825.2542/8–651

Memorandum of Conversation, by the Officer in Charge of River Plate Affairs (Randolph)

confidential

Subject: US-Chilean Copper Agreement

Participants: Mr. Charles R. Cox, President of Kennecott Copper Company
Ambassador Fletcher Warren (OSA)
Mr. Archibald R. Randolph (OSA)

Mr. Miller was absent from his office on other official business at the time set for Mr. Cox’s appointment. Ambassador Warren received Mr. Cox. Mr. Cox opened the interview by declaring that the United States copper producers in Chile are irked at the Department for “not having kept the companies informed at all stages of the negotiations which led to the United States-Chile copper agreement”. He said that the agreement provides for a tax of three cents applicable to shipments subsequent to May 8. The agreement did not stipulate the effective date nor provide the machinery for determining the application of this tax, It was therefore wide open. The Chilean President after the signing of the agreement in a public statement said that the tax was applicable to “shipments” effected after May 8. Mr. Cox asked “Why did not the United States Government step in and say this was not correct?” His company had firm contracts concluded prior to May 8. The Chilean President’s statement because it was “uncontested by the State Department” has had the effect of committing the Chilean Government in an interpretation of the copper agreement. The practical effect of the Chilean President’s statement has been to obligate the Kennecott Copper Company to pay $700,000 representing taxes accessible against copper “shipments” after May 8 but covered by delivery contracts concluded prior to that date. It is understood that the tonnage involved covers 4500 tons in the New York free zone area destined for United States stockpile.

Ambassador Warren emphasized that ARA holds that the American copper companies were at all times kept thoroughly informed and had been consulted throughout the period of the negotiations. This point was made perfectly clear. Mr. Cox declared that he knew “nothing about the terms of the agreement until it was made”. He wants the American companies to be consulted prior to any other proposed contract. The American companies were not present when the Chileans called at the Department to discuss the present agreement, in spite of the fact that Messrs. Cox and Hoover were designated as advisers to the Chilean Commission by the Chilean Government. Mr. Cox considers that had he and Mr. Hoover been kept abreast of the negotiations [Page 1284]which terminated in the current agreement that he would not now be faced with an out-of-pocket assessment by the Chilean Government in the sum of $700,000.

Ambassador Warren reiterated that it is his belief that the American copper companies had been consulted all along the line. He said that he hoped Mr. Cox and Mr. Hoover could discuss their problems with Mr. Atwood who would be in the office tomorrow. Mr. Atwood had expended a great deal of time and devoted scrupulous attention to these problems. Mr. Cox said that at the present time Mr. Hoover is on vacation in the Northwest. As soon as Mr. Hoover returns the two of them will be pleased to call on Mr. Atwood to discuss this matter further.1

Mr. Cox said that the American companies are now prepared to increase their investments to expand production. The Kennecott Company will invest five million dollars which will provide an approximate increase in production of 2500 tons per month. The Anaconda Company has promised President Gonzalez to invest twenty million dollars which will provide an increase of 80 to 90 million pounds, a production increase of approximately 46%.

  1. Department of State files contain no evidence that Messrs. Cox and Hoover pursued this matter with Mr. Atwood.