825.5151/629: Telegram

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

188. Your 288, June 30. The following is our provisional judgment after talking with Federal Loan Administrator.

The ideas which you report as under consideration by Finance Minister Pedregal appear to us undesirable. We realize the interest of the Chilean Government in securing, in all reasonable measure, revenues from the Chilean copper production during this period. These revenues have already been benefited by the fact that we are now affording Chile a reliable market for all its copper. The amounts currently being purchased are very substantial, and it is our understanding that, in addition to the amounts contracted for by the Metals Reserve Company, there will be prospectively available between now and the end of the year approximately 175,000 tons produced by the Anaconda and Kennecott companies, all of which the Metals Reserve Company is prepared to buy. The Metals Reserve Company is now in active discussion with representatives of the Anaconda and Kennecott copper companies and bearing in mind the Chilean interest is offering a price increase for the 175,000 tons to which reference has just been made.

It is to be anticipated that the copper companies will be discussing the whole situation with the Chilean Government and our hope is that out of the conversations, on the one hand with Metals Reserve Company and on the other hand with the Chilean Government, an arrangement that will be satisfactory to the Chileans will result.

In regard to the matter of iron and steel, you may assure Pedregal that this Government will do everything possible consistent with its urgent needs for national defense to make available the iron and steel production needed by Chile for important national purposes, and will promptly consider, in detail, any request brought before it by the Chilean Government.

Our judgment is that it might be of use to have you proceed with the proposal contained in our 175 of June 28 regarding copper concentrates.

Welles