FOREIGN RELATIONS, 1942, VOLUME VI



  Reference Department's air mail instruction 1655, June 19, 1942.
  American companies are doing their best to restrict deliveries
and refuse orders from newcomers but are under heavy pressure and
their position is none too strong in view of the provision in the copper
tax law which obliges them to supply the local market.
  The Embassy has pointed out to the Chilean authorities that short-
age of copper is critical and any diversion to nonessential uses directly
affects our war production. Also that the entire output of Anaconda
and Braden has been purchased by our Government. However, I
am convinced Chile will not establish effective control over either
domestic consumption or exports unless we take a really strong stand.
  I therefore request authorization to inform the Chilean Govern-
ment officially that it is imperative a mutual agreement be reached
promptly fixing the quantities of copper that will be supplied for
domestic needs and for export such quantities to be based on a
study of the essential requirements of Chile, Argentina and Brazil.
Furthermore, that pending the results of such a study Anaconda and
Braden have been instructed to make no deliveries without the ap-
proval of the Embassy which will consult with the appropriate
Chilean authorities.
  With regard to the requirement study Colonel Lord 76 stated that
he would send an expert from the United States which is obviously
desirable.
  Telegraph instructions urgently.
                                                          BOWERS

811.20 Defense (M) Chile/217: Telegram
  The Secretary of State to the Ambassador in Chile (Bowers)

                               WASHINGTON, August 3, 1942-2 p. m.
  865. For Graham  from Metals Reserve. Your cable July 24,
under terms Over-all Agreement only question now open is review
of prices and we believe discussions should be confined strictly to
price changes or matters related directly thereto such as sack charges,
freights, delivery points, etc.
  While not wishing finally to close door on question of gold mines
and while requesting your further views on this subject present reac-
tion of agencies here including State Department is adverse to any
change. Incidentally feel it would be very embarrassing if further
encouragement given and then export of equipment and supplies pro-

7aAssistant Director of the Board of Economic Warfare.
   No. 1212, p. 58.



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