825.00/4–1847
Memorandum of Conversation, by the Assistant Secretary of State for American Republic Affairs (Braden)65
Pedregal, pursuant to his previous request that he wished to have a long conversation with me alone, called yesterday afternoon at 4:00 P.M. He began by saying that he wished to have an entirely frank and confidential talk with me because (1) the President had particularly charged him to take up two matters with me; and (2) I was such a close friend of Chile.
The two special messages of Gonzalez Videla:
1. The President, having been elected by a combination of parties in which the Communists had played the decisive role, had to remain loyal to them, both by naming them to the Cabinet and otherwise, but this by no means meant that he was in favor of Communism. On the contrary, he would restrict their activities rigidly to the official functions with which they were concerned.66
Pedregal was glad to call to my attention that this whole Communist [Page 534] situation had now been resolved by the new Cabinet reorganization in which both the Communists and Liberals had gone out, being replaced by radicals. However, since the Communists had such great influence among the masses in Chile, the President had to handle the matter with utmost caution, since otherwise he might provoke serious trouble, strikes, et cetera, by the working classes of Chile.
2. The President had charged Pedregal to assure me that he, Gonzales Videla, had not changed one iota his complete dislike for Perón and the Argentine Government—opinions he had expressed to me when he visited me in the Department in October 1945. However, his views as a senator and as a private citizen could not interfere with his obligations as Chief of State and because of Chile’s situation, he had to seize any opportunity wherever it might lie. Therefore, when the chance had been presented to reach an agreement with Argentina, he had sent a mission to Buenos Aires; upon its arrival it had been presented with a finished draft of the treaty which might give valuable assistance to Chile and since Chile would protect herself at all times, could not possibly do any harm.
Gonzalez Videla had instructed Pedregal to assure me that a fundamental of Chilean policy would be friendship with the United States and the greatest possible desire to cooperate with this country, and he hoped that we would continue our cooperation. Gonzalez Videla had further instructed Pedregal to say that there was no question but that Argentina was endeavoring to form the bloque austral, but Chile being alert to this danger would not permit herself to become a cat’s paw of Perón.
As a matter of fact, Pedregal observed he doubted that the treaty would ever become really effective because Argentina, as in the case of the oleaginous seeds, had insisted on selling the manufactured product, the oil, to Chile instead of allowing Chile to manufacture herself. When it came to the actual working out of the treaty, if Argentina tried to do this with Chile, Chile, in turn, would insist on selling Argentina the finished iron, copper, or other products. Thus they would probably come to an impasse and nothing would result.
. . . . . . .
Pedregal then went on to say that he had had a series of very agreeable conversations with the people here in Washington but he was disturbed when, for instance, Mr. Black of the International Bank had made it a condition precedent to the issuance of a credit by that Bank that Chile satisfactorily adjust its debt situation in this country.* Pedregal felt that this was unfair pressure and that self-evidently it [Page 535] would do Chile no good to get a 40-million dollar credit if, on the other hand, she had to increase her debt service charges by 10 or 15 million dollars per year. He was extremely downcast by this development—he called it imposition—and felt that it was unbearable pressure.
I replied by reciting the story of the conversation at the White House between Presidents Truman and Rios, Secretary Byrnes, and those accompanying Rios,67 repeating what I had said at that time. I said that unquestionably if Chile wished to reestablish her credit, she would have to do something about the debt and particularly in reference to the 22 million which had been taken out of what was practically a trusteed fund. I then said, however, that while perhaps admitting I was influenced by my knowledge of the subject, nevertheless my thoughts were mostly induced by genuine friendship for Chile and my desire to see that country prosper. I continued the only way Chile could prosper would be by getting private capital, which certainly she could not unless she so reestablished her credit. And this could only be accomplished if the copper companies situation, with the exorbitant and discriminatory taxes and exchange regulations, were satisfactorily adjusted. I added that every word that I had said in my speech before the American Institute of Mining Engineers was true and that, as a matter of fact, in writing that speech, because of my personal knowledge, I had had Chile very much in mind. I went into some details in this connection.
Pedregal responded that the difficulty was that Chile had to have the 40 million dollar credit before she could take care of the tax situation because she must live from the taxes. I replied, “In other words, you claim it is a vicious circle”. He said, “Exactly”. I then said that I agreed it was a vicious circle which had to be broken at some point but that since the taxes and other impositions on the copper companies were so self-evidently unjust, discriminatory, and counterproductive to Chile and to our relations, that in my opinion Chile should break the vicious circle by demonstrating her willingness and ability satisfactorily to adjust these matters and that once she had done so, thus reestablishing her credit, then she might expect to get the private capital and the consideration otherwise which she desired.
I also said the rumors about Chile setting up a copper sales company were very disturbing since it would be tantamount to an expropriation. Pedregal deprecated the idea of any such plan being attempted.
The interview ended by Pedregal inviting me to luncheon on April 25. I accepted.
- Addressed to Mr. Briggs, ARA, and to Messrs. Wright and Mann of A–Br.↩
- For documentation on the Communist situation, see pp. 497 ff.↩
- Note: Mr. Black tells me he merely expressed hope to Pedregal that the Bondholders Protective Council could be induced to write to the Bank approving such credit as might be extended to Chile. [Footnote in the original.]↩
- In October 1945.↩