710 Consultation 4/8–847

Memorandum of Conversation, by the Chairman of the United States Delegation (Marshall)

Participants: Secretary Marshall
Chilean Foreign Minister, Dr. Germán Vergara
Assistant Secretary Armour
Ambassador Dawson

In the apartment of Dr. Vergara, Hotel Quitandinha, August 19, 1947, 11:30 a.m.

Dr. Vergara assured me of his desire to cooperate wholeheartedly with the U.S. Delegation.

Referring to his speech of August 16, he stated that he had stressed economic problems largely because of Chile’s difficult economic situation84 and not because he had any intention of pressing for a discussion of economic questions at the present Conference. He indicated that the Mexican and Colombian proposal for referring the subject of economic cooperation to the Inter-American Economic and Social Council and subsequently to the Bogotá Conference would be acceptable.

In response to my inquiries as to the causes underlying Chile’s economic difficulties, Dr. Vergara emphasized the following points: The cost of living has tripled since 1938. During the war, the prices of Chile’s principal exports (nitrates, copper, iron) remained virtually stabilized, whereas those of its such vital imports as sugar, wheat and cotton rose appreciably. Since the war, there have been further increases in the price of imports with the result that, while the value of its imports is about what it was, in quantity it is receiving only half of what it received before the war. Chile needs in particular machinery (including agricultural implements) and railway rolling stock. As respects industrial development, the country is handicapped by its limited domestic market and to remedy this it has sought agreements with its neighbors (Argentina, Bolivia, and Peru) which would assure its industries wider consuming markets.

Dr. Vergara said that he had come to Rio with the intention of discussing with Assistant Secretary Armour certain specific problems with which he did not wish to bother me. Mr. Armour said that some of these matters had already been taken up by the Chilean Ambassador in Washington and that he (Mr. Armour) would be glad to conduct further conversations with Dr. Vergara here.

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Dr. Vergara remarked that, as respects nitrates, it is not Chile’s policy to raise prices but rather to increase production and exports. He said with regard to copper that there had been some rise in prices but that consumers had banded together to put a stop to this.

I assured Dr. Vergara of our interest in the economic problems of Chile and other countries. I emphasized the tremendous strain on our economy resulting from our efforts to assist Europe. At this point, he expressed apprehension lest European industries be rehabilitated and re-enter the market before Chilean industries could develop to the point where they could compete. I told him that I felt that European industrial rehabilitation would be a long and slow process. I explained to him in some detail how completely the European business structure had been disrupted, and pointed out that there had been no such disruption in Latin America and that, with good planning and good cooperation, these countries should be able to progress in an orderly manner. I called attention to the example of Henry Ford in developing a large domestic market by producing an article which well paid workers could afford to buy.

  1. For documentation on Chile’s position with regard to loans and debts, see pp. 527 ff.