811.20 Defense (M)/941

The Department of State to the British Embassy


Reference is made to the Memorandum on Copper from the British Embassy dated November 22, 1940.

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Taking cognizance of the increased demand for copper attendant upon the defense effort of the United States Government, Mr. Jesse Jones, Federal Loan Administrator, announced on December 19, 1940 that the Metals Reserve Company, a subsidiary of the Reconstruction Finance Corporation, had contracted to purchase 100,000 tons of copper produced in the other American republics. It is understood that deliveries will take place over an eight months’ period beginning in March, and copper thus purchased will go into stock pile.

This agreement as announced on December 19th last has its origin in a note dated August 12, 1940, presented to the United States Government by Señor Oscar Schnake, Minister of Fomento of the Government of Chile. This note referred to the high importance of the copper industry to the Chilean economic structure, the loss of normal export markets, and urged that consideration be given to purchases by the United States. Having in mind the desirability of extending all possible economic aid to the other American republics in accordance with the resolutions adopted at the Second Meeting of Foreign Ministers of the American Republics held at Havana in July,65 this Department immediately took up the matter of possible copper purchases in Chile with the Advisory Commission to the Council of National Defense and other interested agencies of the Government.

In December, after negotiations had been in progress for some time, it became increasingly apparent that domestic copper supplies were not adequate to meet the requirements for national defense and normal civilian usage in this country. This situation is illustrated by statistics for October (latest available) which show that production of refined copper amounted to 83,076 tons, whereas domestic deliveries were 103,771 tons. In other words, there is a deficiency of approximately 20,000 tons per month, and in reflection thereof, stocks of refined copper have declined steadily from 215,823 tons at the end of July to 164,618 tons at the end of October. Consequently, the Advisory Commission to the Council of National Defense urged that action be taken to relieve the impending shortage. The agreement evolved did not confine purchases to Chile alone, although that country will furnish the bulk of them.

From the foregoing, the British Government will understand that the agreement developed for the purchase of copper from the other American republics was motivated primarily by considerations of a strictly economic nature related to the defense program of this Government.

The Department weighed carefully the contents of the Embassy’s memorandum of November 22, and it was given consideration throughout [Page 306] the negotiations leading up to the recent copper purchase agreement. The British Government will understand, however, that the proposals embodied in this memorandum for a joint agreement for the purchase of copper contain considerations of a nature which could not at present be comprehended within the field of American action, as thus far developed.

The Department will, of course, be glad to keep in touch with the Embassy on the subject and discuss any related matters which may arise in the future.

  1. See resolution XXV, Economic and Financial Cooperation, Second Meeting of the Ministers of Foreign Affairs of the American Republics, Habana, July 21–30, 1940: Report of the Secretary of State (Washington, Government Printing Office, 1941), p. 80.