825.21/303: Telegram

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

183. Department’s 85, January 22.12 In view of the lack of any Chilean agency enjoying either the necessary authority or qualifications, and particularly in view of the unsatisfactory results obtained by the Embassy’s own strenuous efforts over a period of months, I am convinced that the advance detailed information requested cannot be supplied in time to be of value. The National Supplies Board states that it would require at least 6 months to detail consignees, quantities and uses of allocated commodities and I strongly question whether even then complete data would be available. It took the Tin Rationing Commission 7 months to compile the data submitted. Embassy’s partial compilation of legitimate importers and users of only three primary iron and steel products includes 230 names in Santiago, Valparaiso area alone. It is manifestly impossible to telegraph such extensive data.

Some more practical plan must be adopted for Chile and I definitely feel that the most effective method of exercising adequate control of distribution and restricted use will be through the Certificate of Necessity covered by the Department’s memorandum of January 14.13 The allocations made to date are sufficiently low to prevent diversion of materials to nonessential uses. The problem is to keep essential industries going.

The following plan discussed by Minister of Commerce14 and the National Supplies Board with the Embassy would accomplish the [Page 80] desired result: as soon as possible after the election of February 1 the Government would create rationing commissions—starting with iron and steel, rubber and chemicals—with full power phase of distribution of all allocated commodities. A representative of importers, an American citizen where available, would be on each commission to keep Embassy in constant touch. Importers would apply to appropriate commission which if it approved would recommend that the National Supplies issue Certificate of Necessity. Board would consult with Embassy prior to issuance of any certificate. The first certificates would cover orders already pending in the United States for which Exchange Control Board during the past months has authorized opening of letters of credit. Later, if administrative difficulties arise owing to the large number of individual importers, it may be necessary to consider temporarily canalizing trade in the hands of a limited number of selected firms.

The Minister of Commerce has emphasized to the Embassy that he hopes at the beginning the authorities in Washington will allow some flexibility as regards the certificates and will accept them even if not complete in all details. Eventually the projected rationing commissions will be able to answer fully all the questions on each certificate but at first this will be difficult owing to lack of organization. The Minister assures the Embassy that the rationing commissions will restrict the use of scarce materials to the essential needs of the national economy; in any event the Embassy will review all certificates before issuance and our objection will automatically suspend action.

The Chilean Government is sufficiently concerned over the shortage of materials so that we can feel certain of absolute cooperation.

I recommend strongly that our authorities: (1), waive the pre-information requested in telegraphic instruction No. 85 as regards allocated commodities, (2), approve the system of rationing commissions acting under constant and close Embassy supervision which is outlined above, and (3), accept as valid Certificates of Necessity issued during the first quarter of 1942 even though during the organization period of the rationing commissions they may not be complete in every detail.

This recommendation is made after a particularly careful study of the problem from every angle and numerous lengthy discussion the Chilean authorities. Unless some such simplified and accelerated procedure is approved promptly we may precipitate an economic and political mess in this strategically important country.

Cable reply urgently.15

  1. Not printed; this instruction concerned allocations of commodities, and requested names of consignees.
  2. Not found in Department files.
  3. Arturo Riveros Alcaide.
  4. Telegraphic instruction not sent. See Department’s instruction No. 1307, April 10, p. 82.