811.20 Defense (M) Chile/55: Telegram

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

663. Reference my telegram No. 654, November 27, 8 p.m.83 Rossetti’s memorandum on copper delivered this morning. Chile agrees to proposition that Anaconda Mining Company be permitted to amortize expended rate of 20 percent annually the sum to be spent on enlargement of plant.

While Chile does not agree with Federal Loan Agency to a 50–50 division of the difference between 10 and 11¾ cents per pound she proposes “in a spirit of conciliation” the memorandum says that:

“The additional price and the initial domestic quotation of 10 cents per pound, would be divided equally between the Chilean Government and the producers, with the sole limitation that the former is assured at all times of a minimum of a cent and a quarter profit per pound. This formula carries with it the idea that all new increases in price above that of 11¾ cents up to 12½ cents per pound will be entirely for the benefit of the producers and that only when the price shall reach 12½ cents will the Chilean Government participate in the new increases of the domestic price.

The proposition contemplates the division of profits in equal parts as the producers and the Federal Loan Agency desire, since all the probabilities indicate that the price will go to 12½ cents or more in view of the actual scarcity of copper in the United States.

The Government cannot promise conclusively what will be the final decision of the Congress but believes that if the formula above expressed is given prompt acceptance it can be defended with success in the Chambers before the Presidential election campaign begins, at which time the matter might be placed before the public, which might demand more exigent terms.”

A copy of the memorandum and translation83 is being forwarded by air mail today.

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