Bob Haldeman Interview (36)

Now the government had a problem: how were they going to
tackle the copper companies in what manner and with whom? So
the president elected two people: Raul Saez, a brilliant
engineer who just passed away last year, who had worked his way
up. The highest job he had before he moved up was as the head
of Endesa, the power company. He was an excellent engineer,
capable, and a big thinker with a lot of international
experience.

Long-neglected rail yard at the deserted industrial

site of the Braden Copper Mine, ghost town of Sewell, Chile

If you remember, in 1955 they legislated and made this

auditing group, the Departamento de Cobre . It was a watchdog on

the copper companies. The man who was the vice president of

that group was Javier Lagarrigue, the second man elected by

Frei. He was a Christian Democrat and a nice fellow. I had

known him for years, and he knew the copper business pretty

well. I think he had been in that -department since 1955, and we

are now up to 1964.

Frei said to the two of them, "I want you to tackle the

companies and see what you can do."

Well, they sat down and figured out, "We've got to go first

where we can get the most out of the softest and the easiest."

They decided the order would be from the easiest to the hardest,

and the easiest was Bob Koenig. Bob had Cerro de Pasco in Peru;

he had Latin experience, and he couldn't care less. He knew

that you had to go along with the political current and tides.

We know the last is going to be Kennecott, because "they

are Peck's Bad Boy; they're the hard nuts, and we're quite sure

we're going to get nothing out of them. So we'll take number

two, Anaconda, because they have all their eggs in the Chilean

basket." They had no other income outside of Chile, an inside

board of directors, re-elected their own president and their own

directors every year, and gave themselves all a raise every

year. They were sitting in this little copper-tinsel world with

no other source of income.

They called in Mr. Koenig, and the conversations started.

After a couple or three weeks they struck a deal where they, the

Chileans, would buy in 25 percent of the company. It was based

on asset and liability the value of the company, everything

above board payments. Bob Koenig was very pleased with it and

satisfied.

Index to Haldeman Interview

Bob Haldeman Interview (35)

Cerro de Pasco Company; Andina Mine and Robert Koenig 


Haldeman: By this time there were three companies. Cerro de Pasco in 

Peru, in 1958 and 1959, decided they were going to open up the 
mine called Andina in Los Andes. It's about 80 kilometers north 
of here. The ore body was known for years, and they got the 
property claimed and bought it out. The mill is underground; 
it's way up, at about 3,500 meters but in an area that is very 
precipitous terrain, a lot of snow and snow slides and 
everything. Well, they decided they would go underground, and 
they built the mill underground. The mine is block caving like 
El Teniente; it all goes to the surface. It has been quite 
successful. 

Bob Roenig, the president of Cerro de Pasco, was just 
coming on stream with his property at that time. He was the 
only thing that Mr. Frei could show of a new investment. He 
said, "There were two companies, and now there are three- 

- Kennecott, Anaconda, and now the Cerro de Pasco Andina mine. 
I'm going to talk to all of you, and if I am elected- -which I 
know I will be--" as they all say. He said, "I hope you can 
understand me and help me out. I don't want something for 
nothing . " 

---

---

That was fine. I understood it very clearly. What he was
saying was that in the long haul, in each presidential term some
guy is going to want more and finally get control of the company
and buy it out. That was perfectly all right, because if
Allende got in, we would be taken over immediately. This might
be Gypsy Rose Lee's gimmick to keep you alive a little bit
longer.

I reported this to New York, and I also said that we had
some alternate schemes of expansion. The Codegua plan, that
enormous thing, would now have cost about $700 million. We took
a plan wherein we went in an intermediate level, at the smelter
level--5,000 feet and made a tunnel in there. From there down
we made a highway and got rid of the railroad. We abandoned the
camps of the smelter and Sewell and opened up from the smelter
down to the public; it was wide open. And of course we opened
up another thirty or forty years of ore.

The next step, whoever has it some years from now, will go
down to where we were at Codegua and do something, because it's
too costly to raise all that rock up and get it out to the
concentrator.

So it was a half a Codegua, if you want to put it that way,
which came out to about $240 million in cost. We had that plus
other things on the fire. But New York said, "No, we don't want
to go to the Codegua. To put in a billion dollars nowwe just
can't see the country that stable for that long a time to get
our money out." We were turned down once, so if they want it,
they can come back and ask for it.

We come to the elections, and Mr. Frei was elected by a
majority over 50 percent of the popular vote and he was put
into office.

Swent: He still didn't control Congress, though, did he?

Haldeman: No, he didn't control Congress. But in the way of things he had
enough splinter groups there that he was able to get major
legislation through without modifying it too much.

Index to Haldeman Interview

Bob Haldeman Interview (34)

Now we're drifting to '63 and '64. The political scene became
very intense. Mr. Frei was one of the candidates, and Allende
was another. There was another candidate, but he didn't have
any votesa Perot, you might say, as far as attracting votes.
Frei's Christian Democrat Party had built up quite a bit of
reputation at this time, and they were real good politicians out
in the boondocks . They went right to the little towns and
established offices, and they had a lot of hard workers,
how they consolidated their vote basis.

---

---

Eduardo Frei Montalva, President of Chile, 1964-70

---

Mr. Frei started to talk about Chileanization of copper, 
with a lot of political gobbledy-gook that I didn't quite 
understand. The copper companies were asking, "What is this 
fellow after?" He'd make some statements, but they were 
semi-vague and broad. They wanted to have a voice and a vote in 
their destiny in copper. Well, if you're worried, that means 
taking it away from you, whatever it is.

Just before elections, in July or August of '64, I arranged 
for a meeting through my Mr. Illanes. I said, "I want to talk 
to Mr. Frei and understand exactly what he means about this 
thing." So we went to see Mr. Claro, one of the directors up 
there [in a photo], the guy sitting down on the left, the bald 
fellow. He was married to one of [President] Gonzalez Videla's 
daughters. He was in the [political] party of Frei. 

Swent: What was his name? 

Haldeman: Jose Claro. Jose said, "I'll arrange to have Mr. Frei over at 
my house for a drink." 

