284. Memorandum of Telephone Conversation Between President Johnson and the Under Secretary of State for Economic Affairs (Mann)1

The President said he wanted to talk about the Chilean copper thing. He said he guessed that Mr. Mann had seen all the traffic including Dungan’s cable2 saying the copper companies want to roll back. Mr. Mann said he had not seen the cable. The President asked Mr. Mann to get all of the communications and to read them and then they could see what could be worked out. The President said that McNamara had talked with the President of Anaconda3 and they don’t want a higher price. They say that the trouble is that Frei only has 30% of the Senate and they forced him to raise the price to 38 and will force him to go to 40. The President said that the danger was that they would go up further.

The President said he had been advised to send a person down to convince Frei that he should roll the price back to 36¢. Ralph Dungan says that the copper companies ought to roll back, not Chile. The President said he thought we had to find some way to say we will both roll back. He thought we should explain that if our economy goes bad we will not be able to give any loans. Ask them to keep the price down and keep it out of the papers. Tell them we have not decided on an $80 million loan—probably will give them 60, but we will talk about that later.

The President said he had been informed that Mr. Mann was not the one to go down to Chile for this job. Mr. Mann said that was correct—he was too visible. The President said they were suggesting Clifford, but he did not like to use these private lawyers who had clients of their own.

Mr. Mann asked about Bob Anderson and the President said he thought he was a little too much Johnson. Mr. Mann said he thought he was a very convincing talker and that he can make a very good case. Mr. Mann said he thought perhaps we should send someone down outside of government.

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Mr. Mann said that Mr. Bundy was suggesting a young fellow named Gensberg (?)4 on his staff. Mr. Mann said he did not know him. The President said he was more of a price man in this country and he did not think he was the one to do it.

Mr. Mann said we needed a tough guy and that the best negotiator in this building was Tony Solomon. He negotiated the agreements with Brazil and the first one with Chile and Mr. Mann was convinced that he would do the job. He added that Mr. Solomon has no political image—he is just a very good economist. Mr. Mann said if the President wished to choose someone to go, Solomon could accompany that person. This would eliminate the need for the person chosen by the President to speak Spanish.

The President asked if Berle would be any good. Mr. Mann said he might. He said he knew the Latins and he has a liberal image.

Mr. Mann said he thought the trick would be to send somebody down to say the first objective is to get a roll back to 36¢. Mr. Mann said he would have to say that the American companies would go along with it. Even if this failed, at least we should get a commitment not to go any higher. Mr. Mann said he would hope that both things could be accomplished. He said he thought the substitution argument 36 to 38¢ makes aluminum competitive with copper, and the argument that Chile has a program to increase its production from 600,000 to 1 million tons by 1970, should show that the Chilean Government has every reason to keep the price down so that they do not lose the market. They should go into volume rather than price. Mr. Mann said it might also help if we could offer them something on our tariff. He said he did not know what the US attitude would be but we do produce 90% of our own consumption.

Mr. Mann said another arrangement would be the stockpile. And another would be the AID package.

Mr. Mann said the one thing we should not do is offer them any kind of political support. He said that Frei was o.k. but that his party has leftwingers and the opposition is leftwing and they may shift any day on Chicom representation in the UN or they could take all of Latin America away from support of keeping them out. They could also shift on the Dominican Republic.

The President asked if they had any communists in the government. Mr. Mann said no, but they are in the opposition. He said that in the party they have socialists who are even left of the communists—who [Page 623]are for violent political action. He said that he felt, with these pressures, we could not depend on Frei’s political moves. The President asked what political support Mr. Mann was talking about and Mr. Mann said that he was referring to the paragraph in the cable that went out last night from the W.H.5 The President asked who sent it and whether Mr. Mann had seen it. Mr. Mann explained that Mr. Bundy had tried to reach him but he was at the Japanese [Embassy?] and they could not get to him.

Mr. Mann said that the President should not forget that Frei has a lot of leverage on us because of the US copper industry and the deal just through Congress. He said we should not push him too far.

Mr. Mann said the second thing was the cartel with Zambia and Congo. He said Zambia will be under great pressures to impose economic pressures against Southern Rhodesia6 and if they do then there will be the problem of getting Zambian copper out. He said this copper goes through Rhodesia and the Rhodesians could retaliate. One-sixth of the world’s copper is produced in Zambia and if this were taken off the market Mr. Mann did not think we could hold the price line. Mr. Mann said he thought we should get the UK to help us in urging the Zambians not to get into blows and counter-blows with the Rhodesians.

The President said that he thought Mr. Mann should try to pull this together. The President said that he is advised that an emissary should go to Chile right now. McNamara thinks that the price will go to 40¢.

The President said he would like to have a memo from Mr. Mann on the following items.

Points:

1.
How do we increase our own production and the production of friendly countries—work around the clock, do it any way we can.
2.
Find out what procurement the government has—not only Defense Department but each and every agency.
3.
Forego, substitute, postpone or minimize the use of copper.
4.
See what the principal civilian requirements are such as power companies, what suggestions they have on how they could minimize consumption—civilian as well as government.
5.
Try to evolve some plan that could be sold to any leftist that would show it would be to his gain rather than loss. [Page 624]
a)
Frei’s expansion program
b)
Substitution argument
c)
Stock pile
d)
Tariff
e)
AID Package

Mr. Mann asked the President who was in touch with the companies and the President said McNamara and Califano.

[Omitted here is discussion of possible candidates for the mission to Chile.]

  1. Source: Johnson Library, Papers of Thomas C. Mann, Telephone Conversations with LBJ, May 2, 1965–June 2, 1965. No classification marking. Drafted by Patricia A. Saunders. Mann was in Washington; the President was in Texas. According to the President’s Daily Diary, Johnson placed the call. (Ibid.)
  2. Document 283.
  3. Charles Jay Parkinson.
  4. Reference is apparently to Edmund E. Getzin, chief of the Division of Industrial and Strategic Materials Division, Office of International Commodities, Bureau of Economic Affairs, Department of State.
  5. Document 282.
  6. On November 11 Prime Minister Ian D. Smith unilaterally declared Rhodesia’s independence, prompting Zambia and Great Britain to press for economic sanctions.