824.6363 ST 2/188

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

No. 53

Sir: With reference to the Legation’s telegram No. 60, dated October 19, 4 p.m.,50 I have the honor to report that Mr. H. A. Metzger, special representative of the Standard Oil Company, arrived in La [Page 300] Paz on October 9th, and that after various exploratory conversations, interviews were arranged through the Foreign Office in which I presented Mr. Metzger to the Minister of Mines and Petroleum on October 18th, and to the Minister for Foreign Affairs on the following day, stating on each occasion that I was presenting Mr. Metzger to them in the hope that through friendly, informal conversations, directly undertaken between the two parties, the issues might be sufficiently clarified to make possible at the proper time an equitable solution of existing difficulties which might prove satisfactory to each of the two parties, with each of which we had a friendly relationship.

In the conversation on October 18th with the Minister of Mines and Petroleum, who is, of course, the officer of Government chiefly concerned with this matter, after the initial remarks on my part reported above, the Minister, Colonel Rivera, from whom I had previously ascertained personally that he would like to have an opportunity to talk to Mr. Metzger, entered at once into the fundamental problem in a tone which seemed both to Mr. Metzger and myself definitely friendly and encouraging.

The Minister stated at the outset that neither he personally nor—he felt sure—the Junta of Government, would be in a position to take the initiative in suggesting any given, concrete solution which might seem to imply a criticism of a previous government. He did feel very strongly, however, that it was very important to keep the door open for an eventual solution, and he went on to say that it was for that reason that he had especially welcomed an opportunity for an initial interview with Mr. Metzger. The Minister suggested in this connection the desirability of the submission of one or more plans to be presented to him by the representative of the Standard Oil Company and which would serve as a basis for friendly discussions. Colonel Rivera again emphasized at this point the necessity for a conciliatory approach on the part of the Company. He called attention to the delicacy of the problem on account of the existing state of public opinion in the country and closed with the renewed hope that the door might be kept open, and that with patience and good will on both sides an equitable solution might be eventually arrived at.

The interview on the next day with the Minister for Foreign Affairs was friendly but naturally very general in character, and did not serve to throw any further light on the probable attitude of the existing Government to possible direct negotiations. Mr. Metzger and I were, however, both impressed with the desirability of meeting Colonel Rivera’s suggestions of October 18th at least halfway, in the same friendly spirit which he had displayed, it being, of course, my understanding that having once presented Mr. Metzger to Colonel Rivera [Page 301] further conversations would naturally be carried on at the proper time between the two parties directly concerned, without any immediate necessity for direct assistance on the part of the Legation.

In these circumstances, accordingly, Mr. Metzger prepared a brief telegraphic report to his Company in which he suggested the acceptance of Colonel Rivera’s invitation and presented two alternative plans for the consideration of New York, the first involving cancellation of the decree of March 13th and an offer of sale on the part of the Company at an equitable price later to be determined between the two parties, and the second and alternative proposition involving an offer of a further investment of as much as $15,000,000 by the Company for the intensive development of the existing oil fields over a period of the next fifteen years, the details of this second plan having been already worked out by technical experts of the Company in Buenos Aires for consideration by New York if such a plan should prove to be practicable.

Merely on the basis of the conversation with Colonel Rivera reported above, one or the other of these plans seemed to have a reasonable promise of serving at least as a basis for friendly discussion. Even if the suggested plans were rejected in their initial form, the door would at least be left open, as Colonel Rivera had suggested, for such modifications or suggestions as might arise in the course of initial interviews on this subject.

When, however, Mr. Metzger consulted yesterday the local attorney of the Standard Oil Company of Bolivia, Dr. Carlos Calvo, he found that Dr. Calvo was very pessimistic as to the possibility of any direct arrangement with the existing government. Dr. Calvo had no doubt that Colonel Rivera would personally favor an equitable compromise, but he did not believe that in existing political conditions the present government would be strong enough to support Colonel Rivera in his position. Dr. Calvo also believed that the second plan, involving possible resumption of operations by the Standard Oil Company in Bolivia would never be accepted by any government here. He also emphasized the strong legal position of the Company and advised again, as he had previously done in the public press, a period of watchful waiting with an eventual appeal to the courts, in which sooner or later he believed that the Company would win a complete judicial victory. Dr. Calvo acknowledged, however, that the process which he had in mind would probably require as much as five or ten years, during which time the problem of the Standard Oil Company would continue to be a more or less disturbing factor in current local politics.

In view of the two very different approaches to the problem which have now been suggested by Colonel Rivera and by Dr. Calvo, Mr. Metzger is now giving further consideration to the report and the [Page 302] recommendations which he will be sending to New York within the course of the next few days.

Respectfully yours,

Robert G. Caldwell
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