824.6363 St2/238

Memorandum by the Chief of the Division of the American Republics (Duggan) to the Under Secretary of State (Welles)

Mr. Welles: When the Bolivian Minister2 was here this morning on another matter I inquired whether he had yet received any indication from his Government as to its attitude with regard to an international arbitration of the difficulty with the Standard Oil Company.

The Minister stated that he had received nothing official. Three days ago he received a letter from the Minister for Foreign Affairs in which the Minister stated his personal agreement with Mr. Guachalla’s point of view, namely, that it would be to the national interests of Bolivia to settle the Standard Oil difficulty as promptly as possible and that the best way of doing this would be through some international arbitration. Mr. Diez de Medina stated that he had mentioned the matter to the President, as well as to certain Ministers of the cabinet, but not the Minister of Mines. Mr. Diez de Medina did not state, however, the reaction of these officials.

The Minister then went on to tell me that following a rather frank discussion which he and I had about two weeks ago of a purely personal character, he had written further in introducing the idea of an international arbitration and had also written in extenso to the Minister of Foreign Affairs detailing reasons why it was desirable for Bolivia to take steps to clear up its difficulty with the Standard Oil Company. In this letter Mr. Guachalla requested the Minister for Foreign Affairs please to read the letter to the President and to other members of the cabinet. Mr. Guachalla observed that this letter had crossed with the letter he had received from Mr. Diez de Medina in which the latter indicated his personal agreement with the plan for an international arbitration.

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In this connection the attached letter from Mr, Holman3 of the Standard Oil Company points out that the period within which under the statute of limitations as amended the Company may file suit expires on March 22. It will be recalled that by a decree of October 22, 1937, the period for filing suit under the statute of limitations of the Civil Code was reduced from thirty years to ninety days. This decree later was amended to provide a sixty day extension. Mr. Holman states the Company’s belief that it would be preferable if the filing of suit could be postponed until after the Bolivian Government has considered a [and?] come to some decision with regard to the proposal for an international arbitration.

From a procedural point of view it would of course be preferable that the Government come to some conclusion concerning international arbitration before the Company files suit, because once the Company files suit the Government might then state that since the matter is in the courts it cannot take any action pending decision of the courts.

The desirability is suggested for your consideration of a personal and informal talk with the Bolivian Minister, who I believe is doing all that he can to bring about a settlement of this dispute by means of an international arbitration. The Minister, I know, is in favor of keeping court action in the background and therefore might not be averse to sending a telegram to his Government suggesting that a further time be given the Company for filing its suit, during which period the Government itself would, it is hoped, come to some conclusion with regard to the proposal for an international arbitration.

  1. Luis Fernando Guachalla.
  2. Not attached to file copy of this document.