Miller Files, Lot 53 D 26

Memorandum by the Assistant Secretary of State for Inter-American Affairs (Miller) to the Secretary of State 1

confidential

Subject: Need for immediate solution of the copper problem with Chile.

Background:

The Chilean Government is faced with increasing opposition from its Congress and from the opposition parties in Chile (aided and abetted by the communists) in regard to the Government’s handling of copper production and sales problems. Bills have been introduced to nationalize the copper industry, set up a Chilean copper sales corporation and divert sales of copper to countries other than the U.S. in order to obtain prices 10–15 cents higher than the U.S. price.

President Gonzalez has adjourned the Congress and sent a special mission here to discuss the copper problem and seek a solution which will prevent precipitate action by the Chilean Congress. The Department has had long discussions with the Chilean mission and representatives [Page 1267]of ESA (Griffith Johnson)2 and DPA (Mr. Hayes) have been present during the formal talks.

All of the problems presented by the Chileans including increased production in Chile and Chilean sales to other friendly countries have been settled in a manner satisfactory to both governments. The remaining point, upon which the success of the entire discussion rests, has not been settled and hinges on a decision by the ODM as to whether or not the U.S. is willing to increase moderately the price paid for Chilean copper. Word from Chile emphasizes that the pressure on the Chilean President is increasing and an immediate solution is necessary.

General Harrison has indicated that a moderate rise in price (up to 4 cents) would not be objectionable.

Mr. DiSalle3 has sent word to Eric Johnston4 that they would go along with a moderate increase in price to Chile but not a general rise for all producers. This means U.S. Government purchase paying a subsidy to Chile and reselling at 24½ cents in the U.S.

It is understood Harrison will not go along with subsidies to Chile and not to U.S. producers.

A meeting between Eric Johnston and General Harrison is scheduled for Thursday, March 22.

Mr. Foster5 is entirely familiar with the problem and is pushing for a solution. Mr. Thorpe will ask Foster to talk to Eric Johnston early on March 21. Mr. Linder6 talked to Foster on Friday, March 16.

Recommendation:

That you speak to Mr. Charles Wilson pointing out that a solution of this problem is considered politically essential prior to the meeting of the Foreign Ministers’ Conference7 on March 26.8

  1. Source text is an unsigned copy; original not found in Department of State files.
  2. G. Griffith Johnson, Advisor, Economic Policy Office.
  3. Michael V. DiSalle, Director, Office of Price Stabilization, Economic Stabilization Agency.
  4. Administrator, Economic Stabilization Agency.
  5. William C. Foster, Administrator, Economic Cooperation Administration.
  6. Harold F. Linder, Deputy Assistant Secretary of State for Economic Affairs.
  7. Reference is to the Fourth Meeting of Consultation of Ministers of Foreign Affairs of American States, held at Washington, March 26–April 7, 1951. For documentation on the meeting, see pp. 925 ff.
  8. No record of Secretary Acheson’s response to Mr. Miller’s recommendation or of a conversation between the Secretary and Mr. Wilson has been found in Department of State files, but see footnote 4, p. 1273.