811.20 Defense (M) Chile/610: Telegram
The Ambassador in Chile (Bowers) to the Secretary of State
[Received January 5—2:28 a.m.]
21. For Hull, Stettinius,99 Duggan1 and Bonsal.2 Reference Department’s 4, January 1, 10 p.m. The notice of reductions in prices we will pay for copper ores, concentrates, gold ores, mercury and other metals has caused a veritable explosion of dismay and wrath against the United States in which many most militantly with us for 2 years completely sympathize. The papers here for 2 or 3 days have been filled from non-official sources in America with the most alarming stories of reductions in prices and purchases of Chilean strategic materials. The timing of all this impresses me and the staff as inconceivably bad since it comes at the most crucial and critical moment involving our prestige and influence in South America and revolving around the Bolivian situation.3 Tremendous pressure is being brought by Argentina against the Government here and I am informed reliably that there is plenty of Argentine money here for propaganda and other perhaps more sinister purposes. These reports give all manner of aid and comfort to our enemies resulting in bitter comments from men who have staunchly been our friends and putting Fernández and Ríos4 on the spot at a time when it is vitally important I positively know that they be supported if possible. Our enemies are pouring in [garbled group] hitherto closed to them that our friendship lasts only as long as our necessities and that we care nothing about the economic ruin of Chile.
This morning Fernández asked to see me on these reports. He was terribly depressed and clearly alarmed. Last night while he and Ríos were working on the control decrees the Minister of Economy and Commerce5 and Senator Lira, head of the mining bank, broke in on them greatly excited over the reports which I know are having a serious effect on public opinion here and at a vitally critical juncture when Chile is supporting our position on Bolivia to the utmost. He said that because of our contract Chile is closely limited on amount of copper that she can sell to other countries and that Brazil is bringing constant pressure and if we both reduce purchases and prices he knows of no way to satisfy public opinion.
Have just had a conference with Heath,6 Butrick,7 Lamb of FEA [Page 709] and Pave Miller of Metals Reserve who are as much shocked as I am by the timing of these reports, and agree with me that politically when we have so much at stake the effect will be disastrous. A memo by Miller goes forth in next pouch. Level-headed American businessmen who understand the situation here are extremely alarmed over the probable political effect at this time. Some even predict a return to the revolutionary activity of 1931 and 1932.8 We of the Embassy do not think this exaggerated for we know that Argentina is concentrating on means to getting a military government in power here subservient to Argentine direction and hostile to the United States. Am informed that the proposed reduction in prices for the 6 months beginning in February means a net saving of but $200,000. In view of that [what] is involved here and the effect in South America of a successful revolutionary upheaval in Chile I can not imagine how that amount of money can be better spent in the war effort and as a war measure. We have too much at stake to haggle over that amount to lose any of our staunchest friends and give aid and comfort to our enemies.
I think it important that a news story be inspired from the United States to calm the public here and to impress on the press associations that even the press is not free of certain patriotic obligations in times of war. We all feel that there must be a 6 months interval to permit of readjustments necessary to prevent serious economic consequences that will react with dreadful effect against us at a time when we can least afford it. Please inform FEA.
- Edward R. Stettinius, Jr., Under Secretary of State.↩
- Laurence Duggan, Director, Office of American Republic Affairs.↩
- Philip W. Bonsal, Deputy Director, Office of American Republic Affairs.↩
- For correspondence on the recognition by the United States of the Bolivian revolutionary junta, see pp. 427 ff.↩
- Juan Antonio Ríos Morales, President of Chile.↩
- Fernando Moller.↩
- Donald R. Heath, Counselor of Embassy.↩
- Richard P. Butrick, Counselor of Embassy for Economic Affairs.↩
- See Foreign Relations, 1932, vol. v, pp. 430 ff.↩