811.20 Defense (M) Chile/58: Telegram

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

515. From the Under Secretary. At my request the Chilean Ambassador called to see me on December 2 to discuss the copper tax [Page 594] question. I handed him a written proposal prepared by the Federal Loan Agency, which was in résumé as follows:

Existing income taxes to remain unchanged on 10 cent CIF New York Chile copper and no export tax of any kind to be assessed.
For such time as Metals Reserve Company pays 11¾ cents per pound CIF New York Chilean Government would skim off in excess profits tax 1 cent, while ¾ of a cent would go to copper companies free of all income or other taxes.
If in future prices are advanced the first ¼ cent would go to copper companies free of tax and if price were to advance beyond 12 cents CIF New York, the increased revenue would be subject to further discussion.
The Chilean Government to permit a 5-year Anaconda amortization with which you are familiar.

The Ambassador said he considered the proposal eminently fair and just and would strongly recommend it to his Government for immediate acceptance. I asked the Ambassador for a prompt reply.

I am telegraphing you this information in order that you will be aware of what has been done here. However, I feel that until the Chileans have had an opportunity to act on this proposal it would be better that you not initiate any discussions on the subject, but if the Chileans initiate them it would be appreciated if you would point out the desirability of their agreeing speedily. I would appreciate your telegraphing me if there comes to your attention any information which I should have. [Welles.]