825.6354/7–2645

Mr. Willard L. Thorp, Deputy to the Assistant Secretary of State for Economic Affairs, to the Executive Director of the Bureau of Supplies, Foreign Economic Administration ( Scheuer )

My Dear Mr. Scheuer: We refer to the previous correspondence between yourself and Mr. Clayton on the subject of the Chilean copper ore and concentrates purchase program, the most recent communication being Mr. Clayton’s note to you of June 18, 1945.36

Since that date, we have studied the matter at length and have participated in several discussions with representatives of WPB and FEA in regard to the program for procurement of foreign copper during the fourth quarter of 1945. We now have learned that WPB has directed the FEA to purchase 150,000 tons of copper from foreign sources in the fourth quarter and hopes that this may be done without cash loss to the Government. The Department is of the opinion that the decision to continue purchases of any subsidy copper in the fourth quarter and in subsequent quarters should be made by the supply agencies solely on the need of such copper to meet our import requirements.

Any decision as to the elimination of subsidies should be in consonance with the Department’s general policy of equality of treatment as between comparable producers within a country and as between [Page 803] different countries. Thus, the Department’s position would be to favor equality of treatment in cutbacks as between the small independent Chilean mines and the Andes.

We feel that if the subsidy prices paid to the Andes Copper Mining Company are terminated on September 30, 1945 there will be small likelihood of any charges of injustice to the small Chilean copper producers by terminating the ore and concentrates purchase agreement on July 31, 1945. However, with the aim of equality of treatment, we can see no objection to the suggestion of your representatives that it may be well to extend the agreement on about the present terms for an additional two months, thus providing coincident termination of subsidy purchases from the small mines and from Andes.

The Department’s position would be, also, to apply the principle of equality of treatment as between purchases of ceiling price copper from Canada and Chile. It would be definitely inconsistent with our established policy to terminate the purchase of ceiling price Canadian copper without equivalent cutback of ceiling price copper from Chile or other countries.

The Department is, of course, prepared to discuss bilaterally, with any of the producing countries, problems arising from the cutback of copper purchases. It is possible, therefore, that the Department may wish to make certain additional recommendations depending on the result of such discussions.

Sincerely yours,

Willard L. Thorp
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