Foreign Relations of the United States, 1952–1954, The American Republics, Volume IV

Eisenhower Library, Eisenhower papers, Whitman file

Summary Memorandum Prepared in the Office of Defense Mobilization¹

secret

Washington, March 11, 1954.

Summary Memorandum on Chilean Copper Proposal

On August 26, 1953, the Defense Mobilization Board agreed that (1) it would be in the national security interest to purchase up to 100,000 short tons of Chilean copper at the market price prevailing at time of delivery; (2) any such purchase should be accompanied by an agreement on the part of Chile not to sell copper to the Soviet Bloc; and (3) as a condition to the purchase, the Chilean Government should agree to eliminate present economic practices which jeopardize American investments in that country and render it an unstable source of U.S. copper supply. On the basis of the preceding conditions, negotiations were thereupon begun with the Chilean Government. The Defense Mobilization Board again discussed the problem at its meeting Wednesday, March 10,² when it reviewed a letter from the Department of State to the Director of the Office of Defense Mobilization.³ This letter outlined the status of negotiations as of March 1, and recommended that the proposed purchase be completed at once at the prevailing market price of 30¢ per pound delivered in the United States.

With respect to point (1) above, it should be noted that about 76,000 tons of Chilean copper are now in storage in the United States. Moreover, there are now in storage in Chile about 103,000 tons. Since 24,000 tons of this supply could be sold at once to the U.S. Government with freight to the U.S. allowed, it would be feasible to get immediate delivery of the total 100,000 tons “at the market price prevailing at time of delivery,” namely, 30¢.

With respect to point (2) above, it was stated by the Department of State representative that the executive branch of the Chilean Government had now agreed to this condition, and that as soon as written confirmation of this is received, the Department of State will consider that this condition has been met.

With respect to point (3) above, it can be noted that the legislation in question has been introduced, that it has received the unanimous endorsement of the Chilean President and his Cabinet, and that the Chilean Senate has recommended this type of legislation. Moreover, the President has agreed to veto any undesirable amendments that may be introduced by the Chilean Congress. Nevertheless, no assurance can be given that the described legislation will be passed. It is held that any suggestion that the U.S. is using its economic power to dictate Chilean legislation may cause the failure of the Bill to pass, and that the only way to demonstrate convincingly that the Chilean Congress is free to make its own decision is to sign a purchase agreement at once, in advance of the passage of the legislation.

The question to be decided is whether we should contract to purchase the copper under this condition, assuming that written confirmation has been received of the agreement not to sell copper to the Soviet Bloc.

1. The drafter of this memorandum, presumably prepared for President Eisenhower, has not been identified.
2. In a letter dated Mar. 12, 1954, Mr. Barall informed Counselor of Embassy Courand at Santiago that at its meeting on Mar. 10, the ODM decided to refer the question of purchasing Chilean copper to the Cabinet (825.2542/3–1254).
3. Supra.