825.2542/3–951

Memorandum of Conversation, by Mr. Edmund E. Getzin of the Economic Resources and Security Staff, Office of International Trade Policy

secret

Subject: Chilean Copper.

Participants: Mr. Carl Lenz, Office of Price Stabilization
Mr. Leo Halpern, Office of Price Stabilization
Dr. John Morgan,1 Defense Production Administration
Mr. Frank Hayes, National Production Administration
Mr. Rollin Atwood—OSA
Mr. John Evans2ER
Mr. Edmund Getzin—ER

The Department was notified on March 8 that Mr. Edwin Gibson, Deputy Administrator, Defense Production Administration, had appointed Dr. Morgan and Mr. Hayes to develop a United States position on the Chilean copper question with representatives of ESA and Department of State. This was pursuant to Assistant Secretary Thorp’s letter to Mr. Gibson, dated March 3.3

The participants met on March 9 and in general terms discussed the contents of the Chilean memorandum and recommendations so far made by State and ESA to meet the Chilean proposals. Mr. Hayes then referred to a conversation between Mr. Harrison4 of DPA and [Page 1262]Mr. Gibson, DPA with Messrs. Hoover of Anaconda and Cox of Kennecott. Following this conversation Mr. Gibson had listed five points representing DPA’s views on subjects for discussion with the Chilean delegation. These five points are:

1.
“The United States will discuss the question of an increase in the price of copper from Chile provided the Government will check or stop semi-manufacturing.”
2.
“Raw copper should assume its normal distribution—U.S. will agree to a maximum amount of copper to be retained by Chile for handling in cooperation with the producers in the manner customary in the trade—this maximum amount will be used by Chile to trade for those necessary supplies which the U.S. cannot provide.”
3.
“The U.S. will be willing to discuss the question of a moderate loan program for small mine development and production. This amount should not exceed four million and expenditures under it be subject to investigation by U.S. experts of individual projects.”
4.
“The U.S. will undertake to arrive at an understanding with regard to the materials the U.S. will supply.”
5.
“The agreement be limited to a one year period.”

It was apparent that these points were hurriedly drafted and their exact meaning and scope would have to be clarified. Specifically, with regard to point 1, it was not known if stoppage of semi-manufacturing was a condition to be fulfilled prior to the discussion of price or whether it was to be a result of satisfactory discussions. It could not be determined if a general rise in the price of copper was to be considered or if the increase in the price was to be confined to Chilean copper. If the latter, there was some doubt as to its manner of accomplishment.

In point 2, the meaning of the phrase “its normal distribution” was in doubt and it was not clear whether the copper is to move at prices agreed to under point 1, or at some higher price relating to what Chile buys from other countries.

Under point 3 the question of whether or not the U.S. is to enter into purchase contracts at higher prices if necessary requires clarification.

Dr. Morgan and Mr. Hayes were asked to check back with Messrs. Harrison and Gibson and clarify the questions raised and report to the group as soon as possible. The representatives of OPS were in general agreement but reserved their position on point 1, pending further consideration in that agency of the inflationary effects of a possible increase in the price of copper.

It was suggested that Mr. Hayes represent DPA and Mr. Halpern ESA in subsequent discussions with the Chilean mission.

  1. John D. Morgan, Jr., Director, Materials Review Division.
  2. John W. Evans, Chief, Economic Resources and Security Staff, Office of International Trade Policy.
  3. Not printed.
  4. Maj. Gen. William Henry Harrison, Administrator, Defense Production Administration.