Foreign Relations of the United States, 1958–1960, Volume V, Microfiche Supplement, American Republics

CH–38. Memorandum of Conversation, by the Director of the Office of West Coast Affairs, Bureau of Inter-American Affairs (Coerr)¹

Washington, June 16, 1960

SUBJECT

• United States Assistance to Chile.

PARTICIPANTS

• President Eisenhower
• Mr. Robert Merriam, The White House
• Ambassador Muller of Chile
• Mr. Jorge Schneider, Special Representative, Chilean Government
• Mr. Wymberley Coerr, Department of State

Responding to the President’s inquiry as to the present situation in Chile’s disaster area, the Ambassador described the plight of Valdivia. He said it lay along the San Pedro River which normally drained Lake Riñihue but had been blocked by an accidental dam that could burst at any moment. He described the Chilean Army’s efforts to build temporary dams above the lake while simultaneously trying to dig channels through the San Pedro River blockage so as to drain the lake’s excess water without flooding Valdivia. In response to the President’s question, the Ambassador confirmed that the United States Government has sent an engineer who is an expert in flood control to assist the Chilean Army in this job.

The Ambassador went on to express his hearty thanks for the wonderfully prompt and efficient American aid that he said had had a terrific impact on the Chilean people. He read aloud resolutions of appreciation that had just been passed by the Chilean House of Deputies and Senate. Observing that these resolutions had been passed unanimously, he consented that Chile was a very democratic country, that such unanimity was exceedingly rare and therefore evidenced widespread gratitude.

Thanking the Ambassador for having read these resolutions, the President declared he was glad to know the United States’ aid had been useful. He said that, although he himself was wary of the danger of over-publicizing United States aid, some private citizens had been talking to him urging that something spectacular be done to dramatize United States sympathy for Chile. For example, it had been suggested to him that Chile had a tremendous need for doctors and nurses which the United States might supply and that the United States might also send Naval ships whose generating plants could supply power to coastal towns whose plants had had been damaged. The Ambassador did not indicate any need for the ships’ power plants, and said that, with the availability of the two American field hospitals for the immediate emergency, Chile had no serious shortage of doctors and nurses.

The President said he had been thinking that it might be useful for the two Governments to form a group to study the problem of Chilean reconstruction. He said that possibly Ambassador Donnelly or Dr. Milton Eisenhower might work with two or three Chilean representatives. The Ambassador did not respond to this suggestion when made, but after leaving the White House told an officer of the Department he would be very much in favor of implementing the President’s suggestion. He said he would recommend that his Government, after the President had returned from his Far Eastern Trip,² ask the President to send a personal representative to Chile to assist in studying the reconstruction problem.

In response to the President’s question the Ambassador said his Government estimated the total reconstruction costs at about $500 million, equivalent to more than 50% of the Government’s budget. He said that of Chile’s 7.5 million population 2.5 million live in the affiliated area. Eighty thousand houses had been badly damaged, and 65,000 had been completely destroyed and could not be replaced for less than $210 million. He said his Government also faced a huge problem in the repair of roads, schools, sewage facilities, etc.

The Ambassador pointed out that unfortunately the natural disaster had struck just as the Chilean Government was on the point of success in its efforts to stabilize its currency and its cost of living. The rate of exchange had held steady for a year and four months and the cost of living in the last eight months had risen only 2-1/2% as contrasted with 33% in the previous year. As a result of the disaster Chile would now have to devote to reconstruction the resources it had hoped to devote to development. He emphasized his Government was determined to achieve reconstruction while maintaining stability.

Voicing his hearty approval of this objective, the President commented that the Chilean Government would have to make a great effort and might almost have to regiment all available people and resources. He said he thought the influx of too much outside capital into the situation would seriously threaten to produce inflation, and a great effort would obviously be required of the Chilean people. The Ambassador replied that Chileans were used to hardship and to facing their own troubles. He added: “We are not a banana republic”.

The President said he had been pleased to read recently that two of the large United States copper companies, Anaconda and Kennecott, had been completing plans for heavy new investments in Chile. The Ambassador said that this was a fine development that had been underway for some time.

In response to the President’s specific question the Ambassador declared: “The emergency is over; now it is a question of rebuilding”. He said specifically that his Government needed barges for logistical work along the coast in the damaged area. He added, however, that in order to determine the best type of ship for the purpose it would be helpful if the United States Navy could send to Chile an officer trained in amphibious operations who could analyze the problem in terms of his knowledge of available ships. The President said this could easily be done.

Mr. Merriam mentioned to the President that Mr. Jorge Schneider had been sent to Washington by the Chilean Government specifically to assist in initiating plans for the basic work of economic reconstruction. The President commented that now the greatest need is for sound planning.³

1. Source: Eisenhower Library, Project Clean Up, “Chile.” Official Use Only.
2. Reference is to the President’s trip to the Philippines, China, and Korea in June 1960, for Documentation, see Foreign Relations, 1958–1960, vol. XVIII, Japan; Korea, and Foreign Relations, 1958–1960, vol. XIX, China.
3. In telegram 971 to Santiago, June 23, 1960, the Department informed the Embassy that the White House had called President Eisenhower in Honolulu the contents of a draft press release announcing a proposed grant of $20 million and the loan of 12 landing craft to the Chilean Government for its long-term disaster rehabilitation program, subject the availability of funds under the Mutual Security Appropriation Act for FY 1961. The telegram also stated that the Department would apprise the Embassy about the date and timing of the release at the earliest possible time. (725–5–MSP/6–2360)