The Hinder Secretary of State ( Welles ) to the Ambassador in Chile ( Bowers )

My Dear Mr. Ambassador: Referring to your letter of October 13,16 the Department has been giving the most active consideration to the important problem of furnishing Chile and the other American republics with material essential for their economic life, and has taken the matter up frequently with the other interested agencies of the Government of the United States. The economic services of the Department have been reorganized with a view toward improving the efficiency of planning and carrying out policies in respect to such matters, while the Economic Defense Board17 has taken over and is thoroughly reorganizing the work of handling export licenses as well as the problem of clearing priorities and allocations. Moreover, the establishment of the Supply Priorities and Allocations Board and the reorganization of the Office of Production Management all tend in the direction of greatly increased efficiencies of operation. The work of reorganization and facilitation of procedure has not been completed, but the Department is very hopeful that procedurally many difficulties will be removed.

It would not be proper for you to get the impression that the basic situation of scarcity of supply is improving. Quite the contrary, as time progresses and the defense program broadens the scarcity of many materials and other strategic products, as well as of fabricating plant and equipment, becomes more pronounced. Severe curtailment of civilian consumption is now the order of the day in the United States and it will not be possible to obtain allocations of materials for the other American republics which do not entail a considerable amount of curtailment of civilian consumption there.

Nevertheless, the Department and the other agencies of the Government are making great strides in the collection of information regarding the minimum essential needs of the other American republics, broken down by commodities and by uses. These are being submitted to the Supply Priorities and Allocations Board, and it is hoped that within the near future definite allocations will be made for export to the other American republics. If it is possible to have such allocations made for a three or six months period the Department and the Defense Board will then be in a position to act promptly on individual applications made through the interested governments.

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I must point out that these remarks of mine are preliminary, and that final decisions as to method of carrying out allocation policy have not yet been taken.

With respect to the specific complaints of Chile with respect to copper and iron and steel products, the Department has recently telegraphed you. As a matter of fact, the Economic Defense Board and the OPM have outstanding specific instructions to act promptly on all applications for copper products to Chile, Peru, and Mexico, the sources of the raw material. Even so, I must repeat that the arguments advanced by the Chileans are not entirely reasonable, since one of the very great shortages within the United States is of productive facilities for fabricating these metals. In the case of copper much of the shortage lies in fabricating facilities as well as in the raw material. The situation in iron and steel is even more acute, since supplies of iron ore are relatively plentiful, while blast furnaces and other steel manufacturing facilities are deficient.

With best personal regards,

Sincerely yours,

Sumner Welles
  1. Not printed.
  2. For Executive Order No. 8839, July 30, 1941, establishing the Board, see Department of State Bulletin, August 2, 1941, p. 97.