811.20 Defense (M) Chile/2–2045

The Foreign Economic Administrator ( Crowley ) to the Assistant Secretary of State ( Clayton )

Dear Will: Your letter of January 2822 concerning the Chilean small copper mines has been received and I am glad to have the expression of your appreciation of our effort to give the Chilean Government more time in which to make the necessary adjustments to the elimination of our subsidy purchases of copper.

. . . . . . . . . . . . . .

I sincerely hope that, if any further subsidy of these mines is considered necessary, the Department of State will concur with us in our view that the Chilean Government should be asked to work out the solution itself, perhaps along the lines suggested by Señor Michels.23

I am sorry that I cannot share your optimism as to the outcome of our additional purchase of manganese in Chile. As you know, only 4,000 tons of the manganese purchased under either the original obligation or the extension of that obligation has yet been shipped. The serious shortage of manganese to which you refer is one based solely upon lack of shipping. While it may be worthwhile to lift some of this manganese at a later stage in the war, there is no present indication that anything would be gained by diverting shipping from higher grade manganese elsewhere to pick up this relatively unsatisfactory material. In fact, at a meeting held at the War Production Board on February 13, it was decided not to move the Chilean grades of manganese.

In my letter of January 22, I said that I was asking the Executive Committee to act on your recommendation regarding the purchase of Chilean copper and to base our purchase program on that recommendation or on some variation agreed to between us and the Department. As I believe you know, we decided upon a temporary extension of our previous purchasing arrangements. We have now decided to propose to the Chileans a continuation of those arrangements through [Page 795] April 30, 1945, and then a gradual reduction in the price paid both to the smelters and to producers not in a position to sell to the smelters, with all purchases to be on a non-subsidy basis after June 30, 1945, in line with discussions between FEA and the Department.

I should like to reiterate the suggestion in my letter of February 3 that future problems of this nature be solved in the light of our total economic relationship with Chile or any other country concerned.

Sincerely yours,

Leo T. Crowley
  1. Not printed.
  2. Rodolfo Michels, Vice President of the Anaconda Copper Mining Company.