The Secretary of State presents his compliments to His Excellency the
Ambassador of Chile and has the honor to refer to his note No.
230/46 of February 24, 19512 which stated that the Chilean Ambassador had
been designated to carry on conversations respecting problems
concerning copper, and to the memorandum furnished by the Embassy
under the date of February 1, 1951,2 which sets forth the position of the Chilean
Government.
Pursuant to the conversations which took place during the period from
February 27 to April 9 between representatives of the United States
Government and representatives of the Chilean Government,3 the position of the United States Government
with respect to the questions raised by Chile has been presented and
the enclosed memorandum contains a statement of the understanding of
the United States Government with regard to agreements reached by
the two governments respecting problems concerning copper.
It would be appreciated if the Chilean Government would inform the
United States Government if the attached memorandum accurately
reflects the understanding of the Chilean Government with respect to
the problems discussed.
[Enclosure]
Memorandum
The United States Government concurs in the view expressed by the
Chilean Government that the maintenance and increase of copper
production in Chile is of primary importance. It is recognized
that increased production can be achieved by expanded operations
by the two large American companies and by enlarging the
operations of existing smaller mines or by opening up certain
mining properties not now in operation.
With regard to expansion of the operation of the larger companies
it is understood that the Chilean Government will continue
discussions with the Anaconda and Kennecott companies in order
to reach an acceptable basis under which these companies can
accelerate expansion programs and plan for additional
investments leading to increased production. The United States
Government is pleased with the reports that the discussions are
progressing rapidly and that mutually satisfactory arrangements
may be expected in the near future. Following agreement by the
Chilean Government and the American companies the United States
Government will assist to the fullest extent that the emergency
permits in the export of essential equipment and supplies to
carry out these plans. It is noted that the mining companies
state that they do not contemplate the need for public financial
assistance for carrying out their expansion programs.
With regard to smaller and medium-size mining properties in
Chile, the United States is prepared to assist in efforts for
sound increases in production by facilitating deliveries, within
the general defense needs, of supplies and equipment or by
considering the granting of loans to increase production,
provided that such requests are based on reports submitted by
competent engineers. The United States Government is prepared to
provide engineers to help determine, together with operators and
engineers in Chile, the feasibility of increasing production by
enlarging present operations or by starting new ones.
The United States Government appreciates the Chilean Government’s
natural desire to utilize reasonable quantities of copper
produced by the American companies in Chile for export directly
to countries other than the United States and for the
manufacture in Chile of semi-finished and finished products both
for domestic use and
[Page 1278]
for export. It is understood that in export sales of copper the
Chilean Government does not propose to export copper in the form
known as “palanquillas.” In regard to the quantity of copper to
be utilized for the above mentioned purposes it is understood
that the Chilean Government will impose a limit of not higher
than 20 percent of the production of the Anaconda and Kennecott
companies thus assuring to the United States continuous shipment
of Chilean copper in quantities no lower than 80 percent of the
production of said companies. It is also understood that the
distribution of copper would be subject to any obligation Chile
undertakes with respect to international allocation in the
International Materials Conference. The Chilean Government
appreciates the importance of copper to the economy of the
United States, which at the present time is being geared to
maximum defense production in effort to supply the free world
with essential military and civilian goods. The Chilean
Government stated its intention that the copper not shipped to
the United States will be used by Chile or sold to other
friendly countries only for their essential needs; that the
Chilean Government will take the necessary measures to assure
that such copper will not be re-exported; and that no sales will
be made to countries which are potential enemies or satellites
of potential enemies. The United States also was pleased to
learn that Chile agreed to exchange information on the amount of
copper which should be sold to other countries, particularly in
the event that the diversion should be sufficient to interfere
with the United States defense effort, and also to exchange
information with the United States on the export of copper to
third countries to facilitate the supply of essential
requirements to such countries in the most expeditious
manner.
The Chilean Government stated that it must receive additional
dollars from the sale of copper in order to maintain economic
stability and support its own efforts for participation in
hemispheric defense. The United States Government therefore, in
the light of the agreements reached with the Chilean Government
and the latter Government’s continuing discussion with the
copper companies regarding increased production and sale of
Chilean copper, considers reasonable an increase of three cents
per pound in the price of all Chilean copper sold to the United
States, and understands that the announcement of such an
increase will be arranged by the Chilean Government at such time
as it determines. It is understood that prices to third
countries will not be lower than the price for Chilean copper
sold to the United States.
In the course of conversations between the representatives of the
two governments it was brought out that a mutually satisfactory
solution of the copper problem was related to Chile’s overall
plans for continued economic development. The representatives of
Chile described Chile’s immediate program of loans now being
sought from the
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Export-Import Bank for the purpose of bringing the production of
the Huachipato steel mill up to full present capacity, and from
the International Bank for Reconstruction and Development for
the purpose of increasing the agricultural potential of the
country through irrigation, land clearance and the purchase of
agricultural machinery and increasing hydroelectric power,
providing new and increased coal production, and establishing a
wood-pulp and newsprint industry. The satisfactory execution of
the Chilean plans for economic development should be of value in
helping to bring about greater economic stability in Chile and
diversification of industry and production. Within the framework
of its world-wide commitments, the United States will continue
to manifest its interest in the economic development of Chile
and will continue to cooperate with the Government by
maintaining a friendly attitude toward requests for technical
assistance such as those received in the past for assistance in
economic planning, low cost housing, health and sanitation and
increased food supply.
While the Government of the United States feels that it is not
practicable to seek a bilateral formula which will permit
dollars obtained by Chile through the sale of copper to the
United States to maintain a constant purchasing power in the
United States, it is pointed out that the United States has
instituted price controls and that these apply to goods exported
from the United States to Chile. Under the principles agreed to
in the Fourth Meeting of Consultation of Ministers of Foreign
Affairs of American States, this Government believes there is
ample provision for continued cooperation by the two Governments
to help maintain and improve the Chilean economy and that,
through consultation, problems of mutual interest may be fully
discussed in order to arrive at a satisfactory solution.
The agreement with respect to the distribution of Chilean copper
produced by the American companies and the price of Chilean
copper to the United States as provided above may be subject to
periodic review upon the initiative of either Government.4
Washington,
April 17,
1951.
