811.20 Defense (M) Chile/350: Telegram

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

194. The Department’s 178 February 17 [18] replied only to that part of your 252, February 6, 11 a.m. which required immediate attention such as copper, ore and concentrate prices and Chagres and Naltagua contracts. The Department believes it important that you be fully posted on the problems which would result in any consideration being given to higher prices for copper for the three large copper mines.

1.
The present price being paid to these mines is practically the equivalent of that being paid for the bulk of copper mined in the U.S.
2.
If a higher price were paid to the major Chilean producers American mining interests would doubtless expect, at least, the same increase in price.
3.
Fluctuations in the price of copper have, for many years, been taken as indicative of the general industrial commodity price trend, hence, an advance in domestic price of copper could well be a signal for pressure for price advances all along the line. The inflationary implications are obvious.

The resistance by numerous agencies of the government to a copper price rise is likely to be very great. The Department urges that you keep the aforedescribed broad picture constantly in mind in your conversations with the Chilean Government.

Hull