Swent: The picture is interesting, because it's directors of-- 

Haldeman: That's the first board meeting of the company when we sold 
51 percent. I'll get to that later on. 


The industrial relic that was the Braden copper mine 
at the ghost town of Sewell, Chile, a World Heritage site


So I had a drink at his house and Mr. Frei was there. I 
asked him exactly what it was he wanted. He had had lunch 
before at my office, and I knew him very well. He was a 
senator, and one of the invited men, so I knew him by first 
name. That's how those things pay off. He said, "Bob, let me 
explain it to you. We have to have something to say in the 
industry," and he more or less repeated what Ibanez (my advisor) 
had told me, who was not a Christian Democrat; he was extreme 
Right. But it was the general feeling. 

Frei said, "I call it Chileanization, but what it is 
really there are two things that I would like and am going to 
ask the companies for. One is that you kick up production, one 
way or the other; I need more revenues. The second thing is 
that I want to buy some equity. I don't want to be given 
anything; I want to buy in the company, be on your board, and be 
able to give our opinions on what is happening to the industry. 
Because, after all, 70 or 80 percent of all of our foreign 
exchange comes from these companies . " 

Index to Haldeman Interview 

Bob Haldeman Interview (33)

In some of the areas, like the smelter, you had a bunch of 
bohunks who were running the converters and the reverberatory 
furnaces and the roaster building. The first time I put a 
Chilean in the converter section, the whole converter 
group- -Americans and Canadians (and these were not university 
graduates; they were practical men) got word to the 
superintendent: "You tell Haldeman, that new man in the 
management, that we're going to quit if they put the Chilean in 
the same job as we are." 

I told the superintendent to ask them when they wanted 
their plane tickets to go home; I'd have them delivered to them. 
Two of them picked it up, and I filled the jobs immediately. 
Everybody became quiet; they suddenly realized that I wasn't 
fooling around. They had a Chilean engineer, a college 
graduate, in there running the shift. He ran it much better 
than the bohunks--the practical men. 

That started the thing going in management. About this 
time we had a tremendous breakthrough, and the remaining 
expatriates realized that they had to compete with the Chileans. 
It made a very healthy atmosphere [for the Chileans] to get up 
the management ladder, because they had really worked their 
tails off. The Americans figured they were down for three 
years, and they could do almost what they wanted. No way.

---

---

So it was very helpful. Then it became the place to go for 
the Chilean engineer, and we then had requests of the best 
people around to get on the dollar payroll. We started to 
hand-pick the people out of the industry [laughs], and we picked 
up an excellent team. I'll get to that later on. 

Swent: This you could do on your own authority? The board in New York 
didn't know what was going on? 

Haldeman: I didn't consult them; I told them. 

There was myself and Mr. Grant, and then we had a manager 
of operations, manager of service departments, and manager of 
personnel. We had the equivalent job in purchasing and 
accounting. Accounting was always held with an American under 
Kennecott's American accounting system; they have the hands on 
the cash box. I don't have any problem with that; that's 
perfectly right. But the fellow they had down there went along 
with us and hired Chileans under him. 

About '63 or '64, we had an opening for a manager in the 
service departments. I didn't have anybody I could put in that 
I would be satisfied with who could compete with a Chilean 
fellow, Nelson Pereira. He had been educated at the University 
of Illinois in the United States and at one time was 110-, 220- , 
and 440-meter AAU track champion. A Chilean! 

So we made him the first Chilean gerente. Well, that was 
earth-shaking. [laughs] Then he turned around and married the 
daughter of my Mr. Casarotto, and they had four children. Their 
daughter is the girl who married a son of my friend who worked 
in the Bethlehem Steel mines. Small world, eh? 

Index to Haldeman Interview

Bob Haldeman Interview (32)

The Payroll System and the "Gold Roll"

Haldeman:

I have to tell you about the payroll. The payroll was divided
into three sections. The top jobs were called "gold roll", the
second jobs were "empleados [employees] on pesos," and the third
jobs were "obreros, or workers, on pesos". The Chileans could
get up to the "empleados on peso" roll, but the gold roll, of
the 400 maybe there were only four or five Chileans.

Why do they call it gold roll? Because when they first
started the operations in 1915, Braden Copper Company smelted
down to matte and sometimes to blister, and the only source of
people who really knew the smelting and some concentrating,
which were air cells, were in England. They wouldn't come out
for Chilean pesos, but they came out for penigues, or gold
coins. That's how you get a converter foreman or a smelter
foreman or a flotation foreman, usually Welsh or English or
Cockney--you pay them in gold coins. That became the "gold
roll".

Old RR bridge & barracks at ghost town of Sewell, Chile,
UNESCO World Heritage site


Later they stopped paying gold and paid them in United
States dollars. And, of course, for years we had a black
market, where the official rate was 30, and you could go out and
get 150. If this fellow earned 50, and that one earned 100, and
this is 150, actually he was earning  500 if you went on
the curb for the black market.

Swent: Did they ever pay in dollars in the States?
deposit your pay in the States for you?

Haldeman: Oh, yes, they deposited it in the States, and then you'd cash a
check or you could charge. For years, until 1955, I lived on
chits and never used any American currency.

As we replaced these jobs in the gold roll (they've cut out
the gold roll, because it's nationalized, and they couldn't do
that; that was an Ugly American habit), they earned dollars, and
we paid them the same salary at the job they replaced. Of
course, the Chileans who got up into that position just became
rich; they could buy a car and this and that. Work? Oh, my
gosh. Eight hours? That wasn't the shift; the wives would call
them up and tell them to come home. And you built loyalty with
a lot of pay and the fact that they were recognized as equals.

Index to Haldeman Interview

Bob Haldeman Interview (31)

Presenting a Plan for Chileanization to Frank Milliken, 
President of Kennecott 



Haldeman: So he arranged a meeting, and I went up to New York and sat down 
with Mr. Milliken-- just the two of us. "Frank, I want to tell 
you something, what I believe and what I think," and I started. 
It took an hour and a half or two hours and a couple of cups of 
coffee. 

