File No. 825.6374/416b
The Secretary of State to the Ambassador in Chile ( Shea)
The President has handed over to Baruch, chairman of the War Industries Board, negotiations for purchase of nitrates in Chile and for utilization of German tonnage interned in Chile. After careful consideration and in order that these negotiations might be carried on by one man located in London, the meeting place of the Nitrate Executive, Baruch has handed over all of these negotiations to Winston Churchill, British Minister of Munitions, with the understanding that before taking any important move Mr. Churchill would consult with Baruch. As you probably know Churchill has already made nitrate purchases for 1918 amounting to over 600,000 tons and has begun, through Edwards, Chilean Ambassador in London, negotiations for 1919 purchases and for use of German interned boats. It is probable that in the future practically all of these negotiations will be carried on in London through Edwards.
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It is clearly understood by Churchill and Baruch that Churchill is acting simply as the agent of the Associated Governments and that all nitrate purchases carried on are for the account of the Associated Governments. The contracts for the purchase of nitrates for American account are signed by American firms. If ships are chartered or purchased as the result of these negotiations the charters thereof shall either be signed jointly by the authorities of the United States and Great Britain, or said authorities will each charter one-half of such ships. If ships are purchased, a similar arrangement will be worked out.
Churchill and Baruch further understand that all political phases of these negotiations will be dealt with in the usual manner, that is, [Page 738] by the Foreign Office in London and by the State Department in Washington, and that negotiations respecting the position of Chile in the war … must be carried on through the medium of this Department. Churchill and Baruch both agree that the negotiations which Churchill is expected to conduct for the account of the United States and the Allies are business negotiations involving simply the purchasing of nitrates and the acquisition of boats and that if, at any time, these negotiations involve political questions of the character described, they should be carried on through the Foreign Offices of the respective Government[s].
You should make clear to the Foreign Office the character of Churchill’s agency in this matter. You should point out also, that, inasmuch as the United States and Great Britain are acting jointly in this matter, … the United States Government does not look with favor upon negotiations for the use of the German boats interned in Chile on the part of any private citizens of the United States, or, in fact, on the part of any one other than Winston Churchill, the agent approved by the United States and British Governments.
You should continue to report fully to the Department any information that you may obtain concerning the progress of these negotiations as reflected in Chile. Hand Keena a copy of this telegram.