exclude foreigners or to limit unorganized opportunities is undesirable, I recommend that it be done through conversations between you and the Chilean Ambassador to the United States,

I have conversed with two vice presidents of the National City Bank of New York, now in Santiago, and with Doctor Kemmerer and we agree that the proposed legislation is likely to be detrimental to the real economic interests of Chile but [omission?] because of official or business relations with the Chilean Government. Instructions quested. [End paraphrase.]

COLLIER

825.506/8: Telegram

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

[Paraphrase]

WASHINGTON, August 8, 1927noon. 31. The Department has not yet received proposed Chilean law nationalizing insurance. However, upon the information at hand, the Department does not think a protest is warranted upon grounds that the law under international law would be confiscatory and violative of the rights of American citizens. Nor does the Department think that article 59 infringes upon the sovereignty of foreign countries and trespasses upon the rights of foreigners as you suggest.

ver, the Department believes that you are warranted in urging that it be eliminated because it would interfere with free and mutually beneficial intercourse between the United States and Chile. At your discretion you may take up this matter again informally with the Minister for Foreign Affairs.

KELLOGG

Ноу

825.506/13 : Telegram

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

SANTIAGO, September 12, 1927noon.

[Received 6:40 p. m.] 129. Supplementing my 114.23 Joint committee has reported insurance bill with amendments to Chamber of Deputies. All efforts by myself and commercial attaché and interested American enterprises to get printed or specific information about committee amendments have so far been unavailing, report "not yet having been printed for distribution”. It is understood that existing foreign agencies will be allowed to continue business with present personnel and without reorganizing as national companies upon condition that in addition to amount required for mathematical reserves they invest 2,000,000

* Dated Aug. 30, 1927, 11 a. m.; not printed.

pesos in Chilean securities or property that can be readily liquidated and that they pay a tax on premiums collected 50 percent greater than the tax to be paid by national companies.

Former section 59, modified and now made section 46, is said to provide that every person or company who insures property located in Chile in companies not established in Chile must pay a tax “variable between 15 and 20 percent of the premium that would be collected by a Chilean national company", the President of the Republic to be authorized to fix the tax within these limits. It is uncertain whether policies taken out in foreign companies whose existing agencies may be continued by them under the new law will be subject to this tax.

Shall I protest against discriminatory taxation and also against second-mentioned tax so far as it affects policies on Chilean property taken out in the United States by Americans not residents of Chile ? Cable promptly, measure likely to be rushed through. Nationalistic sentiment strong, mere representations as to promotion of mutual interests by equal or liberal treatment not apt to produce results.

COLLIER

825.506/13 : Telegram

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

(Paraphrase)

WASHINGTON, September 14, 1927—6 p. m. 42. Your telegram No. 129, September 12, noon. The Department can perceive no good basis for a protest against the provisions of the insurance law. See Department's telegram number 31, August 8,

noon.

KELLOGG

825.506/14 : Telegram

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

SANTIAGO, September 19, 1927noon.

[Received 12:55 p. m.] 135. Insurance bill as amended is considered by local representatives of American fire companies already having agencies here as likely to result in big increase in business because it will prevent entrance of new foreign companies unless they nationalize and because it requires Chilean companies to effectuate all insurance among themselves or through Government caja while requiring foreign companies to reinsure in caja only 20 percent. However many object even to this in principle, unwilling to cooperate in any way with Government in

insurance business and on this ground threaten to discontinue agencies but most agents believe prospects of increased business will cause them not to do so. Requirement of increased deposits and heavier taxes even though discriminatory are not considered by agents as offsetting probable big increase in business and profits. National companies in whose interests bill was drafted not now completely satisfied with its provisions and may seek amendments which may possibly be adopted although this is not likely, moreover any further discussion is apt to help established foreign companies.

COLLIER

825.506/16 : Telegram

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

SANTIAGO, September 21, 1927—3 p. m.

[Received 7:40 p. m.] 138. Regular session of Congress has terminated. Government contemplates calling special session about October 6th. Insurance bill will then come before Senate. I request Department's considcration of the fact that the tax on policies negotiated by foreigners with foreign companies and executed in foreign countries affects not only insurance on real estate, that is, buildings, but also insurance on personal property, machinery and other chattels and also insurance against loss of prospective profits caused by interruption of business due to fire. Am informed that one of three great American copper companies carries 12 million dollars against loss of prospective profits, presumably the others carry proportionate insurance. Attorneys for American interests have argued that if such contracts relating to personal property even though used in connection with or derived from real estate situated in Chile can thus be taxed, it would appear that any contract affecting such personal property, as for instance mortgages and assignments, could be taxed. Does this in the Department's opinion affect its decision that no representation should be made against this feature of the law?

COLLIER

825.506/16 : Telegram

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

WASHINGTON, September 27, 1927p. m. 47. Your 138, September 21, 3 p. m. As there is no discrimination against American concerns there is no apparent ground for a formal protest but in your discretion you may continue to urge

informally that the provision in question be eliminated upon the ground that it would interfere with business between the two countries.

CARR

825.506/21 : Telegram

The Chargé in Chile (Hofer) to the Secretary of State
SANTIAGO, November 17, 1927—5 p. m.

[Received 10:10 p. m.] 179. Ambassador's telegram 138, September 21, 3 p. m. Insurance bill passed Senate yesterday with modifications, all of which according to Beausire, representative of Great American and Home Insurance Companies, are acceptable to foreign companies. Article 46 amended so as to permit insurance of properties in Chile with local branches of foreign insurance companies or if the risk is unacceptable the local companies may place insurance abroad without being subject to tax.

HOFER

825.506/22

The Ambassador in Chile (Collier) to the Secretary of State No. 1256

SANTIAGO, November 29, 1927. .

[Received December 21.] Sir: Referring to the Embassy's telegram No. 179 of November 17, 5 p. m., reporting the modifications made in Article 46 of the redrafted Insurance Bill, I have the honor to state that on the 23 instant the Chamber of Deputies approved the bill in question with all of the modifications made by the Senate with the exception of Article 36 which does not vitally affect foreign interests but refers to the question of non-taxation of local institutions of a benevolent or charitable character.

The bill as presented at the opening of the special session of Congress contained several new changes beneficial to Foreign Companies and the subsequent amendments,-particularly in Article 46 which now allows local branches of foreign insurance companies to place insurance abroad when the insurance has been turned down by the local companies, without being subject to a special tax,-is considered by Mr. Beausire as eliminating the most harmful feature of the bill as far as foreign companies are concerned. However, the cutting down of the required capitalization of the local companies to only $500,000 and of the foreign companies to $1,000,000 is somewhat regretted by foreign interests as this it is believed will permit

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