811.20 Defense (M) Chile/102

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

No. 2536

Sir: With reference to the Embassy’s telegram No. 94 of January 17, 1942,68 I have the honor to transmit herewith copies of notes exchanged on January 26, 1942 between the Embassy and the Foreign Office of Chile effecting the Agreement for the Purchase of Strategic Materials in Chile by the Metals Reserve Company, together with copies of Exhibit “A” in which there are specified the terms applicable to all purchases as well as the quantities, grades, prices and delivery conditions for each of the materials.

Respectfully yours,

For the Ambassador:
Donald R. Heath

First Secretary of Embassy
[Enclosure 1]

The American Ambassador (Bowers) to the Chilean Acting Minister for Foreign Affairs (Pedregal)

No. 861

Excellency: I have the honor to inform Your Excellency that my Government agrees to the provisions of your note of this date, repeated [Page 49] below, and considers the Agreement completed by the exchange of these notes.

The Government of the Republic of Chile undertakes, through the issuance of export licenses and other adequate control regulations effective immediately, to restrict exportation of the strategic materials listed in Exhibit A attached hereto,69 for a period of eighteen months from the date hereof, except to (1) Metals Reserve Company or other corporation or Agency designated by the Federal Loan Agency; (2) United States purchasers; (3) the British Empire; (4) in cases where the United States or the United Kingdom have made purchases on behalf of a third party, such designations for direct shipment as shall be nominated by the United States or the United Kingdom, as the case may be; and (5) the other American Republics which have systems of export control acceptable to the Government of the United States; unless in any case a different provision for export control is set forth in Exhibit A.
While the Chilean export control system, referred to in paragraph numbered 1 above, operates effectively, the Government of the United States confirms that the Federal Loan Agency of the Government of the United States, acting through the Metals Reserve Company or another Agency designated by it, agrees to purchase for a period of eighteen months from such sources approved by the Federal Loan Agency, the maximum quantities of each material as listed in Exhibit A hereof, less sales made through commercial channels or otherwise to the eligible countries referred to in paragraph numbered 1 above. The terms of purchase of each material by the designated Agency of the Federal Loan Agency are set forth in Exhibit A hereof. Without in any way limiting or affecting the prices at which a particular seller may sell Chilean material through commercial channels or otherwise to eligible countries, the Federal Loan Agency, acting through its designated Agency, agrees that its purchases during the period of this Agreement shall be at the prices listed in Exhibit A, with the understanding that these listed prices will be reviewed each six months.
The Government of Chile agrees that any increases in export taxes or fees that may be enacted or enforced between the time of purchase by the designated Agency of the Federal Loan Agency and the date of shipment of the material, will not apply to the materials purchased by the designated Agency or the Federal Loan Agency.
The Federal Loan Agency, for the purpose of performing its commitment hereunder, has appointed Mr. H. R. Graham, its Authorized [Page 50] Representative in Chile, who has accepted the Agreement on behalf of the Federal Loan Agency by signing at the end hereof.

Accept [etc.]

Claude G. Bowers


Federal Loan Agency
H. R. Graham
Authorized Representative
[Enclosure 2—Translation]

The Chilean Acting Minister for Foreign Affairs (Pedregal) to the American Ambassador (Bowers)

No. 4

Mr. Ambassador: With reference to our letters of this date70 relating to the purchase of Chilean products by the Federal Loan Agency, I have the honor to confirm to Your Excellency the agreement which we have reached with respect to the periodical revision of the prices stipulated in paragraph 2 of said letters:

The prices, tonnage and terms of purchase established in Document “A” shall be revised by common accord at the end of each period of six months counted from this date.
To make this revision and the respective adjustments, there will be taken especially into account the variation in the prices of the materials in the world market, the value of the dollar, fluctuations in Chilean exchange and increases in salaries, wages, materials and freights and loading expenses which affect the cost of production in Chile.
In the execution and fulfillment of this contract and to settle the difficulties which may arise, the Caja de Crédito Minero will act as the representative of the Government of Chile. This official institution will authorize the present buying firms in order that they may continue making their purchases under the same conditions as they did before the war.
Mr. Cesar Fuenzalida, Director of the Caja de Crédito Minero, signs at the end hereof to attest that said institution accepts the foregoing conditions. In like manner, Mr. Horace R. Graham will also sign at the end of Your Excellency’s reply to attest that the Federal Loan Agency accepts said conditions.

I take [etc.]

Guillermo del Pedregal

Cesar Fuenzalida C.
  1. Not printed; this telegram transmitted text of proposed note, printed below, to the Chilean Acting Minister for Foreign Affairs. On January 19, the Department authorized the signing of the agreement using this text.
  2. Not printed; the strategic materials listed were copper concentrates, copper ore, gold ores and concentrates, manganese ore, and mercury. In addition, the Metals Reserve Company was prepared to purchase both ores and concentrates of antimony, cobalt, lead, molybdenum, tungsten, and zinc.
  3. The reference is presumably to the notes exchanged on January 26.