811.20 Defense (M) Chile/1–1945
The Assistant Secretaries of State ( Clayton and Rockefeller) to the Foreign Economic Administration (Crowley)
My Dear Mr. Crowley: At this morning’s meeting of the Board of Directors of the U.S. Commercial Company,16 no action was taken on the proposition which had been agreed upon among the FEA17 representative in Santiago, Chile, the Embassy, and the Department, for a solution of the problem confronting the Chilean small mining industry producing copper. We shall not burden you with details, owing to the fact that all of the pertinent communications to and from Santiago and other related documents are in the hands of the Foreign Economic Administration. Also there is on file a letter dated January 18,18 signed by Mr. Wayne Jackson, Deputy Director of the Office of Wartime Economic Affairs of the Department of State, strongly recommending that the proposed plan be adopted without delay.
We cannot over-emphasize the political importance of this small copper mining industry which, although it produces only about three percent of Chilean copper, nevertheless has dependent upon it for livelihood over 30,000 persons. Chile will hold congressional elections during early March of 1945 and opponents of the present Chilean administration will hold our failure promptly and adequately to adjust this matter over the heads of the administration. This may have unfavorable consequences with regard to our political relations with Chile.
We have facing us next month one of the most important conferences of American states which has yet been held19 and we are anxious that there be no political complications which might impair the success of the conference. It is our considered judgment that failure to take the necessary action without delay will prejudice our foreign relations.
We must bear in mind that the copper which these small mines, produce came to the American market at our insistent urging and at a time when we were struggling desperately to obtain every pound of copper which we could purchase and ship. Many of the mines, it is true, are marginal ones and would not produce at their present levels, [Page 789] in times of peace, and it is to be expected that they will not, except possibly with Chilean governmental subsidy, be able to produce at the same levels a short time hence. Nevertheless, we did contribute materially to the expansion of production and it has been understood all along that when we curtailed purchases we would do this in a way which would cushion the shock.
It is our strong recommendation, based upon information received from the American Ambassador in Santiago,20 that an arrangement should be approved which would provide for the continuation of purchases from the marginal mines on the same basis as before for a ninety-day period commencing February 1, 1945. For the three subsequent months, an orderly cut-back would be instituted, the amount purchased to be cut one-third in May, one-third in June, one-third in July, and the contract terminated by July thirty-first. Such action will avoid a very serious situation in Chile which would have repercussions on the relations among the American republics far out of balance with the relatively small amount of money which would be saved were the contract not to be continued after January 31.
In addition to these political considerations, we are informed by the War Production Board that there has been a sharp increase in copper requirements and that, accordingly, all available foreign copper is needed during the first half of 1945.
In view of the political and economic factors involved, it is therefore our earnest hope that this matter can be adjusted at once, as the Embassy in Santiago informs me that a favorable reply must be received there by January 22 in order to make the necessary technical adjustments before the present smelter contracts expire on January 31.
Nelson A. Rockefeller