103.9169 Santiago: Telegram
The Acting Secretary of State to the Ambassador in Chile (Bowers)
Washington, February
19, 1944—4 p.m.
219. From Nitze and Bateman,33 FEA, for Low. Your 261, February 10, 9 p.m.34 The following is our position after careful consideration of your recommendations:
- 1.
- We can not agree to extension of agreement by 1 year as recommended. This would bind the United States for 18 months from February 1st at a time when no other overall agreement runs more than 6 months and when we are asking Mexico to agree to a provision [Page 725] for cancellation at any time on 3 months’ notice. However, we are still willing to renew for 6 months from August 1st, 1944 with review privilege as described in our 5735 and as modified below in connection with copper and gold.
- 2.
- If Chileans prefer, you are authorized to agree to mercury price which will always be based on the price being paid in Mexico. We have no fixed mercury price in Mexico. At present, price is determined in advance by us for half monthly periods. We have already announced price for first half of March, which is $125 per flask at Laredo, duty for buyer’s account. For your information, this method requires our estimating probable course of New York market price. That price is now about $135, The Mexican price will be reduced until market stabilizes and until differential between it and New York price is sufficient to cover shipment costs and duty, when it will be determined directly by the New York price.
- 3.
- We do not think the Chilean proposal or your recommendation on copper price take sufficient account of the present situation. The elimination of the two increases previously granted would bring price only down to around 16 cents on shipping ores and 14 cents on shipping concentrates compared with the ceiling price of 12 cents. Under your proposal, one year would be required to eliminate one-half of the present price above 16 cents. Please repeat to the Chileans the proposal in our 57. However, if a compromise is essential, you are authorized to accept the following schedule: a cut of 5% and 2½% respectively on each of the following dates, May 1, June 15, Aug. 1 and Sept. 15 with latter price to be effective until Nov. 1. Price for November 1 left open for later determination.
- 4.
- You have suggested we continue to buy gold ores and concentrates if analysis of costs indicates we suffer no monetary loss. Our latest analysis shows the following. Based on present smelter charges margin between average price we pay and smelter proceeds only $4.32 per ton of ore and $1.26 per ton of concentrates to cover all freight costs, etc. If smelter charges are reduced after war, margin would be larger but storage costs and interest would be incurred. However, we gather that your analysis of costs shows different result. In order to expedite conclusion of agreement you are authorized to extend purchases until August 1st, 1944 at present price with understanding that we are not obligated to buy beyond that date and that gold ores and concentrates are not included in the 6 month extension; also provided all our other terms are accepted. [Nitze and Bateman.]
Stettinius