811.20 Defense (M) Chile/8: Telegram

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

309. Your 422, September 4. Prices for all products are being communicated by Metals Reserve to Miller.

With respect to the numbered paragraphs of your 422:

1. As you know, Metals Reserve does not presently have legal authority to purchase gold ores and concentrates but in view of the strong recommendation on this subject made by Miller in his letter to Bridgman dated August 23,80 Metals Reserve without making any [Page 590] commitment at the moment is studying the problem with a view to finding some solution which will be satisfactory to the Chileans. In your conversations with the Chilean authorities, you are requested not to make any commitment on behalf of Metals Reserve with respect to gold ores and concentrates but at the same time not to close the door to the possibility of a solution satisfactory to Chile.

Metals Reserve does not understand your reference to “all materials produced.” If there are any minerals not presently the subject of discussion, please specify what they are.

With respect to increases over the previous production, Metals Reserve will buy maximum amounts for each material in each year up to 125% of the exports of the material in question for the preceding year.

2. Metals Reserve agrees that prices shall be established f. o. b. Chilean ports; 80% payable upon delivery at port and an additional 10% if cargo is not moved within 4 months, the balance payable upon receipt of final analysis and assay.

3. Metals Reserve is willing to have the agreement for 18 months and no longer, prices to be reviewed at end each 6 months period.

4. The Department and the interested agencies are unwilling to accept the proposal concerning credits for new copper and manganese projects. If there are any copper deposits of excellent quality which could be brought into production immediately, the development of such properties might be desirable. But it is felt that the loans, aggregating $22,000,000, already authorized to Fomento by the Export-Import Bank are sufficient to provide funds for this purpose.

5 and 6. The policy of this Government with respect to these questions has been recently officially stated by the Under Secretary of State in an address81 on the occasion of the anniversary of the declaration of Uruguayan independence on August 25, 1941 as quoted in Radio Bulletin 202 of August 25.

It is believed that this official declaration should reassure the Chilean Government that every effort will be made to assist the Chilean economy in so far as this may be done without seriously impairing the national defense effort.

In order further to reassure Chilean authorities, the Department is now considering a proposal to assign an officer to the Embassy in Santiago for the purpose of consulting with the Chilean authorities on their needs and of conveying to the Department for action here recommendations for the granting of export licenses on products urgently needed. With specific reference to the Paipote smelter materials, the Department is sympathetic with the Chilean desire and wishes that you assure the Foreign Minister that any charges that [Page 591] the Department has been influenced by American smelters to block the Paipote project are unwarranted. However, you should impress it upon the Chilean authorities that the Paipote materials will have to be considered in connection with the entire allocation subject and must necessarily be subject to prior needs of national defense.

The Department and Metals Reserve desire that you continue the negotiations for an overall purchase agreement but it is thought that you could seize this occasion without establishing it as a condition precedent to impress upon the Chileans that this Government earnestly hopes that the copper tax matter may be out of the way before the agreement is signed.

  1. Not printed.
  2. Department of State Bulletin, August 30, 1941, p. 163.