He sat there with his lower chin out; he pouts all the 
time. When I finished, he looked at me and said, "Bob, you have 
a problem." What's that? "The trouble with you, Bob, is that 
you have been working in Chile too long. Do you realize that if 
I took this to the board of directors they would fire me?" 

"No, Mr. Milliken." 

"Well, thanks a lot. When are you going back? Why don't 
you come over for dinner tonight." 

Frank R Milliken, 1914-1991:  Milliken was chief executive officer at Kennecott Corp., which he headed for nearly two decades, when he became Copper Man of the Year. A mining engineering

graduate of Massachusetts Institute of Technology, Milliken began his career in 1935 as a

metallurgist for Peru Mining Co. in New Mexico.

---

---

Haldeman: So I came back to Santiago with my tail between my legs.
Swent: He didn't offer to sponsor it at all?

Haldeman: No. That was the end of the conversation. I came back, put it
in the file, and that was the end of it.

Meanwhile, we had better get back to the management side.
We left Mr. Grant in 1956, and now it was 1962, 1963.

Swent: Grant was still there?

Haldeman: Grant was still here as the second man. When we started this
thing out of a payroll of about 7,000 people, about 400 were
expatriates, mostly Americans. By this time we were down to
about 180 Americans, the other jobs being replaced with
Chileans.


Index to Haldeman Interview 

Bob Haldeman Interview (30)

The railroad bridge at the ghost town of Sewell, Chile

"When the prices go down, you people curtail production,
fire 30 or 40 percent of your people, and at the end of the year
hire them back again. How can we Chileans plan a budget for our
country when you make the decisions without advising us?" It's
true, and they had no other sources of income of exports.
Nitrate was a sad business; it was just barely alive. He said,
"You've got to incorporate yourself more in the Chilean scene of
business here. Why don't you think of becoming a Chilean
company. You don't have to lose your control of the company,
but offer shares in the local market. Get some shareholders,
get Chileans involved with you so that they can defend your
position. When your dividends go down or the government wants
to tax you, I don't protest. But if I had a block of shares in
the company, I'd certainly make a fuss. And have your board
here, a local board, where decisions are made, and you have
Chilean representatives on the board who have shares on the
board. They don't have to have control. They're going to get
the message over to the government that this is a business, and
you just can't treat it any other way. It has to hurt our
pockets a little bit before you get some help and defense."

Deserted barracks at the ghost town of Sewell, Chile

I thought it over, and he made an awful lot of sense. I
went back to my office with my two lawyers and sat down and told
them what I thought. They didn't disagree. They were aware of
it, but nobody wanted to really bring it out.

Swent: Were these Chilean lawyers?

Haldeman: Yes. But to think, at that time, of a Chilean lawyer to tell a
100-percent owned American company that they should incorporate
and sell shares on the market never-never land; they wouldn't
dream of that.

Swent: It doesn't sound strange now, does it?


Haldeman: Well, the world has changed.

I said to the lawyers, "Let's get to work. I want you to
educate me on all the legislation in regards to corporations,"
which I never had to bother about because we were a wholly-owned
subsidiary in the U.S. We worked three, four, five months I
guess it was. I put together a whole presentation, a whole
package of what I proposed to do--to have a Chilean board, et
cetera.

I made enough dress rehearsals that I was absolutely sure I
could present this myself, and I became very convinced of the
thing. We would get this nationalistic feeling off our backs.
And if you want to share the profits, share them. Sometimes
it's better to be a pig, not a hog. A pig just eats a little
bit, but the hog eats it all.

I talked to Michaelson, and I told him what I had in mind.
He said it sounded good, but what I had to do was convince
Mr. Milliken (President of Kennecott at that time --RS)
on the thing. He said, "Look, if you want to come
up, I'll arrange for a meeting. You come up and sell your plan
to him."

Index to Haldeman Interview 

Bob Haldeman Interview (29)

Alessandri just didn't feel he wanted to take our package 
to Congress, so in about 1962 we threw in the sponge and figured 
there was no need to talk any more about it. 


Chilean President Jorge Alessandri

Swent: You must have been terribly disappointed. 

Haldeman: Yes, very disappointed. When I had to leave the country, I had 
to leave so quickly that I didn't have time to go into the 
files. I don't know where that report was. I know somebody in 
the Copper Corporation has it in the government, but I can't get 
my hands on it. 

In 1962 the government was scrounging for money. They had 
problems with the copper price fluctuations- -every thing. Of 
course, no new investments. I became aware of the fact that now 
Mr. Allende is gaining more ground politically on the fact that 
they should take over copper. Well, we hadn't done anything for 
the government, but it wasn't because we didn't want to; we just 
couldn't. The political pressures were coming, and I could see 
the handwriting on the wall. I talked to Mr. Michaelson. I 
said, "Mike, time is limited. Like Gypsy Rose Lee, you have to 
find a gimmick to stay alive."

Haldeman: At this time Mr. Ibanez, who was a businessman, one of the chaps 
I invited to lunch from time to timethe coffee you had today 
is Nescafe; he started the Nescafe business in Chile. A 
landowner, a very charming person. He founded these Almac 
stores, a chain that you see everywhere. Today the poor fellow 
is a vegetable in bed on his farm. He must be eighty-plus. He 
called me over to his office one day and said, "Bob, I want to 
give you a little personal advice. Time is running out. As you 
know, you are a foreign company, and the political pressures are 
on. You people in copper are just too important to the nation's 
economy. When the price of copper goes down and there's too 
much inventory on the market, New York--both your companies- 
decide they're going to have to cut back production," which they 
did at one time when I was in the mine. I was the general 
superintendent in '52, and Mr. Stannard came down. Our prices 
were at rock-bottom; we were getting along with practically no 
profit at all. He said he couldn't see much future for the 
world business of copper, and they were on the borderline of 
deciding to shut down the mine, the whole property. That was at 
a tuxedo dinner at the Teniente Club. 
The El Teniente Club still stands at the ghost town of Sewell.  Almost all other

 traces of the American compound behind it were destroyed, apparently as a result

of the communist desire (they were in charge at the time) to wipe out any traces 

of the former American presence at Sewell.(click image for larger view)
 

Index to Haldeman Interview

Bob Haldeman Interview (28)

Swent: At this point were you paying discriminatory rates? 

