Foreign Relations of the United States: Diplomatic Papers, 1944, The American Republics, Volume VII

103.9169/1603a: Telegram

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

Washington , January 1, 1944—10 p.m.

4. From Scheuer⁸⁵ FEA and USCC⁸⁶ to Low.⁸⁷ Your 2112 and Ambassador’s 2111 December 17,⁸⁸ concerning Chilean manganese.

You are hereby authorized to execute a contract or contracts on behalf of U. S. Commercial Company to purchase the 40,000 long tons of manganese required to complete this Government’s obligations under the existing Overall Agreement, said purchase to be for the period up to February 1, 1944, or such longer period not extending beyond August 1, 1944, as negotiations may require. For price and other terms, you should be guided by Overall Agreement and present MRC⁸⁹ contract. Before execution of above contract or contracts, please establish through Embassy the assurance of Chilean Government that above purchase completes U. S. Government’s obligation to purchase manganese under present overall, and that the arrangement for purchase by the USCC will release the MRC of any further obligation under the Overall Agreement.

The Department has concurred in the recommendation that, in addition to above, 40,000 long tons of manganese be purchased. Following this recommendation, you are hereby authorized to proceed in accordance with (2), (3) and first paragraph of (4) in your 2112, except to substitute USCC for MRC and you are further authorized to execute on behalf of the USCC the contract or contracts contemplated therein.

Please keep us advised of all developments, and furnish us copies of all documents. The Department is advising the Embassy in accordance with the above.

At the same time that this decision is announced to the Chilean Government, we consider it desirable that they be informed of the changes which we expect to propose in Schedule A of the Overall Agreement before the semi-annual review date of February 1. These changes are proposed in order to bring our Chilean prices more in line with our present easier supply situation in the minerals concerned and to avoid the accumulation of uneconomic surpluses.

Mercury: Price to be based on the average E. & M. J. New York quotations for the seven market days immediately preceding the delivery date. U. S. duty for Seller’s account. Delivery to be c.i.f. New York.

Antimony, Chemical Grade: Change base price of $2.10 per short ton unit to $1.70.

Antimony, Metallurgical Grade: Change base price of $1.75 per short ton unit to $1.40.

Lead: No change.

Zinc: No change.

Copper Ores: 10 percent less than present price on February 1 to April 30. 10 percent additional reduction May to June 30.

Copper Concentrates: A reduction of 5 percent and 5 percent respectively on the same dates.

Cobalt: In place of present schedule:

4 percent to 5.99 percent, $0.17 per pound of contained Co. f.o.b. steamer Chilean port. 6 percent to 6.99 percent, $0.30. 7 percent to 7.99 percent, $0.40. 8 percent to 8.99 percent, $0.50. 9 percent to 9.99 percent, $0.60. 10 percent and up, $0.70.

Molybdenum: Change present base price of .656 cents per pound Mo to 37 cents per pound MoS2 f.o.b. steamer Chilean port.

Tungsten: Change present base price of $22.60 to $16.00 per short ton unit of WO3 f.o.b. steamer Chilean port.

Gold Ores and Concentrates: We again propose that the prices paid for gold ores and concentrates be reduced by 10 percent. If this does not now meet with the approval of the Ambassador we should like to receive his views but suggest that notice of the other changes proposed be given to the Chilean Government without delay.

As you know, the Chileans are receiving exceptionally favorable treatment with respect to gold ores. With respect to other commodities mentioned, it should be made clear that the changes suggested are in line with policy being followed in other countries and in the U.S. and are essential if the mining industry is to reduce its operations in an orderly way. If not made now, more abrupt reductions in the future are inevitable with resultant severe economic dislocations.

Hull

85. Sidney Scheuer, Assistant Director in charge of imports, Foreign Economic Administration.
86. United States Commercial Company, successor to the United States Purchasing Commission.
87. Sam D. W. Low, Special Representative in Chile of the Foreign Economic Administration.
88. Neither printed.
89. Metals Reserve Company, an instrumentality of the Reconstruction Finance Corporation.