811.20 Def (M) Peru/7–844
The Ambassador in Peru (White) to the Secretary of State
[Received July 14.]
Sir: I have the honor to report on the points of more immediate interest to the Department in the conference of July 6 regarding the renewal of the Overall Metals and Minerals Agreement. The participants were Finance Minister East, mine operator (and former Minister of Fomento) Hector Boza, the Minister’s secretary, Dr. Tello, Messrs. Libbey and Dowden of FEA, and the undersigned.
The Minister invoked the Embassy’s assistance in impressing on the authorities in Washington the adverse political consequences of unemployment to result from diminished purchasing by the United States. He asserted that the proposals made benefit the American mining enterprises and ignore the strictly Peruvian-owned part of the industry; and declared he would cable Ambassador Beltrán the same afternoon and request him to bring before the Monetary and Financial Conference65 the question of the “moral obligation” of the United States to continue mobilizing Peru’s economic resources, “as agreed upon during the 1942 conference in Rio de Janeiro”.
With reference to the first consideration (political consequences), he was assured that the Embassy as usual would convey his request for such consideration as might be deemed appropriate. We had indicated the production affected by the omission from the proposed agreement of tungsten, antimony, molybdenum, and silver concentrates would amount to only a small percentage. Dr. Tello estimated that the total so concerned amounts to about S/8,000,000—“a small sum for the United States, but great for Peru”. Mr. Boza volunteered that the affected quantity is small, but that many laborers would be thrown out of work. Boza did admit the omission of silver concentrates is unimportant. All of our ideas pertaining to the advanced stage of [Page 1526] the war, our past assistance to Peru, the impossibility for the United States to absorb the entire output of the hemisphere, the parallel curtailment in the United States, and the obligation of all partners to assume a portion of the load were met by Mr. East with reference to our undertaking during the Rio conference.
For the purpose of this despatch there is no need to describe the relatively insignificant place of tungsten, molybdenum, antimony, etc., in the Peruvian mining industry. This fact and the other considerations mentioned herein are well known to all concerned. There will be no adverse political repercussions in Peru as the result of omitting those minerals. If Mr. East and his colleagues explain the facts to the small number of interested producers, the question will be settled without any difficulty whatsoever. But being excellent traders, they apparently will not desist until the decision of the highest executive officers is made known to the Peruvian Ambassador in Washington.
In discussing the statement that the proposals “benefit the American mining enterprises”, Mr. East was not disposed to admit that Peruvians profit to any appreciable extent through sales to the regular brokers in the United States or to Cerro de Pasco, which have been the normal channels. But he knows well that the so-called American interests are at the same time among the greatest of Peruvian interests. Again in this case the details are omitted because they are publicly known. It seems that he may have introduced this point as a mild threat for bargaining purposes, possibly also to bolster the Ministry’s project for inordinately raising taxes on Cerro de Pasco. No doubt we shall soon hear that such action is imperative in view of the diminished revenue represented by the prospective tapering off in income from tungsten, antimony, etc.
The officers in the Embassy, of course, are not in possession of full information pertaining to future policy and the world-wide supply situation, and hestitate to comment extensively on the major point—assurance of a secure market for an indefinite period, under the Rio agreements. However, a few observations are made for such value as they may be found to contain regarding Mr. East’s attitude toward the omission from the preamble of the proposed renewed Overall Agreement of the phrase, “with the special object …66 defense of the hemisphere”, but continuing with the inclusion of “to the utmost possible degree in the mobilization of their economic resources”.
It is not likely that any of the United States officers in Washington or Lima would have foreseen any such interpretation of the preamble, since it is assumed everyone had understood the object was to win the war, and that it was not intended to underwrite the economic future of the hemisphere. However, Mr. East and presumably his colleagues [Page 1527] Dasso, Beltrán, Tudela,67 et al., seem to incline toward such an interpretation. Mr. East, in fact, stated the Rio Resolutions establish a moral obligation on the part of the United States to comply with its agreement to do so; and it is convenient to mention that the same thought is brought out in the so-called Peruvian thesis referred to in despatch No. 732 of July 3, 1944,68 describing “Stabilem”.69 He was not disposed to discuss our explanation that at least certain of the Rio Resolutions were adopted for the purpose of winning the war and were not necessarily meant to continue indefinitely in a way that would obligate the United States to guarantee Peru’s complete economic security throughout an indefinite future period. This point was considered so strong by Mr. East that he declared, as mentioned, that he would instruct Ambassador Beltran to carry the question to the Latin American delegates to the Monetary and Financial Conference now in session. I suggested that it might be a good idea; that although the topic might be somewhat extraneous it could nevertheless be discussed advantageously while so many of the higher policy-forming officers are together in one place. The same argument is susceptible to application by Mr. East and those of the same school of thought to the other agreements with the American republics—covering cotton, flax, rubber, rotenone, quinine, etc.
Additional details of more technical nature are available in the Embassy’s telegram No. 896 of July 7, 6 p.m., for Bateman and Evans FEA from Libbey, and in Mr. Libbey’s letter of July 8, 194470 to Mr. Paul H. Nitze.71
Respectfully yours,
Counselor for Economic Affairs
- For correspondence on the Conference held at Bretton Woods, New Hampshire, July 1944, see vol. ii, pp. 106 ff.↩
- Omission indicated in the original despatch.↩
- Francisco Tudela, head of the Commission on Foreign Economic Policy of the Ministry for Foreign Affairs.↩
- Not printed.↩
- Name given to an economic proposition advanced by Alfredo Alvarez Calderon that an international organization cooperate with the International Monetary Fund to underwrite the marketing of useful raw materials and to perform related economic functions of a wide variety.↩
- Latter not printed.↩
- Director, Foreign Procurement and Development Branch, Foreign Economic Administration.↩