Haldeman: Yes. We were at 65 or 70 percent, and of course they can diddle 
you all the ways they want --exchange and everything. 

You negotiate that and get an agreement with the president, 
and then the president sends it to the Congress and says, "Take 
it or leave it. Don't negotiate and start to change commas and 
this and that," which they will do a little bit, but it's a 
package deal. 

We went over and talked to the president and told him what 
we had in mind. 


Presenting the Plan to President Alessandri 


Swent:
Did you talk directly with the president? 

Haldeman:
Oh, yes. Mr. Milliken, Michaelson, and myself. Milliken didn't 
speak any Spanish, and Michaelson said, "You talk to him, Bob." 


Swent:
You weren't speaking with his representatives? 
speaking directly with the president? 

Haldeman:
We went directly to him, and he congratulated us on our bold 
plan. He was an engineer himself, and he realized it was a bold 
plan. At the time, 1956, we estimated the cost at $200 million. 
If you take inflation and put it in present value, as the 
economists do, that's about a $1.2 billion investment. 

The president appointed the minister of finance, 
Mr. Figueroa, to strike a deal with us. Well, '57 passed, '58 
passed, '59 passed. We just couldn't seem to come to an 
agreement. What really was behind it was that Mr. Alessandri 
didn't feel he wanted to take that package to the Congress. 

I refer you to a book, [Frederick B.] Pike's Chile and U.S. 
Relations, 1880-1962, Notre Dame, 1963. This tells you why the 
Chilean leading class doesn't like the United States, by names. 
It's very understandable. 

 


American "gunboat diplomacy" ?  Baltimore became the flagship of the North Atlantic Squadron on 24 May 1890, and, from 15-23 August, 

conveyed the remains of the late Captain John Ericsson from New York City to Stockholm, Sweden. After cruising in European and Mediterranean waters, 

she arrived at Valparaíso, Chile on 7 April 1891 to join the South Pacific Station. She protected American citizens during the

 Chilean revolution, landing men at Valparaíso on 28 August. The events around this became known as the Baltimore Crisis. 

(click image for larger view)  

Don't forget that Chile at that time 
was an agricultural country. All of the gentry had big farms, 
were absentee landlords, and paid miserable wages to the people. 
They left the mining to the foreigners, the gringos. Of course, 
anything that upset their apple cart, they had to tax the 
gringos. Remember President Kennedy's Alliance for Progress, 
which ended in Frei's expropriation of large farms. 

Index to Haldeman Interview

Bob Haldeman Interview (27)

So we engineered a scheme wherein we went from the valley

floor and ran a thirty-kilometer tunnel. We would go right

underneath and hook it up and bring the ore out to almost the

valley floor, with a concentrator there. Our smelter was an

antiquated thing; it's still working today, but it was a

shambles . We would put in a modern smelter that would capture

the gas, acid, and so on, at about the 3,000-foot elevation,

very close to the mill. We would walk away from all the town

sites, all paternalism. From that town of Codegua to Rancagua,

which was a large open city, we would build government -financed

housing. We would put up the money, the workers would assume a

long-term mortgage, and then they would pay the government. The

thing was a very nice way to get out of your housing problems up

there.

"Our smelter was an antiquated thing . . ." (click for larger image)

It would take you about thirteen minutes to travel by bus

from the city to the tunnel at Codegua, another thirty minutes

into the mine, five minutes up the shaft. In fifty minutes,

you're at your working face. As it was then, it took you four

hours just to get from the city down, and from the working face,

five-and-a-half or six hours. Because of the concentration of

people of up there and the limited ability to move passengers on

that narrow-gauge railroad, we calculated that every family had

an opportunity only once a month to leave the camp. We just

didn't have any more transportation facilities. When there was

a snow slide, we were locked in for three or four days until we

dug it out.

We presented that plan to Mr. Alessandri in 1959. One of

the conditions we required was that we had some guarantee, say

for a twenty-year period- -they call them an ad referendum

contract, in which you sit with the government and say, "I want

nondiscriminatory treatment on exchange rate, pay the same taxes

as the Chilean companies." In other words, don't discriminate

against me; let me get into the community here and pay the same

as everybody else pays, guaranteed for twenty years. If taxes

go up for everybody, I'll go up; if they go down, I go down.

Sewell as parts of it were being demolished

Index to Haldeman Interview 

Bob Haldeman Interview (26)

The Codegua Plan to Modernize the Mine 


Haldeman: We devised what is called the Codegua plan. Codegua is a little 
town just a few miles north of Rancagua, the rail terminal. Why 
was it there? That was a natural valley. It went up and almost 
connected with the valley where El Teniente mine was. If you're 
looking north-south, Codegua was just about west of the mine of 
this little canyon that went up there- -but never connected over. 
To get to our mine, you went from Rancagua, went south, looped 
up El Teniente canyon, and back north to the mine. 

We were mining from Sewell, going in from level Teniente 5 
and going up. It's an upside mine. All the ore that we mined 
up above, we dropped in the ore passes, which was a primary 
crushing operation in itself. It went out to the concentrator 
here, and the concentrates were shipped by an aerial tramway to 
Caletones, about twenty kilometers down. 

We knew that by mining here by this method and bringing the 
ore out to this town, where we had paternalism, high costs, and 
people with social problems, the unions had everybody captive 
there. Socialists and communists dominated this union. People 
couldn't run away; they couldn't go out and spend a weekend at 
the beach, like they can living in Rancagua. They're held 
captive. If they want to have an assembly, they would knock on 
doors, get everybody out, and vote for a strike. It was a 
wonderful method. 

We figured that maybe by the year 1980 we would be pressed 
to feed this concentrator. We would be mining just about this 
level, and there was a tremendous reserve of a billion or two 
billion tons of ore below this. Sooner or later, sometime in 
the future, somebody has to go down to a lower level. You can 
go down in another level, from 7,000 to 5,000 feet, but if you 
went to Codegua you went to 2,000 feet, and there you had mining 
beyond the year 2100 if you wanted. 

