105.9169 Santiago: Telegram
The Secretary of State to the Ambassador in Chile (Bowers)
57. From Scheuer, FEA, for Low. Your No. 39, January 7, 1944. Have carefully considered your report and recommendations. Several general comments seem in order. You refer to the political stakes, but it must be remembered that FEA cannot purchase for political reasons except upon recommendation of the State Department. This entire subject was canvassed with the Department before our cable No. 424 went forward. The Department has discussed the political aspects in their cable No. 35 of January 11 to the Ambassador.
You have referred to large tonnage of low cost Chilean copper we are receiving. This was considered before we made our proposal. We believe that Chile has benefited from our purchases and is as anxious to sell this copper as we are to buy. For your strictly confidential information, the time may be approaching when our needs of even Chile’s lower cost copper will have to be reviewed. It is also our conviction that a gradual reduction in Chile’s mine production and the avoidance of a later more abrupt curtailment are in Chile’s interests.
In view of these facts and the fact that our additional purchase of manganese totals over twice the amount of the suggested reductions, together with the relation of our proposals to the over-all program of gradual reduction that is already taking place in other countries and in the United States, we believe these proposals should have been acceptable to the Chileans. Protests were anticipated. We have tried to be as moderate as possible in our consideration of this matter. You will realize that cut back or reduction in price at any time is not palatable but in the nature of the case, it is unavoidable.
There is merit in your suggestion of a somewhat longer notice of the change in copper price, but we do not consider 6 months postponement necessary. We are willing to agree to a renewal from August 1 on the terms indicated below. You are authorized to negotiate the February 1 revision as follows: For all minerals, except [Page 720] copper and gold, follow the changes requested in our No. 4 of January 1. For copper ores and concentrates reduce prices May 1, 1944 by amount of increase granted February 1, 1943. On August 1, 1944 reduce by amount of increases granted August 1, 1942.
You omitted recommendations on gold ores. Reduce by 5 per cent on each of the above dates, May 1 and August 1, 1944.
You are also authorized to extend the over-all agreement for 6 months from present expiration, specifically reserving to the United States the privilege of reviewing and re-determining prices as of August 1, 1944. If the above decreases in copper and gold prices have been agreed upon, provision may be made that any further reduction as to copper or gold determined at the August 1 review will not be effective before November 1, 1944.
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Hull