811.20 Defense (M) Chile/7

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

No. 1779

Sir: I have the honor to report in connection with the proposed purchase of certain Chilean concentrates and ores by the Metals Reserve Company that Mr. Thomas J. Williams, mentioned in the Department’s [Page 585] Telegram No. 249 of August 7, 6 p.m.,74 arrived in Santiago on August 18. He immediately called at the Embassy and on the following morning was introduced to Mr. R. P. Miller, the Metals Reserve Company’s special representative in Chile and the special representative in this country of the Federal Loan Agency, to serve in the absence of Mr. Horace Graham.

After Messrs. Williams and Miller had conferred with me regarding the general aspects of the plan of the Metals Reserve Company and had studied, in conjunction with my Commercial Attaché, all the detailed information on the subject in the Embassy’s possession, I presented them at 1 p.m. Friday, August 22, to Foreign Minister Rossetti. At the same time I handed him my Note No. 603, of which a copy is enclosed,75 advising that the Metals Reserve Company now was ready to discuss the acquisition of the exportable surpluses of certain Chilean concentrates and ores and that the special representative of the Company, Mr. Miller, was authorized to negotiate a purchase agreement in collaboration with the Embassy. Mr. Miller also handed the Foreign Minister a letter in the same tenor. A copy of Mr. Miller’s letter is also enclosed.75

Mr. Williams outlined the essential points of the Metals Reserve Company’s plan to Rossetti who immediately endorsed it and expressed the hope that there would be no delay in reaching an agreement to which end he promised his complete cooperation. The Foreign Minister declared that it was his desire to go along in every way with the United States in promoting hemispheric solidarity but difficulties were being experienced in Congress where the opposition was charging the Government with neglecting the national interest. The prompt conclusion of a satisfactory purchase agreement with Metals Reserve, he said, would greatly strengthen his and the Government’s position in Congress and would facilitate obtaining favorable consideration of other important measures involving continental defense and economic cooperation. He explained that the United States had not received the measure of credit, to which it was entitled, for the aid it already had extended Chile largely because such aid had benefited the “vociferous little fellows” only in an indirect way. An agreement with the Metals Reserve Company, he declared, would drive home the fact that the United States was interested in their welfare and was genuinely desirous of helping Chile.

As proof of his wish to go ahead at once with negotiations, Rossetti appointed a committee composed of the President of the Miners’ Bank, the Subsecretary of Commerce, the Vice President of the Fomento Corporation, the Vice President of the Mining Society and a [Page 586] representative of the Ministry of Fomento to meet with Messrs. Williams and Miller at six p.m. Friday afternoon. The meeting, presided over by Rossetti himself, was carried on in an atmosphere of mutual frankness and cordiality according to the special representatives of the Metals Reserve Company. At the express suggestion of the Foreign Minister, who declared that he did not wish to give the meeting too much of an official character, no representative of the Embassy attended. However, a report of the meeting is contained in the enclosed copy of Mr. Miller’s letter No. 2 to the Vice President of the Metals Reserve Company.76 There also is enclosed for the information of the Department copies of Mr. Miller’s letters numbers 1 and 3 to the Metals Reserve Company77 wherein he sets forth in detail his estimate of the situation and his views on the prospects of negotiating an over-all agreement for the purchase of the concentrates and ores.

The Chilean reaction to the Metals Reserve’s proposal will be summed up in a memorandum the Committee has promised to submit to Mr. Miller. While it is too early to venture an opinion as to the ultimate outcome of the negotiations I believe, with Mr. Miller, that to obtain an over-all agreement it may be necessary for Metals Reserve to

agree to taking deliveries in Chile instead of f.o.b. steamer Chilean ports,
offer slightly better prices for some ores and concentrates, particularly those of copper,
purchase the Chilean gold ores
offer contracts for a period longer than one year.

Refusal to make concessions along these lines might jeopardize the negotiations which, if they are not carried to a successful conclusion, could have unfortunate political repercussions here and lead to the questioning of the sincerity of the whole good neighbor policy.

To surround the negotiations with as favorable an atmosphere as possible, Rossetti tendered a luncheon on Saturday, August 23, to Messrs. Williams and Miller, there being present on the occasion the members of the Chilean Commission, influential members of Congress and individuals prominent in the mining industry. Both the meeting with the Commission on Friday and the luncheon the following day were given wide publicity in the local papers. The principal press articles, clippings of which are enclosed, were inspired by the Foreign Minister who was quoted by the Diario Ilustrado as having said: “it is the firm purpose of the Government to obtain, by all the means at its command, the stability and prosperity of the small mining industry, assuring it prices which will permit the development of its maximum productive capacity.”

[Page 587]

Mr. Williams returned to Buenos Aires yesterday, leaving Mr. Miller to continue with the negotiations in collaboration with the Embassy. His presence here was most helpful in starting the negotiations. Both he and Mr. Miller made an excellent impression on all with whom they came in contact and it is my observation that the Metals Reserve Company has in these men two very capable and competent representatives.

The Department will be kept fully informed of all phases of the negotiations.

Respectfully yours,

Claude G. Bowers
  1. Not printed; Mr. Williams was a representative of the Metals Reserve Co.
  2. Not printed.
  3. Not printed.
  4. G. Temple Bridgman; letter of August 23 not printed.
  5. Not printed.