---

Index to Haldeman Interview

Bob Haldeman Interview (25)

The Guggenheim Philosophy of Increasing Capital Value 


Haldeman: Since the Guggenheims took it over, they didn't take a dividend 
out for the first twenty-six years. They plowed everything back 
to build up the property. If you take that period of time from 
the beginning until about "55 or '56--I had somebody make a 
study for me--the return on the amount of money invested in 
dollars (not in present value) was something like 6 percent a 
year average. The Guggenheims were people like that, who would 
plow back and build a business. They weren't interested too 
much in the profit; they were interested in increasing the 
capital value. It's a different philosophy. Today you have the 
present value of money, and you want to get your cash out, get 
it back in, and roll it over again. Who's right and who's 
wrong, I have no comments on. 

Swent: Just different. 

Haldeman: It's entirely different. 

Solomon Guggenheim, Presdent of Braden Copper from the time Kennecott purchased it in 1915:

---

---

Solomon Guggenheim with the model of the proposed Guggenheim Museum in 1945:

---

Index to Haldeman Interview

Bob Haldeman Interview (24)

Presidential Elections. 1958. Alessandri the Winner 

Haldeman: In 1958 we had presidential elections. At that time there was a 
great threat of Mr. Allende becoming elected. The other 
candidate was Mr. Alessandri. Of course, one of Allende 's major 
platforms was the expropriation of copper. It was painted on 
the walls all over the country. We were called every imaginable 
thing you can think of, having stolen I don't know what from the 
country, et cetera. Chile was still divided politically into 
thirds, and the Christian Democrat Party now started to bubble 
forth as a major faction in the center. 

Mr. Alessandri was the new president. At this point it 
seemed like new presidents were given the country with the 
coffers empty; they were broke. They looked for the greatest 
source of income--the copper companies, the major export. 
Sixty, seventy, eighty percent of their foreign exchange came in 
copper--two companies. 

Swent: Anaconda and Kennecott? 

Haldeman: Right. Of course, the president would call on you and ask you 
what you were going to do to for the country: if you can, 
increase production. We had been working it out in the 
engineering department since '55 or '56. I put it on a six-year 
presidential period, with a little bit for each president to 
satisfy him and increase the revenues. By the end of that term, 
they had already spent that, and you had to have something for 
the next president in the basket. We put it on the gantt chart 
and just programmed them- -something for each president. A gantt 
chart is a planning chart, where you put down critical path 
methods; it's an engineering tool. 

Mr. Milliken came down in the '56, '57, '58 period, and he 
said, "You know, we have a tremendous ore body here, but we're 
not really working it to its potential. It could generate much 
more." We were around 160,000 or 170,000 tons a year of copper. 
He said, "Why don't you put something on the board and see what 
you can devise. Let your imagination run away with you, even to 
dumping waste into the Pacific, 150 kilometers away, and see 
what alternates there are." 

Swent: Why would that help? 

Haldeman: If you expanded so big, there was no place to dump in the 

central valley, so you had to get out. Anaconda was dumping 
tailings in the ocean up north anyway. You have to get rid of 
them, and you can't put them on farm land. 

That was a think-tank arrangement. 
Swent: Bra ins terming. 

Haldeman: Yes, just to see what we could do. We had a lot of things on 
the board. Kennecott 's board of directors said, "Maybe it's the 
time we just take the step forward and make a bold move and 
present a very bold program to the government. Get our tax rate 
down and increase production, let the government have more 
revenues to keep them happy, and get some more profits out of 
the property." We worked out the figures. 

                                 Jorge Alessandri, President of Chile




Index to Haldeman Interview

Bob Haldeman Interview (23)

Using More Chilean Engineers

Swent: Were you hiring more Chilean management?

Haldeman: No. At this time we talked over this as an issue, in 1955 and

1956. I had some fifteen years in Chile, and I became very

convinced that the Chilean engineer, the professional, who was

always held to the third-rate level with the foreigners holding

the first- and second-level jobs, was just as capable, didn't

require a three-year contract, didn't have to have a wife who

had to go home every two or three years, didn't have to have his

children in special Calvert course schools, and was satisfied to

work a lifetime with the company.

Swent: And already knew Spanish.

Haldeman: Yes. So we decided that we would start to train the Chileans.

I was having a lot of problems with the foreign service people.

They were demanding more and overseas premiums, 20 percent over

salary, just to go abroad.

Sewell as a World Heritage Site & a ghost town

Swent: Were they able to get good engineering training in Chile at that

time?

Haldeman: Well, yes. Their schools were turning out good people. At that

time the steel industry, Campania Acero Pacifico, CAP, was

plowing right ahead. It was a very top-class, iron ore mining

and steel company with Chilean engineers. The Chilean power

company, Endesa, had excellent people in engineering, operation,

and planning. The Chilean oil company, ENAP, had excellent

engineers. Mr. Simian, ex-minister of mines (who was the best

man at my second marriage), was the man who was on the first

well that found oil in the south of Chile. He was a mining

engineer in petroleum.

So there were excellent people. Of course, these were in

Chilean companies , and in the American companies the Americans

had the top jobs because they didn't trust the Chileans, if you

want to put it that way. They didn't trust them with

purchasing, because they always thought they were crooked. Even

today it exists to a certain degree. Canadians come down here,

and they don't trust the Chileans to have the purchasing jobs or

in the accounting and controlling departments; they have to have

their own men. I don't mind having two men, one to make major

decisions and one to make sure he has the key to the cash

register. But as for the rest of them, Chile has plenty of

capable engineers.

So we accepted that, and started to work on it in about

1956 and 1957. As we go along here, I'll start to phase in the

results of it.

Index to Haldeman Interview

Bob Haldeman Interview (22)

Monthly Luncheons at Agustinas 1389 


Swent : What was the address? 


Haldeman: Agustinas 1389. It still has on the top part of the concrete, 
that not even Allende took away, that is in intaglio, indented 
Roman letters, "Braden Copper Company." 

