825.5045/11–1846
The Ambassador in Chile (Bowers) to the Assistant Secretary of State (Braden)
Dear Spruille: Stannard and his party arrive this evening and I notice in the press that they will be met by the Minister of Labor. In my conversation with the President I was left in no doubt as to his concern and determination to do everything within the range of his possibilities to get some sort of agreement. He left me in no doubt whatever of his earnest desire to continue the very excellent relations between Chile and the United States and his repugnance to the idea of accepting anything not positively necessary, such as the oil and wheat, from Argentina. He went over the conditions, with which I have informed you, that brought about the inclusion of Communists in the Ministry and, in this manner, more or less forced the mine issue upon him. He made it clear that he has no doubt that these Communists will not linger long in the Government.18 But having had their support in a bitter presidential campaign he felt under obligations to offer them seats; and they having accepted, he does not wish to force them out immediately after taking office since this would make too easy the charge that they had been tricked into his support.
He had hoped and worked for a National Government to include Conservatives as well as Liberals and I personally think it was very shortsighted of the Conservatives in not accepting his invitation. But he does have three Liberals in the Ministry and these tend to strengthen him in his hopes for a moderate but progressive regime. If he is forced, through the refusal of the copper company to cooperate through some semblance of a concession on some points, he would be forced to ask for a decree of insistence and the Liberals would not sign and I understand that the Radical Minister of Finance would [Page 613] not. This would create an immediate crisis and the Liberals, the moderating influence in the Government which is important to us, would go out.19 Should they go out, it would be very difficult to get them or members of their party back and this would throw the President into the hands of the extremist crowd. I cannot conceive of anything more disconcerting.
Should this occur and as a result should we decide to refuse all credits to Chile for her industrialization the situation internally would become rather grave.20 Our enemies, the old Nazi outfit, the pro-Argentineans and the Communists would revive the old cry of “Dollar Diplomacy” and “Yankee Imperialism” and I am afraid that very many who have been our friends throughout would go over to our enemies on the theory that we had turned on Chile.
Another phase which enters into the picture is this: Chile has gone too far, interest here is too great, in the plans for industrialization to end it now21 and yet should all credits be denied by us the necessity for credits would remain. This is not lost on Argentina. I find nothing objectionable in the negotiations for the purchase of the oil and wheat which we cannot possibly furnish. These products Chile positively must have and Argentina is the one place where they can be had. But it appears that when here for the President’s induction into office, the Argentine delegation, with economic experts, brought up the matter of possible credits for the industrial needs of Chile.22 The President mentioned it to me but no one is more antagonistic to the Perón regime than González and I have perfect faith in the sincerity of his assertion that there is nothing he wants less. He said with all possible emphasis that he wants American credits and does not want to feel any obligation to the Argentineans. I know this was not intended by him as a threat. He was talking very much off the record. But should it be necessary to abandon the plans for industrialization or to take credits from Argentina, public opinion here would make it impossible for any Government to abandon the projects. And should this situation develop I am afraid that it would throw Chile, against her will, into the Argentine orbit; and this would mean headaches for us possibly for 6 years.
The proposition of González for a board of arbitration, not actually chosen by the Company but absolutely satisfactory to the Company28 which would have the power of veto on any board not satisfactory, seems to me about the best that he could make. If the conferences [Page 614] between the President and his men and Stannard and his directors are conducted in a friendly spirit, I hope the storm will pass. González told me that the demands of the syndicate numbered about sixty; that he cut these down to fifteen; that among the fifteen were some that the Comptroller has already declared unconstitutional and that by virtue of that fact the board would inevitably refuse these. He implied without saying that he did not want to cut out too many of the demands, having eliminated about forty-five, and he left in the illegal ones to make the list seem reasonably long with the knowledge that the illegal demands would be doomed from the start.
During the course of his conversation, González said that he is annoyed by the necessity of always denying that he has a communist Government. He said he is “ashamed of having Communists in at all,” but that he had told the Communists himself that the point of view of his Government will be that of a capitalist state. “I have a liberal Government in a capitalist State” he said to me. Convinced as I am of his sincerity, I am hopeful that we can help him out of his present predicament, and that the conferences will make it possible.
I am giving you these thoughts personally as background which impresses us here.
I shall keep you posted on the progress of the negotiations. I rather think the Company acted wisely in sending its head since, in a sense, it is complimentary to the Government and seems to be appreciated here in governmental quarters.
Warmest regards.
Sincerely,
- A marginal comment in the handwriting of Mr. Braden reads: “Then why not off-load now?”↩
- At this point a marginal note by Mr. Braden reads: “I don’t believe this sequence would happen at all.”↩
- Marginal note by Mr. Braden: “After $60,000,000 of credits!”↩
- Marginal note by Mr. Braden: “We don’t want to end it, but to do it soundly.”↩
- Marginal note by Mr. Braden: “God help Chile”.↩
- Mr. Braden’s marginal comment here reads: “Which has never been clear”.↩