The Under Secretary of State ( Welles ) to the Secretary of State
[Received September 27—3:30 a.m.]
18. Our 5, September 22, Department’s 16, September 25.
1. The Bolivian delegation has given us an extensive memorandum21 containing a full account of the development of their present [Page 317] exchange position and difficulties. We are sending this to Washington by airmail today.
The essence of the present difficulty seems to be as follows: The value of Bolivian currency has been linked to the pound. This fact has created difficulties in two directions: First, approximately 60% of Bolivian exports go in the first instance to Great Britain and are paid for in pounds and approximately 20% to Germany. This means fewer dollars. Second, the decline in the exchange value of Bolivian currency increases the difficulty of paying for necessary imports from the United States, Argentina, Chile and Peru, whose currencies have not declined in value. These imports are almost entirely necessities.
Furthermore, the serious disturbance both of markets and of shipping is interfering seriously with Bolivian exports especially to England.
This combination of circumstances—many of which may be entirely transitory—create an acute exchange situation for Bolivia. Immediate relief is required.
I therefore urge that the Board of Trustees of the Export-Import Bank immediately authorize an advance of say 2 millions of dollars to be made to the Bolivian Government conditional upon the satisfactory agreement upon details to be worked out by the Executive Committee. If this is done the Bolivian Foreign Minister and myself can then sign here in Panama an exchange of letters containing an agreement for this advance in general terms specifying merely its approximate amount, its approximate period and its interest, approximate interest rate which suggest should be no more than 3%. Upon the return of Minister Guachalla to Washington details could be settled and the necessary formal papers signed.
2. With regard to the possibility of Bolivian sales to the American Government for reserve stock, as soon as the terms of the advertisement for bids are published will you kindly give copies to the Bolivian Legation in Washington. It would also be helpful, if it is practicable, if you would cable to the American Legation in La Paz the main features of the advertisement as regards the procedure for placing bids and instruct the Legation to bring it to the attention of the Minister of Mines.
I recommend that the arrangement outlined in numbered paragraph 1 for an advance to the Bolivian Government be worked out without waiting to ascertain whether or not the Bolivian Government secures any of the orders for tin for reserve stock purposes.
3. For your information. The delegation states that it has been informed that the Banco Minero expects to be in a position to assure the export of $100,000 monthly of antimony and wolfram.
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