Foreign Relations of the United States: Diplomatic Papers, 1943, The American Republics, Volume V

825.24/965a: Airgram

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

Washington, April 8, 1943—7 p.m.

A–696. Your telegram no. 602 of March 30, noon;⁹⁶ the Department’s telegram no. 383 of April 1, 10 p.m.; and previous correspondence concerning an agreement with Chile on the control of Chilean consumption and export of copper.

The Department and the interested Government agencies in Washington are appreciative of the cooperative spirit Chile has shown in endeavoring to adjust this matter. It is sincerely hoped that you will be able to obtain the concurrence of the Chilean Government to our common desire to control from Washington the sales of refinery shapes of copper for shipment from Chile to the other American republics by Copper Export Association, Inc. and Kennecott Sales Corporation. We would then be in a position adequately to control the export of refined, unmanufactured copper.

In respect of fabricated copper, it is felt that although marked progress has already been made, a somewhat more closely knit control should be obtained to assure that copper, which is sorely needed for the prosecution of the war and for the maintenance of the health and public safety of the American republics and the United Nations, not be diverted to speculative operations or into uses which are patently unessential. You will recall that in the earlier stages of the negotiations (see Dept. 1296 October 28⁹⁷) there was discussed a country by country quota system allocating fixed percentages or amounts of all copper which could be shipped from Chile to the other American republics. For one reason or another this quota arrangement was not included in the recent decree. Careful consideration here has convinced us that the orderly functioning of the control, both in the interest of the conservation of copper stocks and to give Chile something to fall back on when political pressure might be brought by one Government or another to obtain copper above and beyond its real needs, renders essential the establishment of some such quota system. Statisticians and other experts in the copper trade have made a thorough study of the copper requirements of the American republics. They have arrived at the totals given in the following table as the most accurate available quarterly essential requirements of the other American republics (including Chile), for all copper (including copper, brass and bronze in both manufactured form and refinery shapes, and copper sulphate) during the calendar year 1943:

Countries	Metric Tons
Argentina	17
Bolivia	46
Brazil	230
Chile	624
Colombia	271
Costa Rica	142
Cuba	264
Dominican Republic	8
Ecuador	25
Guatemala	15
Haiti	31
Honduras	338
Mexico	1,927
Nicaragua	12
Panama	76
Paraguay	3
Peru	230
Salvador	9
Uruguay	14
Venezuela	218
Total	4,500

It is desired that this be taken up with the appropriate Chilean authorities urging that for the reasons stated action be taken as expeditiously as possible to have a quota system such as the one described above established. The Department appreciates that the Embassy can not be insistent that Chile accept without question the figures given, but you may state with assurance that these are the figures which have been arrived at after the most careful consideration of all the facts available from the extensive sources of information available in this country and obtained from our foreign service abroad. While in the last analysis it is up to Chile to say what, if any, quotas could be established, it is hoped that the ones indicated can be agreed upon. It is anticipated that the Chilean authorities may at least inquire why the Argentina quota has been suggested at such a low figure. You may state that our investigations clearly demonstrate that far from there being a copper shortage in Argentina, there exists in that country at least 6000 metric tons of copper, (while their estimated 1943 essential requirements are 7000 tons) which are now being speculated in, to the detriment of the war effort. The Department recalls the cooperative statement of the Under-Secretary of the Ministry of Economy and Commerce to Mr. Butrick (when discussing the Argentine situation) to the effect that a way could be found to limit exports to essential uses.

In the event of requests to the Chilean Government agency which exercises the control of copper exports for shipments in excess of the aforelisted quota amounts, this Government would have no objection to increasing these amounts, provided the additional metal is for an essential requirement of which the Chilean agency approves, and we would hope that the Chilean agency would consult the Embassy prior to making any commitment to increase a quota so that we might have an opportunity to make suggestions and give such information as we may be able to furnish. Here again the Department clearly recognizes that the ultimate decision rests with the Chilean Government. The measure of essentiality in the United States is requirements for the maintenance and repair of public utilities and copper for governmental uses during the war. No copper is made available here for purely civilian commercial consumption. It is hoped to have Chile agree to the same definition of essentiality.

In addition to the aforedescribed quota system, the Department hopes to be able to convince the authorities that the following additional points should be agreed upon:

(A) That, to remove the element of speculation which is dependent upon the spot consummation of export transactions, Chile agree that licenses for export shall not be issued until 60 days after the application shall have been filed, except where the exigencies of unusual circumstances warrant more prompt action.

(B) That Article 21 of Decree 64 Bis, of February 3, 1943, which reads as follows, “the exportation of copper is reserved for the companies who have proceeded in their manufacture on the conditions stipulated in this present decree and to requirements thereof”, be revised. It is thought that the provision was erroneously included, since it appears to be in conflict with Ambassador Bowers’ letter of January 19, 1942,⁹⁸ which is an over-all agreement for the export of copper.⁹⁹ The present situation appears to require the promulgation of an amendment or regulation in order to include the mining companies.

(C) Article 26 of Decree 64 Bis provided that at least 50 percent of the capacity of all plants shall be reserved as an inventory. This is so vague that it is considered most desirable to define what is meant by inventory. It appears that some definition of plant capacity should be made by regulation, so as to show what size inventory shall be maintained, for as it stands now there is no telling whether plant capacity for a day, a week, a month, or a year, is meant. An inventory of more than one month’s needs would constitute stock piling and we would be loath to see a larger one provided for.

To make this plan effective, the Embassy at the time it is screening orders for sales and applications for export, should conduct its own investigation and convince itself of the essentiality of the end-use, and that the buyers’ inventory position warrants the purchase of additional copper or products. In cases where the Embassy believes the purchase of copper or products is unwarranted or its approval may lead to illegitimate business, these matters should be called to the attention of the proper Chilean officials and the Chilean authorities should be requested to deny the certificate for export or cancel the purchase order after reconsidering the case in the light of the new facts presented by the Embassy. Of course, if Chile does not concur we can only look to moral suasion to prevent shipment. In the event additional information is required to screen the certificates for export, the Embassy should then inquire from the Embassy located in the country to which the export is to be made for the necessary additional information.

. . . . . . . . . . . . . .

Hull

96. Not printed.
97. Foreign Relations, 1942, vol. vi, p. 72.
98. Not found in Department files.
99. The Ambassador telegraphed the text of the proposed agreement in telegram No. 94, January 17, 1942 (not printed). For text of the note (No. 861) embodying the agreement, see Foreign Relations, 1942, vol. vi, p. 48.