824.512/66

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

No. 525

Sir: I have the honor to refer to the Department’s telegram No. 43 of October 19, 6 p.m., in reply to my telegrams 93 of October 5, 12 noon, [Page 4] and 101 of October 13, 11 a.m., all in reference to the extraordinary taxes for military purposes created by Law of September 30, 1932, and their applicability to alien residents of Bolivia in contravention of existing treaties.

The matter has now been brought to my attention by the attorney of the Patiño Mines and Enterprises, Inc., an American corporation with large interests in Bolivia, who inquires whether the United States Government intends to protest against the application of these extraordinary taxes to American corporations doing business in Bolivia. I have informed him that while our treaty with Bolivia is not specific in respect of the incidence of such extraordinary taxation on American firms and individuals domiciled in Bolivia, nor even as to most favored nation treatment, I was hopeful that if other nationals are exempted under their respective treaties, American citizens would also be exempt, and that verbal representations had been made by the Legation to the Bolivian Government along those lines.

The capital investment of this corporation in the mining industry proper is not affected, since the Patiño interests, as a member of the Association of Miners, have already agreed to an extraordinary tax of Bs. 100 per ton of tin exported, which takes the place of the ⅕ of 1% capital tax provided for by the Law of September 30, to be effective for ten years.

What is affected is the Corporation’s investment of approximately Bs. 13,000,000 in the Machacamarca-Uncia Railway, which it owns and operates. The amount of tax involved would be Bs. 260,000, payable at the rate of Bs. 26,000 per annum for ten years.

Up to this time, I have merely expressed to the Bolivian Government verbally my Government’s expectation that American corporations and individuals would be exempt under Article 3 of the Treaty of 1858. In view of the concrete case that has now arisen, I would appreciate the Department’s instructions as to what representations I may make to the Bolivian Government in the premises.

Although I can find no specific guarantee of most favored nation treatment in respect of taxation in our Treaty, I have been waiting the result of the negotiations that have been undertaken by the British and German Ministers here for the protection of their nationals, and have the honor to transmit herewith a copy of the note addressed to the Foreign Office by the British Minister and the Bolivian Government’s reply thereto. Enclosures 1 and 2.5 The British Minister has informed his Government of the Bolivian Government’s attitude, and has requested further instructions.

[Page 5]

In view of this attitude, I would appreciate knowing whether Bolivian citizens resident in the United States during the Great War were subject to extraordinary taxes for military purposes.

The matter of the Patiño Mines is of some urgency, since a demand has already been made for the tax of ⅕ of 1% on the capital invested in the Machacamarca-Uncia Railway, but I shall take no action until definite instructions have been received from the Department.

Respectfully yours,

Edward F. Feely
  1. Not printed.