811.20 Defense (M) Chile/619: Telegram
The Ambassador in Chile (Bowers) to the Secretary of State
[Received 8:50 p.m.]
45. For Hull, Stettinius, Duggan and Bonsal. I have given considerable thought to your 11, January 4, 6 p.m. and am convinced in [Page 712] my own mind that it is not opportune for me to bring up in a direct manner with Minister of Foreign Affairs matter of termination of copper agreement, especially on top of bombshell we exploded in preliminary mention of price reductions under the Overall Agreement for purchase of certain minerals from small mining industry. See my 21, January 4, 6 p.m. and 39, January 7, 4 p.m. This telegram strictly confidential.
I prefer to bring up this matter with Foreign Minister when I can convey some good news to him and I most earnestly recommend that I be authorized to inform him that we have fixed the woodpulp quotas for the second and remaining quarters of this year at 4,000 tons per quarter. The technical details of Chilean woodpulp requirements have been exhaustively reported by Embassy. Department is aware of vast saving to newsprint production industry resulting from sending chemical woodpulp to Chile where it can be mixed with Chilean mechanical woodpulp in ratio of about one part United States wood-pulp to seven parts Chilean woodpulp for production of newsprint. Moreover, it will aid in maintaining existing Chilean industries and therefore be consistent with our policy of developing in Chile copper and other industries which depend largely for their raw material on Chilean resources. Matter of failure of the United States to supply Chile with sufficient woodpulp while Argentina is able to obtain supplies from Europe as well as the United States because she did not break relations with the Axis has caused comment here which has even reached the floor of the House of Deputies. I must ask that the Department and the other concerned agencies of the Government augment without delay woodpulp quotas for Chile.
Minister for Foreign Affairs has inquired about the Department’s resolution regarding exchange of Chilean copper for Argentine mares. He states he would not admit of pressure from Argentina, that mares he desired for agricultural purposes especially because of limited gasoline supplies made available to Chile, and that this is purely a Chilean request. He was apprised that Argentine Army customarily has its military needs for copper manufactures handled by a Proclaimed List firm (Sema)18 and that it is thought Argentine Army pays the firm in copper. It is believed that he would like a favorable reply even though it placed exchange on a restricted monthly basis but in any case he wishes an early reply. I am convinced of good faith of Fernández and do not think he would make this request unless it really meant something to him and administration. If at all possible I would suggest that I be authorized to inform him of some concessions in this matter but I do not insist. I do, however, feel that I must insist in the increased wood pulp quotas.
[Page 713]The Department will realize that the Chilean picture is spotted and that a real danger exists here of a military coup because of constant conspiratorial activity of Axis through Argentina. The Government is doing everything in its power to prevent it and has so far succeeded but I consider the situation is still delicate and we must not do anything which can be used by our enemies to aggravate it. Economic curtailments strike everyone down the line from the Government and capitalist to the laborers and we must make them with the greatest perspicacity to avoid injuring our own best interests and post-war trade. For example, it has been rumored here recently that state railways unable to obtain loans in the United States to cover purchases of needed equipment, have turned to Great Britain and are now negotiating a barter agreement involving an exchange of nitrate for railway equipment. In this connection the Nitrate Sales Corporation here feels that it obtained from the State Department what amounted to a veritable promise that nitrates above the 700,000 tons would be purchased by United States. Consideration might be given to purchase of additional nitrate if Chilean state railways will purchase in the United States substantially corresponding value railway equipment. Am aware we do not like arrangements which smack of barter although there is certain similarity to barter in Lend-Lease and reverse Lend-Lease. Chileans are essentially traders and we must keep point in mind in dealings with them and it is well to have in hand a quid pro quo even if not presented as such in effecting transaction.
In conclusion I entreat that my views be given utmost possible consideration consistent with prosecution of war. I ask prompt upward revision of wood pulp quotas, authority to revise overall agreement for minerals along lines my 21 and my 39, and in general consideration of Chilean scene as whole and not piecemeal. Am doing my best to further advancement of good neighbor policy on firm foundation of mutual trust and mutual advantage. Great strides were made during past year but it would be easy to lose ground through ill-timed action or action which Chileans could feel inconsiderate. We must not give our enemies opportunity to refer to us as “fair weather friends”.
- Soeiedad Electro Metalứrgico Argentina.↩