I had the apartment turned into a nice big dining room, an 
office suite, another executive office, and a secretary's 
office. We had it all redone. We started the invitations for 
about sixteen people, 1:15 or 1:30 for cocktails in my office 
room, and the best catering service we could get. Then we'd go 
in and have lunch. We had oysters, lobsters, the best wine. At 
that time you were able to get good cigars. Of course the 
Chilean politician likes to live well, and I invited all the 
political parties. I even invited Mr. Allende, but he never 
accepted. When Alessandri was president, he accepted. Gonzalez 
Videla accepted, and, in fact, he invited me. 


Chilean President Jorge Alessandri

I started to know the political leaders of the country--, all 
political, economic, social, banking, et ceteraand I mixed 
them up. Mario Illanes was a wonderful diplomat; he knew how to 
handle them. Of course, the first lunches were just as dry as 
could be. They were waiting for me to ask for what I wanted, 
and nothing happened. I just asked a couple of questions, "What 
do you think about this?" and so on. Word got around that these 
were just social lunches, and they had good food, the best 
liquors you could imagine, nice cigars, there were a lot of 
enjoyable people, and Haldeman didn't want anything; he just 
wanted to know. 

It got to be that Mario had a waiting list to be invited. 
The guys would stay around until 5:30 and 6:00 and booze. The 
radicals were the biggest bon vivants of the lunches. I got to 
know people who to this day are still my friends. That's why I 

was able to open doors, 
I could even call up ministers and so on . . . 

Byron E. Grant; Modernizing the Management 


 

Haldeman: I had come to Santiago in 1955 as head of the company 
(Kennecott's Braden Copper Company--RS). About 
that time I needed a second man, and I started to interview 
people who were recommended through Kennecott, other executives 
who had Latin American experience and Spanish or something. 
After a couple of attempts at hiring people and not being 
satisfied, which took about a year or a year and a half, I came 
across Mr. Byron E. Grant. He was the man whose last experience 
at that time had been in United States Smelting and Refining in 
Utah. He came down for an interview, and we talked together. 

About this time I became very aware of the need for 
incepting modern management methods in the company. We had been 
quite archaic, and the world was slipping us by, being so far 
away from the modern world. Harvard had started up, and 
industrial engineering became the fad, and new organization with 
all of the frills. And Mr. Milliken was quite a bug on 
management . 


Kennecott President Frank R Milliken 

I talked it over with Grant, as I was very enthused about 
the idea of becoming a bit more modern and bringing ourselves up 
to date. Mr. Grant accepted the job. Of course, I was in 
Santiago, and he, being in Coya, had the day-to-day business 
with the seven or eight thousand people involved. I was in the 
political arena with the government authorities and the likes, 
trying to get our image corrected in the country. Maybe two 
times a month we'd get together and plan out what we wanted to 
do. 

We decided at that time to incept all of the new tools that 
were out on the market- -wage and salary administration, job 
evaluation, reorganization, warehouse controls, training 
programs. We started to plan on how we would send our 
supervisors, superintendents, and second-in-lines abroad to get 
some training and mix with the rest of the world that was 
spinning around above us. We were too far away. 

Index to Haldeman Interview

Bob Haldeman Interview (21)

Building Relationships with the Chilean Government 



Swent: How did you get these messages from them? 

Haldeman: When I got into Santiago and the general manager's job, I 
realized that I was still a foreigner, and I had to have a 
Chilean with some political know-how who would give me political 
advice and get me the contacts and open me the doors. 


Swent: Had Michaelson handed over anything to you? 

Haldeman: He was only there seven months. He just sprang in there and 
went out and left me. There was nobody prepared for that. 


Santiago view 1

Mario Illanes 



Swent: You had to do all your allying yourself? 

Haldeman: There was a man working in the office, a Chilean named Mario 
Illanes, who had been in the diplomatic service in the Chilean 
consulate in San Francisco and in Washington for several years. 
Turton had hired him to stay in Santiago and handle the 
politicians and so on, because Turton wouldn't work in Santiago; 
he wanted to live out in Coya in his nice house with a garden. 
So I got Mario Illanes, and I said, "Mario, I have to get to 
know the senators, representatives, ministers, the president, 
and all the businessmen in the National Manufacturing Society. 
I've got to get myself into the Chilean business and political 
whirl." 

Swent: Was there a Chilean Mining Society? 

Haldeman: Yes, but it was only mining engineers, and most of them were 
small miners. 


Santiago view 2


Swent: Your job was to get to know the Chileans, and about eight months 
of the year you were in Santiago? 

Haldeman: For about eight months of the year everybody was in Santiago. 
The other four months December, January, February, and 
March people started vacations, and Congress and the courts 
shut down. I said, "Every month, I'd like to have a lunch at 
the office." That was in the apartment they had built on the 
top floor of a five-story building in Santiago for Turton to 
live in. 

Index to Haldeman Interview

Bob Haldeman Interview (20)

Tax Problems 



Haldeman: Now we came to a problem with taxes. Our taxes were way, way 
up. In fact, our direct and indirect taxes were 82 percent. 
The exchange rate was an indirect tax, and so on. 

Swent: Did they tax your ore? 

Haldeman: No, they just taxed all of the business part of the 
thing transfer taxes, exchange rates, import duty rates, 
corporate tax rates. Nothing to do with the ore in the ground. 

Swent: No severance tax? 

Haldeman: No. Of course, the companies were really groaning. The 
government needed some help from the United States , which used 
to give money to cover up the deficit problems. So in '55 they 
legislated a new law, Number 11,828, in which they reduced the 
tax rates for increasing production with certain investments, 
which was a very modest and nominal thing, but it got Chile off 
the hook. They had also accumulated an awful lot of copper 
there when they decided they were going to sell it through the 
Chilean Central Bank and give us the proceeds. They weren't 
able to sell it, as nobody would buy it. There was a blockade 
on the thing. 

Swent: Through the Chilean Central Bank? 

