The Assistant Chief of the Commodities Division (Bums) to the Chief of that Division (Kennedy)


You suggested this morning that it might be wise for the Export-Import Bank to anticipate the contingency that the conversations of the Department with the President of Chile,66 during his forthcoming visit here, might indicate the desirability of extending a loan to Chile to tide that country over the transitional period between termination of government purchase agreements and the resumption of full-scale private trade.

This Division’s position is that the Export-Import Bank should definitely ear-mark a portion of its funds for a possible loan to Chile, at least until the outcome of President Ríos’ visit is clear.

Chile’s post-war readjustment problem

Copper and nitrates, both under public purchase throughout the war, account for the bulk of Chile’s exports, as indicated below:

Chilean Exports to all Countries

1937 1943
Total, all commodities $190,000,000 $179,000,000
Copper 104,000,000 108,000,000
Nitrates 39,000,000 30,000,000
[Page 818]

Copper. Chilean exports of copper to all countries amounted to approximately 500,000 tons annually during the war years (virtually all to U.S.), as compared with 350,000 tons annually before the war (virtually none to the U.S.). All of the U.S. copper imports from Chile during the war were under public purchase, (80 to 85% at basic price, the remainder being cash subsidized).

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

Conclusion. The trade readjustments which Chile must face this year in copper and next year in nitrates will impose a considerable strain on the Chilean economy.

Chile’s copper exportation will shrink, on an optimistic estimate, by $24,000,000 below the war-time level; on a moderately favorable estimate by $58,000,000 and on a pessimistic estimate by $96,000,000 below the war-time level.

In the following year, there may be a shrinkage of $10,000,000 in Chile’s nitrate trade.

These figures represent a very large share of Chile’s total export trade of all commodities, ($190,000,000 in 1937 and $180,000,000 in 1943).

It seems very likely that the President of Chile may raise the question of a loan. If this Government decides to deal with the Chilean readjustment problem by means of a loan, the Export-Import Bank ought not to have all its funds obligated to other countries in advance of the Chilean discussions. This does not mean that a dollar loan for the purpose of easing the transition should necessarily be made to Chile. Such a loan, if requested, should be carefully examined by the appropriate agencies before a decision is made.

  1. Juan Antonio Ríos Morales.