825.2542/5–552:Telegram

The Ambassador in Chile (Bowers) to the Department of State

confidential

574. For Miller and Pres. Saw Pres at his request. His explanation of recent event follows:

He says public statement of Fleischmann and stories by UP and AP exposed the informal discussions in Wash re copper price resulting in fall price in Europe and inability sell Chile’s 20 percent. Party leaders along with common demagogues seized on this as an excuse attack copper agrt and the Amer Govt. Inability Chile dispose its copper at price expected together with closing copper mines strike had created a grave economic, social, and political situation four months before an election.

Strike accentuated the gen danger. The Pres resents statement from Wash that Govt here made no attempt carry out its promise of better exchange rates for US. He appreciates cos cannot absorb the increased cost due wage increase demanded and he prepared a decree which was declared illegal by the Comptroller who has practically dictatorial power. The decree cld have been put thru by being signed by all the Mins but this wld have been interpreted by demagogues as assumption dictatorial power and as making it possible for Pres override not only Comptroller but Congress. This in midst campaign involving democracy Chil wld have been perilous. He says even had decree stood, agitation wld have continued because of price copper and failure profitably [Page 680]dispose of its twenty percent in European markets. Result too wld have been violent attacks on US Govt.

He says Nieto to see Truman Tues or Wed. He requests Truman after conf with Nieto say in press conf or otherwise that he is willing open or resume negots. He put this as a direct request. He wld thereupon announce his desire negotiate. This he says wld relieve unreasonable pressure on his Govt and disarm those seeking a pretext agitate against US.

He then said with emphasis that never at any time had he thought such a thing as withholding from US all the copper we need for defense and other vital purpose.

He had been informed that our Govt has suspended all priorities for Fomento including machinery essential to needs of Endesa. He did not know that this suspension applies gen and not to Chil only and is due steel strike. Accepting the misinterpretation of his informant he is trying keep this secret here since publicity wld create an ugly reaction against US.

His manner was conciliatory, most friendly. He unquestionably is right as to critical situation financial, social, and political when enemies democratic regime are very active. Am convinced govt exerting itself keep down criticism Amer Govt.

Bowers