825.2564/5–1551

Memorandum of Conversation, by Mr. Milton Barall of the Office of South American Affairs

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Subject: Increased shipping cost for Chilean nitrate

Participants: Señor Felix Nieto del Río, Chilean Ambassador
Señor Mario Rodríguez, Minister Counselor, Chilean Embassy
Mr. Doetsch, President, Chilean Nitrate Sales Corporation
Mr. Miller, Assistant Secretary, Inter-American Affairs
Mr. Barall, Chile Desk Officer

The Chileans discussed the nitrate industry in general terms as outlined in memorandum of April 25 which was sent from the Nitrate and Iodine Sales Corporation of Chile to the Chilean Nitrate Sales [Page 1282]Corporation located at 120 Broadway, New York City. The Chileans raised the problem of an increase in the cost of ocean transportation which may make it impossible for Chilean nitrate to be sold at the ceiling price in the United States market or to compete with synthetics if the ceiling price should be raised. They claim that the present conference rate of $8.50 per ton to Atlantic and Gulf ports which is applicable to 40 percent of Chilean nitrate shipments, combined with the time and rate charters which carry the remaining 60 percent at lower rates, bring the average transportation per long ton to $7.80 for 1950–51. These terms expire June 30, 1951 and, because of a current shortage of available shipping, tramp steamers, generally not under United States registry and not subject to any United States control, are increasing their freight rates to about $15.00 per ton. If no action is taken to solve this problem the effect on the Chilean economy would be ruinous and a shortage of fertilizer in the United States would probably occur before synthetic production could be increased.

Mr. Miller explained that any sharp increase in price was imposed by tramp vessels not under the control of the United States and therefore this was not a problem which could be easily solved by this government. However, the United States would examine any concrete proposal made by the Chileans to help the nitrate industry solve the problem. Mr. Doetsch stated that he thought it was possible that some arrangement could be worked out through the National Shipping Authority whereby vessels could be made available for operation under the NSA to carry Chilean nitrate at reasonable rates. He stated that he had no details on how this could be done although he understood that certain commodities were already being shipped under similar arrangements.

Mr. Miller stated that the Department would look into the situation to see if something could be done through the NSA to help the Chileans.

Action Taken:

After investigation, a letter1 from Mr. Radius2 to Admiral Cochrane3 was prepared requesting investigation of the possibility of allocating shipping space for the transportation of nitrate from Chile to the United States under arrangements similar to those now in effect whereby certain ships under the NSA transport coal and grain under “general agency” agreements.

  1. Not printed.
  2. Walter A. Radius, Deputy Director, Office of Transport and Communications Policy.
  3. Edward L. Cochrane, Chairman, Federal Maritime Board.