Chilean Central Bank Santiago, Chile

Haldeman:

Yes. So Uncle Sam bailed them out on the basis, "I'll pick up
the copper as long as you make a better shake for the copper
companies." They did, and that law came out. That also created
what the Chileans had always wanted to have, what they called a
Departamento de Cobre, which was a fiscalizing agency, an
overseeing agency that would centralize all of its activities on
the copper companies' exports, imports, profits, and all the
rest of the stuff. It was a watchdog kind of thing. That
satisfied an awful lot of political anger, because nobody was
quite sure whether we had a lot of gold that we were sneaking
out in bars of copper that we were shipping and not declaring.
Everybody was suspicious of everybody, so they just put up a
government agency. This was a watchdog, and you reported on
everything. We had to report to them. Finally it took the heat
off of us, which was very good.

Swent:
What were your relationships with the American embassy?

Haldeman: Very good.

Swent:
Did you work with Chile through the American government?

Haldeman: Oh, no. I worked directly with the Chilean government. At that
time, really the major export industries were owned by American
interests. There were the nitrate and the copper companies,
Bethlehem Steel, and iron ore. There was a big American colony
at that time. I was the second-most important man in the mining
industry and in foreign investments in Chile. Anaconda was
number one because of their size, and we were number two. I was
seated accordingly in protocol.

Swent:
So when they wanted to put the squeeze on someone, they went
directly to you and Anaconda?

Haldeman: They would do it through Congress,
have to enforce it .. . Then the government would

Index to Haldeman Interview

Bob Haldeman Interview (19)

GENERAL MANAGER, CEO, VICE PRESIDENT, DIRECTOR OF BRADEN 

COPPER COMPANY, 1954-1967 


Haldeman: Where were we? 

Swent : 
Turton died, and Michaelson moved to Santiago. 

Haldeman: As he moved to Santiago, I became general manager in 1954. 

Swent: Did this mean that you moved down to Coya? 

Haldeman: Yes, I moved to Coya, but I was there only seven months. I had 
furnished Mr. Turton 's house, and it was beautiful. Now fate 
comes in again. In the United States, Cox and Milliken had 
hired a man to be manager of the Western Mine Divisions. I 
forget his name. They didn't realize that the man had a bottle 
problem. About the third time he got off the plane in Salt Lake 
City, Utah, and fell down the stairs, they decided that they had 
to let him go. So they called Mr. Michaelson and said, "Mike, 
you come up to the States and take over the job, and tell 
Mr. Haldeman that he has to move into Santiago. He will be the 
chief executive officer." 

Haldeman:  Here I was, thrown into politics.

Swent: This was in '54?


Haldeman: The end of '54 or the beginning of '55. I was thirty- seven
years old, the youngest general manager in the company's
history. Mr. Ibanez was president, and he was a very weak
president. He was a general of the army and had a second term.
The first term he had a military coup and took it over, but he
was voted in again for president, because all the people
remembered that bread only cost twenty centavos a loaf at that
time, and he'd probably get the food prices down. Inflation was
rampant.

Haldeman: Anyway, the general got in, and the government floated along
from '52 to '58. In the middle of that, in 1957 I became vice
president of Braden Copper. It was another title and a raise in
pay, and then I became a member of the Braden board in New York
but still staying in Chile. I received a decoration, the Orden
Al Merito Bernardo O'Higgins from the Chilean government, with
the rank of official. There was a ceremony with the minister of
mines.

Swent: That must have been a big thrill.

Haldeman: Very big thrill. It raised my posture and stature in local

society.

Index to Haldeman Interview

Bob Haldeman Interview (18)

Swent: Well, the prosperity is something to see.

Haldeman: We owe that to the general.

Swent: General Pinochet?

Haldeman: Yes. He was convinced that a market economy had to be

established here for the country to get ahead. He was smart

enough, like many great leaders, to get good young people around

him and let them go. They made a couple of mistakes, but they

didn't repeat them, and he prevailed. He didn't have to go

through Congress. He had his boys go out and canvassed the

world to find out what we had to do to be competitive in mining,

exports, quality control. Write the law, and he would sign it.

[Pinochet said] Labor- -what do we need in labor? Take all

the labor laws, which are all political laws and such a mess you

couldn't understand them. Just put them all to one side. All

of these laws were superseded by very simple legislation. You

can strike, and if you don't get a settlement by sixty days, the

employer has a right to hire new people and start all over

again. The first time it happened, nobody believed it and went

to see the minister, who said, "I'm sorry; it's the law." On

the fifty-ninth day, they signed up.

Augusto Pinochet

The employers started abusing the thing a little bit, and

the president said, "Now, come on. If you're going to abuse it,

we're going to doctor it and give the workers a better break.

What do you want?" He called in a pow-wow, a jawboning the

Central Workers' Confederation, the biggest union; the head of

the national manufacturing society; and the head of the mining

association, and private sector. They sat with the ministers of

finance, economy, and labor, and said, "You have to teach your

people properly. As the economy goes up, you--business--trickle

down. If you don't, I'm going to legislate."

So the bosses started to open up the trickle valves. We

haven't had a strike here in I don't remember when. Everything

is booming. In fact, we have trouble because there is just too

much purchasing power here. We can't get the inflation down to

a single digit just because the economy is doing too well.

Wouldn't you like to have that in the States? [laughs] But

don't shoot holes in it down here.

Index to Haldeman Interview

Bob Haldeman Interview (17)

Some Thoughts on Chilean Politics 

Haldeman: We came up now to a little bit more political pressure of 
elections, and the left wing is drumming hard to take over 
copper. The political situation in Chile has been and still is 
divided in generally three groups. One is the extreme right, 
one is the center, and one is the extreme left. Each of the 
three groups has about one-third of the votes. 

Swent: So two-thirds controls. 

