Office of the Historian

824.6363 ST 2/177

The Ambassador in Brazil (Caffery) to the Secretary of State

No. 54
Rio de Janeiro, September 30, 1937.
[Received October 7.]

Sir: I have the honor to refer to the Department’s strictly confidential instruction No. 9 of September 11, 1937,48 regarding the difficulties between the Bolivian Government and the Standard Oil Company of Bolivia.

In conversation yesterday with a high official of the Brazilian Foreign Office, this official stated that the Brazilian Mission which has been in Bolivia recently has completed its studies and will return very shortly to Rio de Janeiro and will submit certain recommendations to the Brazilian Government. He explained that Brazil has become increasingly concerned at Argentine economic expansion into Bolivia, which Brazil feared would bring southern Bolivia under Argentine influence in much the same way that Paraguay now is. He especially referred to the alleged Bolivian-Argentine agreement under which there will be constructed, with Argentine capital, a railway from the Argentine frontier north to Santa Cruz. The Foreign Office understands that the section from the Argentine frontier to Camiri will be administered as an Argentine railway pure and simple, while the section from Camiri to Santa Cruz will be administered by Bolivia as a Bolivian railway. In order to combat this Argentine penetration into Bolivia, the Brazilian Mission has made the following recommendations which the Foreign Office believes will be adopted by the Brazilian Government:

  • Firstly, Brazil will construct a railway from Porto Esperança to Corumbá and from Corumbá to Santa Cruz.
  • Secondly, Brazil will construct a railway from Santa Cruz to Cochabamba; and
  • Thirdly, studies will be made of the posibility of construction, either of a railway or a motor road, from Santa Cruz north to Puerto Grether.

The Foreign Office official pointed out that inasmuch as the principal oil fields are located between Yacuiba and Camiri, these fields will be more accessible to Argentina than to Brazil. However, Brazil hopes that at some future date arrangements may be made to secure at least part of the oil. It would then be possible to transport the oil by railway to Santa Cruz, Corumbá, and thence to São Paulo. He added that should the railway or motor road finally be constructed from Santa Cruz to Puerto Grether, this will also make it possible to transport petroleum to northern Brazil via the Rio Ichilo–Rio Mamore–Rio Madera and thence via the Amazon River. He explained, however, that Brazil has made absolutely no arrangement with the Bolivian Government as regards the purchase of petroleum, and this question will only be taken up in the future.

The Foreign Office official added that, under the Treaty of Petropolis of 1903,49 Brazil still owes Bolivia one million pounds sterling, and, should the agreement mentioned above be ratified by the Brazilian Government, the latter will use this sum to commence construction upon the Porto Esperança–Corumbá–Santa Cruz section, which he estimates will cost approximately one and a half million pounds sterling.

The Brazilian Commission is expected to return to Rio de Janeiro in the near future, and the Foreign Office volunteered to furnish the Embassy with further details when the Commission delivers its detailed report.

Respectfully yours,

For the Ambassador:
R. M. Scotten

Counselor of Embassy
  1. See last paragraph of instruction No. 4, September 11, to the Minister in Bolivia, p. 294.↩
  2. Dated November 17, 1903, for text, see Bolivia, Tratados Vigentes, 1825–1925 (Bolivia, 1925), vol. i, p. 150.↩