Foreign Relations of the United States, 1946, The American Republics, Volume XI

825.51/10–146

Memorandum by Mr. Alexander Schnee of the Division of North and West Coast Affairs⁶²

[Washington,] October 1, 1946.

Mr. Vergara of the Chilean Fomento Corporation called to provide me with a list of the proposed expenditures of the $15,000,000 credit authorized for Chile by the NAC.

The proposed division of the use of the $15,000,000 credit is as follows:

1. Chilean State Eailways—$5,000,000

2. Fomento Corporation—$11,100,000

hydroelectric projects	$ 900,000
Transportation	1,540,000
agricultural machinery	3,200,000
copper wire plant	800,000
cement plant	550,000
petroleum	2,500,000
construction	1,610,000

You will note the inclusion of $2,500,000 for the petroleum industry in the above list. Roberto Vergara strongly advocates the granting of this loan in order that this question might be resolved without the friction which might be engendered by an unfavorable press. He expressed a willingness to reduce this request by a million dollars if it would permit the State Department and other interested agencies to look favorably upon the request. I informed Mr. Vergara that, in view of the long period of cooperation between Chile and the United States on the subject of the development of the Chilean economy and in view of the large credits extended by the Eximbank, I did not believe the Chilean Government would permit its people to be misled by false reports such as characterized Chilean press notice on this subject during the months of May and June.

Mr. Vergara is of the opinion that Mr. Gaston,⁶³ one of the Eximbank directors, is favorably disposed towards granting Chile a petroleum loan with the understanding that no more will be granted by the Eximbank and that future requests by Chile for assistance in the exploration of petroleum resources will be addressed to the International Bank. Mr. Vergara believes that Mr. Martin,⁶⁴ while objecting to the loan in principle, would be willing to favor the loan on the same basis that Mr. Gaston would.

It is suggested that the United States should not give way before this threat of public pressure and that the Department should vote against the granting of a petroleum loan when the subject is raised at the Eximbank. An itemized list of the proposed expenditures is attached.⁶⁵

62. Addressed to NWC.: Mr. Brundage, Mr. Hall, and Mr. Wells, and to A-Br.: Mr. Smith.
63. Herbert E. Gaston, Vice Chairman of the Board, Export-Import Bank.
64. William McChesney Martin, President and Chairman of the Board, Export-Import Bank.
65. Not printed. The following notations appear at the end of this memorandum: “By all means. CCH[all]” and “Agree M. K. W[ells].”