740.0011 European War 1939/21968: Telegram

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

885. For Secretary and Under Secretary.

1. Am informed that La Hora, a leading paper, organ of Radical Party, will come out this week forcefully for the breaking of relations and that probably on Thursday Schnake35 will issue a powerful declaration for breaking relations.

2. Graham36 who sees Ministers of Finance and Commerce37 in connection with Metals Reserve matters38 was asked by these two and in behalf of the Minister of Fomento, Schnake and Minister of Interior,39 to say to me that they favor breaking relations and are willing to use the sinking of the Chilean ship as the reason and they claim they would like, for the purpose of bringing in that part of public opinion which while pro-American doubts the wisdom of breaking relations, to have an agreement in principle on the following: (1) they would like an increase in copper price, a reasonable increase, and a reasonable guarantee from Santiago for a minimum fixed tonnage and minimum fixed price for a reasonable period after the war; (2) a reasonable increase in the price of Metals Reserve purchases as in the case of tin in Bolivia, and a reasonable assurance of the continuance of this Metals Reserve market for a reasonable period after the war; (3) a reasonable increase in the price of nitrate and iodine and guarantees regarding the market and price for a reasonable period after the war emergency; (4) reasonable guarantees to the effect that synthetic ammonia plants now being erected under the defense program [Page 23] will not be used after the war to cut the throat of the nitrate industry of Chile; (5) a loan of X millions of dollars, but something that might approximate $100,000,000 to do the following things:

Approximately $48,000,000 so that the Chilean Government can carry out the scheme by the Minister of Interior to liquidate the arrangement made with electric company to take over all their holdings to solve problem of locomotion in Santiago and vicinity.
$21,000,000 to carry out electrification of state railroads and thus solve combustion problem of coal and oil.
The remaining X millions to be spent by Government partly on public works, partly on its armed forces and partly for the material to be bought in United States so as to keep small industry alive in Chile.

They say they realize this may seem like bargaining, but that they assume some agreements will be made by us, and apparently they ask only an agreement in principle before acting. This does not come from Barros Jarpa nor, as I understand, is it known to him. The propositions have been submitted to me indirectly, unofficially and personally for transmission. While Barros Jarpa has been much more favorable to breaking recently he is looked upon as the stumbling block by these Ministers. This is all very confidential, of course.

3. Have been informed by same source that President Ríos is ready to go along with these Ministers and break relations but he makes this stipulation, “Under no circumstances would the active or reserve forces of Chile be requested or required to do active service outside their own territory or the national islands”.

I had sent the above by letter, but in view of the rapidity of movement here now conclude it best to get it to the Department at once.

  1. Oscar Schnake, Chilean Minister of Public Works and Improvement.
  2. Horace R. Graham, representative of the Metals Reserve Company.
  3. Benjamin Matte and Pedro Alvarez Suárez, respectively.
  4. For negotiations concerning the acquisition of strategic materials by the United States from Chlie, see pp. 47 ff.
  5. Raúl Morales Beltrami.