CHILE: Copper Slide

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With new industries abuilding and others blueprinted, Chile was like a specialty shop expanding to department-store size. Then the price of copper, Chile's specialty, started to slip. Last week, when it hit 16¢ a Ib. (down from 23½¢ a lb. since March 29), Chileans began wondering just how long they would be in business.

Anaconda, largest of the two U.S. companies that together own 96% of Chile's mines, announced a 30% cutback, laid off 2,615 workers. Higher-cost Chilean-owned mines had already shut down or soon would. That would add several thousand more to the unemployment rolls. Meanwhile, in the U.S., the price drop brought cries from copper-state Congressmen for revival of the prewar tariff on U.S. copper imports. If it were reimposed, Chile would be shut from any big share of the U.S. market.

Life's Blood. Every 1¢ drop in the copper market cost the Chilean government $5,000,000 in royalties. By last week the price decline had already brought a $32.5 million-loss in this year's foreign exchange budget. The production cut also meant a fall of 1.8 billion pesos in the taxes that Chile collects on mine operations. "If this situation had presented itself in 1952 instead of 1949," sighed President Gabriel Gonzalez Videla, "it would have been of no importance." But at a time when Chile's industrial development program (TIME, May 30) was still far from paying its own way, it was as important as life's blood.

In their first panicky reaction, Chileans tore into the U.S. tariff talk. Santiago's La Hora protested that it "counters principles [of freer world trade] backed by the U.S. in Bretton Woods, Havana, and Bogotá." Government leaders understood that it was only one part of their problem.

Long-distance Call. González Videla put in a call to Manhattan, where Economics Minister Alberto Baltra, after attending a U.N. economic conference in Havana, was waiting to ship out for home. Acting on instructions, Baltra this week asked President Harry Truman to do what he could to scotch revival of the copper tariff. He also asked for a U.S. loan of $45 million for foreign exchange.

To make up for the drop in peso income, Gonzalez Videla was ready to ask Chile's Congress for permission to issue new paper money. With part of the money, backed by government-supported bonds, idle copper hands would be employed on public works projects.

If these steps did not go far enough, Chile planned to create a state-controlled Corporation del Cobre which would control the production, price and distribution of all Chilean copper. In effect, U.S. companies would lose their firm hold over the world's biggest source of the metal outside U.S. borders. Chile was reluctant to take the move. But its determination to stand on its own economic feet, whether well-shod by U.S. dollars or not, was too strong to permit an alternative.