825.27/387: Telegram

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

415. Misunderstanding apparently occurred regarding plan outlined Embassy’s telegram number 183 January 30, 5 p.m. for controlling distribution allocated commodities through Certificates Necessity. Minister Commerce and National Supplies Board now state they did not intend that rationing committees should decide distribution before issuance of certificates but only upon arrival goods. They point out that allocations are below Chile’s need, that regardless of certificates committees will have power to impose whatever distribution seems necessary when shipments arrive and that compliance with policies laid down by United States will be assured since no decisions will be made without concurrence committee member approved by Embassy. Rationing committees will not be set up before new administration takes office April 2d and some time will elapse before they really function. Meanwhile supplies are urgently needed especially of iron and steel.

Minister Commerce asks approval following procedure regarding iron and steel allocations which he insists is only practical method of getting shipments moving promptly. The balance of the allotment for each iron and steel group after deducting the quantities for which certificates have already been issued would be divided between the few principal importers, the railroads and Fomento Corporation to whom certificates would of necessity be issued stipulating that final distribution shall be made by rationing committee. These firms would obligate themselves to make delivery only to approved consumers for essential uses as instructed by committee which would also fix prices. Some certificates have already been issued to Fomento on that basis. Although Minister’s proposal now covers only iron and steel, it must be presumed that if accepted it will be extended to other commodities for which rationing commissions are created.

Obviously the procedure differs widely from ideas of American control authorities. However since iron and steel must arrive soon if unemployment is to be avoided and experience has clearly demonstrated inability Chilean Government to act promptly, it is recommended that Minister’s proposal be agreed to for first half of 1942 which would give rationing committees time to organize and gather necessary data. But Government should be officially informed that for second half year United States will not clear shipments allocated commodities unless ultimate consumer and use are shown in Certificates of Necessity. It is to be remembered that this is an interim government and until the new government takes office on April [Page 82] 2d efficient handling of this problem can hardly be expected. Please instruct urgently by cable.16

National Supplies Board requests telegraphic information specifying types iron and steel products covered by first quarter allocation; whether needs of copper, iron and nitrate companies and of railways particularly track materials, wheels and axles are included; and quantities cleared without certificates.

  1. In telegram No. 541, April 7, the Embassy indicated its embarrassment that no reply had been received. In reply, the Department, in telegram No. 415, April 14, referred to its instruction No. 1307, April 10, infra, as its answer, (800.6363/588)