The Minister in Bolivia (Cottrell) to the Secretary of State

No. 576

Sir: I have the honor to inform you that in various petroleum concessions granted to Bolivian citizens since the beginning of the year there has been inserted a clause, of which a copy and translation are enclosed, stating not only that the petroleum rights granted cannot be alienated without the consent of the Government, but that they cannot be alienated in any case to others than European capitalists. Concessions in which this clause appears have been about ten in number and all in the Departments of La Paz, the Beni, Cochabamba and the Territorio de Colonias. I have discussed this matter with the local representatives of the Standard Oil Company of Bolivia (Standard Oil Company of New Jersey), who inform me that they take little interest in this clause as they do not believe that petroleum in commercial quantities is to be found in these provinces.

I have taken occasion informally to bring the clause in question to the attention of the Minister of Finance and various officials directly connected with the granting of petroleum concessions. They inform me that this was designed to prevent the monopolization of the Bolivian oil fields by the United States. The Minister of Finance, Señor Victor Navajas Trigo, however, has assured me that this clause was inserted by error and that steps will be taken to have it struck from the concession contracts. …

I have also informally brought this clause to the attention of the Minister for Foreign Affairs, but have not made any forcible representations in this connection. Doctor Paz has assured me that an explanation of this clause will be furnished immediately. It would appear that the clause in question is not only a discrimination against American citizens, but in direct violation of article two of the Treaty [Page 565] of Friendship, Navigation and Commerce between the United States and Bolivia of 1862.1

I have [etc.]

Jesse S. Cottrell

Clause Inserted in Petroleum Concessions Granted to Bolivian Citizens

14. Neither shall they (the capitalists) be able to transfer, sell or mortgage in their entirety or in part the material holdings of this concession, except only to European capitalists or industrialists, who for their part, shall not be able to transfer, sell, mortgage or take a partner in the ownership, use or profit of the concession, except to European industrial elements; they being obliged in any case of misunderstanding or want of knowledge of this clause to conform to the caducity “ipso facto” of the present adjudication and to all the duties embodied therein.

  1. The treaty was signed at La Paz, May 13, 1858; ratifications were exchanged Nov. 9, 1862. See Malloy, Treaties, 1776–1909, vol. i, p. 113.