Haldeman: Yes. When Alessandri was elected, he was only elected on 

one-third, and he had to sue for peace to get a majority to give 
51 percent in the Congress for votes. And Frei was elected with 
plus-50 percent of the vote, but he didn't have a majority in 
Congress; so he also had to sue for peace to govern. Ibanez was 
the same way, and Gonzalez Videla was the same way. As I told 
you yesterday at lunch, we now have two-thirds, the left and the 
center, who were always fighting, both against the right third. 
They are now together, sharing the glory of what the military 
did to reestablish a free, open-market economy here. As long as 
they can stay together, we are not going to have a problemif 
they can just keep the GNP [gross national product] at 6 percent 
a year. A man would have to have a gun at his forehead and pull 
the trigger to upset the apple cart and destroy the balance of 
this thing. It's working. The socialists, the left wing, the 
center left, and the Christian Democrats realize that this 
market economy is the best thing to increase the standard of 
living for the whole country. I hope they can get another 
generation coming through that, who will vote that way. Then I 
don't care what the parties are called, they're going to be 
voting for a good economy, and politics secondly. 

Chilean President Eduardo Frei Montalva


Swent: Which, as you were saying, is quite a change for Latin America.

Haldeman: Absolutely. And they're very proud of it. They don't want
anybody to come back and say, "Hey, you fell back, just like
Peru or Bolivia." No, "I want to be the leader." The national
pride here is going to keep that alive for quite awhile, I hope.

Swent: We might interject that it's hard to find a quiet place in this
city, with all the construction going.


Haldeman: It's wonderful. It's jobs.

Swent: I've never seen so much construction in my life. It's all day
and all night in every block.

Haldeman: Good.

Swent: Tremendous prosperity.

Haldeman: That means TV sets, a new stove for the wife, clothes for the
kids, and so on, for our workers.

Swent: The people on the street are so well dressed.

Haldeman: It's awfully hard to get a strike nowadays. People don't strike
any more; they make too much money. It's wonderful.


Index to Haldeman Interview

Bob Haldeman Interview (16)

Relations with Anaconda Copper Company

Swent: You mentioned Anaconda- -did you get together at all with the
Anaconda management to discuss problems?

Haldeman: No. We were competitors, although friendly competitors. A lot
of things Anaconda did, we didn't agree with eye-to-eye, so we
would have to let them go their own way. They played a lot more
politics than we did. And, of course, we were isolated. The
offices in Santiago, sure, they got together. You're always
listening with one ear and trying to hear the conversation on
the other side with the other ear. We were not against or have
any fights with Anaconda except in the last days, when they were
very bitter at us for our selling 51 percent of the company to
the Chileans. I'll get to that later on.

Swent:
Did you get into Santiago very much for socializing?

---

---

Haldeman: 
No, I did no socializing at all in Santiago. I vacationed in
the States with the family and went up to see my wife's mother,
my mother, who was still alive at that time, and my wife's
brothers and sister. I was a typical U.S. expatriate working
abroad. The Chilean market didn't have much in clothing or
bedsheets and so forth. So when we went up to the States for a
three-months' vacation every three years--. I shortened the
contracts to two years with two months' vacation to get the guys
out more to the States, and they would come back loaded with
things. We'd send a truck down, and all that stuff. We
imported Arrow shirts.

---

  Swent: I came down on the plane this week with some fellow who was
carrying four lampshades by hand. [laughter] So it still goes
on.

Haldeman: It still goes on. Goods imported from the U.S., people just
love to have them and show them off in their houses. That's why
I have no worry about this North American Free Trade Agreement
[NAFTA]; we'll be money ahead. The more they can buy our goods,
and they love them and let them manufacture it down here, and
they can buy it here with our label on it. The Japanese do it.
Mr. [Ross] Perot doesn't quite agree with me.

Turton passed away, and Michaelson had to go to Santiago.
Turton never did want to go. The New York board of directors
wanted to have somebody for political representation. By this
time we were having problems with our tax rates going up. The
Chilean Congress was starting to levy more burden on the copper
companies to finance the budget deficits rather than try to
develop new business atmosphere. It was just the contrary; it
discouraged new business to come in, because they were treating
the existing businesses badly. That's the way it went.

---

Index to Haldeman Interview 

Bob Haldeman Interview (15)

Self-Contained Camp 

Swent: What about health care? 


Haldeman: We had very good medical service. It was excellent. We had 
what they call "womb to tomb" philosophy in everything; 
paternalism to the nth degree. 

Swent: Company doctors, company hospital-- 

Haldeman: Everything. A hospital in every town site. We took care of all 
of the people. We had some excellent doctors, all Chilean 

Haldeman: 

. . . We imported, without any question as to cost, everything 
they needed. Many people in Santiago would call up and ask if 
they could send their kid up to Sewell to have him operated on. 
So did Anaconda, because we both had to be self-contained. The 
Chilean national health service--government socialized 
medicine--at that time was very substandard. 

So we did a very good job on that, 
and still do today. 


Swent:
You had your own schools, too? 

Haldeman:
The company always did.
We had public schools there, and for the foreigners we had the 
Calvert system. My boys went to the Calvert school in the 
mining camp, and when I moved to Santiago we put them into a 
British boys' school, the Grange. 

Swent:
Did your wife teach, or did you hire teachers? 

Haldeman:
No, the wife of the safety director, the wife of the mill 
superintendent, and the wife of this and that who had experience 
in teaching before in their lives took over the teaching jobs. 
They did a real good job. 

Swent:
Did the company pay them? 

Haldeman:
Yes, a modest, nominal sum, and gave them all the equipment they 
needed. And we gave all medical and other paternalistic 
services to the teachers that the government sent to the public 
schools, and we helped them out with supplies, because the 
government was short on that, too. There are an awful lot of 
indirect subsidies that you have to get along with. We also had 
quarters for the police force; we gave them housing. We had 
18,000 people in our town sites, and we gave them everything, 
plus all the 18,000 complaints that you can imagine. Everything 
you get for nothing is not very good. If you have to buy it 
yourself and take care of it yourself, it's not bad; even though 
it's lousy, you don't complain. [laughs] 

---

---

Swent: So now as superintendent you were getting into all of this. Haldeman: Oh, when 1 got into management, the women used to call me up and say, "The welfare department hasn't changed the light globe in my basement now in three weeks." Oh, dear. And I'm supposed to be taking care of producing copper.

Index to Haldeman Interview