Evening star., 1932-01-24
American Money in Chile

able Chilean nitrate to compete on the
worlds market with the synthetic
product. If the price was high enough
to carry profit the government would
get half of It. Because of the treasury's
dependence upon the nitrate income
its share was guaranteed for four years.
There was prompt criticism and op-
position. There was some oratory
about 'an invasion of American capt.
tai" The Ibanez government, how
ever was fully alive to the danger that
the industry would be doomed unless q
reorganization was carried out. 1t &C
cepted the proposal, and new expert
ment in cooperation between Ameri-
can capital and foreign government
was launched.
But the critics of the Cosach were
numerous and vocal among the men
exiled under the Ibanez regime. Their
contention has been that the overhead
charges on the capital necessary to
operate under the new methods add
more to the cost of production than is
saved. Some even claim that this
would be heavy enough to offset the
export tax. Add these to the political
charges that the whole project was
merely a scheme to saddle a Guggen-
helm liability onto the Chilean Govern
ment, and 1t Is easy to see why some
Americans looked with apprehension
on the return of Alessandri
But Chile had moved on beyond
Alessandri
Chile was looking for new men, not
for those who had been tried and found
wanting. From the confusion sur
rounding IbaneZ's departure, Dr. Este
ban Montero had emerged as a man
who kept his head, who said and did
the right thing at the right time. He
seemed to have carried with him into
political life, which was entirely new to
him, something of the clear thinking
of the study where he worked as a pro-
fessor Of law.
The final returns of the election
showed approximately 10000 votes for
Montero against 100000 votes for
Alessandri. Don Arturo" may now
enjoy the tranquility he has profeSsed
to desire. And DR.. Montero will have
the opportunity to demonstrate once
more what professor in politics can or
cannot do.
His election by no means settles the
Ccsach matter. Already investigations
are under way. congressional in
vestigating committee has made an
adverse preliminary report. How much
of this Is based on science and how
much on politics it is still too early to
judge.
There is another matter which must
be included among the delicacies of our
business relations with Chile This is
the financial aspect. American banks
and investors have loaned to the
Chilean Government s3O0,00o,000.
1t may be properly assumed that
Chile was glad to get this money when
it was loaned to her, and that she
somewhat resents the necessity of pay
ing it back now that she has had the
fun of spending 1t.
But something further needs to be
said with regard to our loans to South
America in general and to Chile in
particular As a nation we had but a
limited knowledge of international
banking when we we're thrust into the
role Of "the worlds banker" after the
war. Some of our bankers appeared
to think that it was only necessary to
give any government as much money as
it could be persuaded to sign note for.
Chile and her neighbors were loaded up
with debts with little regard for the
ultimate destination or productivity of
the money.
When the crash came and they could
not pay, they at first tried to borrow
more to cover the loan services. Failing
this, they must default and then seek
solace to their own injured pride by
blaming the American bankers for CIV
ing them money when they did not
need it and refusing 1t to them when
their need was sorest.
1t would be most regrettable If these
two matters-the Cosach and the credit
problem-were not solved to the salts
faction of both sides. For in the main
the great influx of American capital
into Chile has been so handled as to
cause little friction.
Pleasant relations are particularly
noticeable in the copper mining indus
try. The great copper mines of Chile
are all in American hands. In the
north Is the enormous Chuquicamata
mine veritable mountain of copper
ore. American engineers are taking this
mountain piecemeal into the concentra-
tion plant, extracting the copper, and
setting the mountain down on the op-
poSite side Of the plant.
At the Braden mine in Central Chile,
almost on the crest of the Andes, the
copper is deposited around the crater
Of an extinct volcano. The main en-
trance to the mine Is some 5000 feet
below the summit, and the work pro-
ceeds upward through the huge circle
of ore toward the top. Some of the
extent Of the enterprise may be OBJ
tained from the fact that there are over
200 miles Of railway inside the noun
tain.
These mines provoked comment by
q British mining engineer. He knew
shat both of these deposits had been
examined by British and French ex-
perts and rejected as unworkable
And he remarked to one of the Amer
leans who was actually carrying on
! operations: "You American engineers
have perfectly fantastic ideas. The
trouble is you carry them out'
The quality of daring, or at least un-
conventionalism, on the part of the
American promoters has not only made
Chile one of the great copper produc-
| ing countries of the world after both
native and other foreign talent had
failed to do so, but it has been associ-
ated with a consideration for the rela-
tionS of foreign capital in sensitive
country
The banks and trading houses which
were the first to establish themselves in
Chile have expanded their business and
their investments. At the same time
new enterprises have entered the field
The great North American Industrial
organizations have begun to supersede
agencies by branch houses, and in some
cases have even set up local factories.
The total Of these investments runs to
about 22,500,000.
This type of american activity SUD-
plies goods or services to the ChiIeans
in competition with national or other
foreign business The "Morte- Ameri-
cano' not only enjoys no special favors
In offering his credit facilities, his con-
struction efficiency or his motor cars,
sewing machines and typewriters to the
Chilean market. but he has to meet Sc
we're and not always entirely friendly
competition from German, English,
Spanish and other rivals.
A still larger American interest In
Chile Is of even more recent develop
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