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

No. 1655

Sir: Reference is made to strictly confidential despatch no. 5103 dated May 15, 1942 from the American Ambassador at Buenos Aires, a copy of which he sent directly to you, regarding the continued need for control of Chilean exports to Argentina of Chilean semi-manufactured copper.

The subject was further discussed in your despatch no. 3387 dated May 22, 194272 from which it appeared that exports of such copper to Argentina have thus far this year reached 5,000 tons, estimated to be nearly enough for the entire year.

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It is observed that the American Ambassador at Buenos Aires states that the supply now reaching Argentina, if allowed to continue, will surpass even the normal needs of the market. The Ambassador at Buenos Aires likewise indicates the need for control to prevent such copper from reaching pro-Axis entities, and he also mentions the Chilean law which requires that copper needed by Chilean domestic industry must be sold in Chilean pesos, presumably for domestic consumption only. It is noted that the Chilean Army Workshops sell semi-manufactured copper to intermediaries who then sell it in Argentina. The amount purchased and handled by the Chilean Army Workshops is understood to be far beyond Chilean needs.

The Ambassador at Buenos Aires reports that there is little or no control over the sales of such semi-fabricated copper once it reaches Argentina.

It has been observed that the Chilean Under Secretary of Commerce73 recently inquired of the Anaconda Copper Corporation in Chile whether it would be prepared to sell certain amounts of copper to the Chilean Army Workshops for dollars. The Chilean law providing for the sale in Chilean pesos of copper produced by foreign-owned corporations in Chile and needed by Chilean domestic industry is apparently being interpreted not to apply to copper ultimately destined for export.

You are requested in your discretion to remind the appropriate Chilean authorities that the Government of the United States is making arrangements for the extension of financial assistance to the copper industry in Chile on a large scale in order to increase the production of copper for the war effort and that it appears to this Government that the uncontrolled distribution of copper in Argentina which is assisted by entities in Chile is inconsistent with this developmental program. You should point out that this Government considers, moreover, that it is unfortunate that the Chilean Army Workshops should serve as an intermediary for the delivery of semi-manufactured copper to Argentina for uncontrolled distribution to purchasers, many of whom may be pro-Axis entities. You may mention in this respect that the participation of the Chilean Army Workshops in such activity appears inconsistent with the asserted Chilean needs for war matériel which presumably require the use of all Chilean Army Workshop facilities and, in addition, the facilities of other countries from which the Chilean Government desires to import such matériel.

Very truly yours,

For the Secretary of State:
[File copy not signed]
  1. Not printed.
  2. Ricardo Heatley.