811.20 (D) E.D.B./1840: Telegram

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

1207. Your 1609, October 2, noon. The Department and other interested agencies of this Government have been giving their most earnest consideration to the problem of determining the minimum amount of Chilean copper which can be diverted from supplies required in our war effort and still satisfy the legitimate needs of Chile and of other American republics normally supplied by Chile. The reaching of a satisfactory agreement on this point would be a demonstration of Chile’s willingness to cooperate in this phase of the war effort. The Department authorizes you to discuss with the appropriate authorities of the Chilean Government a figure of 20,000 tons per annum as representing our considered judgment of requirements for Chilean internal consumption and for export principally to Argentina, Uruguay and Brazil.

In reaching this figure the necessity for a reduction in the normal civilian consumption of copper under war conditions has been balanced against the legitimate role to be played by copper fabricators in Chile and in other American republics in supplying certain articles which the United States and other non-South American suppliers are no longer able to furnish.

As you know, the United Nations desperately need every ounce of copper which can be obtained for military purposes. Consequently any unnecessary diversion of copper to civilian users directly and unfavorably affects the war effort. This Government has been seriously preoccupied with the increasingly large diversion of Chilean copper into uses which can not be termed essential, both in Chile and in Argentina as well as possibly in other countries. In considering this problem, the Department is fully aware of the price situation and of the further fact that it is reasonable to suppose that there has been some hoarding of copper for speculating purposes.

At the same time that you approach Chilean authorities on this matter of a specific amount of copper for the purpose mentioned, you should indicate that in the event those authorities believe an agreement is possible, this Government will be disposed to assign a representative or representatives (probably Graham of Metals Reserve) to discuss details such as allocations to companies and to markets with the appropriate Chilean authorities. The Department recognizes of course that these are matters within the exclusive jurisdiction of the Chilean Government but believes that, once the Chilean [Page 71] Government has indicated its willingness to cooperate, the necessary details can only be worked out through joint conversations.

This matter is regarded as one of the utmost importance.