Moratorium

A Dictator who knows when to retreat is square, swart Carlos Ibanez, the President who has held the reins of Chilean Government in his fist for four years. Times were bad in Chile last week. The Government was in grave financial difficulties, a committee of British and U. S. bankers was expected to reorganize once more the country's finances. Santiago teemed with discontent. In Buenos Aires the Argentine police had raided the rooms of one Pedro Leon Ugalde, who narrowly failed to bring off a Chilean revolution at Conception several months ago. As a matter of courtesy they announced publicly that Senor Ugalde was about to embark on another revolution which looked highly promising.

Canny Ibanez sidestepped. For the first time since he took office a Chilean Cabinet formed last week by someone other than Carlos Ibanez himself, took charge of the departments of government. The new premier, Pedro Blanquier, chose his Cabinet from the majority civilian parties. Although a member of the Radical party, he is known as being independent and fearless.

Pedro Blanquier, engineer and economist, has never held a political post in Chile before with the exception of a short period when he was director of the Chilean State railroads. His first move last week was to issue a statement through Minister of the Interior, Esteban Montero:

"This Cabinet aspires to merit the most ample public confidence through the establishment of a regime of strict legality with respect of the law and all guarantees." This included freedom of the press, the lifting of Chile's three month censorship.

Next morning strictly-legal Premier Blanquier announced a complete moratorium on Chile's foreign debt at least until Aug. 1.

Immediately affected by the moratorium were British and U. S, holders of Chilean bonds. Some $2,040,000 that should have been paid them in interest last week was deposited in Santiago banks to bolster the Government's local credit. But U. S. interest in Chile goes far beyond the holding of Government bonds. According to the U. S. Department of Commerce, in 1929 U. S. direct investments in Chile totalled $442,000,000. Most important companies were Baldwin Locomotive Works; Wright Aeronautical Corp., having local factories; All America Cables, which beside its cable business operates the local telephone system; Electric Bond & Share Co., operating trams, providing light and power through its subsidiary Compania Chilena de Electricidad; and "Cosach," the Guggenheim nitrate combine, which controls 35% of the world's annual output of natural fertilizer. Nitrates were what brought Chile to this sorry pass.

Natural Chilean nitrates are bitterly contested in the world market by synthetic nitrates, chiefly manufactured in Germany. In Lucerne, Switzerland last week, Chilean Cosach proudly withstood demands it termed excessive for money in connection with the organization of a proposed new cartel, refused to keep prices on natural nitrates higher than those on synthetic (see p. 33). Chilean Government financial difficulties started when the nitrate interests succeeded in getting the export tax on nitrates abolished.

Germany (for once laying down the law in an international conference) tried pressure, announced a new German duty of 120 marks a ton ($29) on Chilean nitrates and other imported nitrogenous fertilizers.

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