The Secretary of State to the Under Secretary of State (Welles)
38. Your no. 5, September 22, 2 p.m., no. 18, September 26, 8 p.m., no. 22, September 28, 6 p.m., and no. 28, September 29, 9 p.m. The Department has had great difficulty in finding any basis on which an extension of credit could be justified to public or congressional opinion here. The suggested collateral is imperfect in view of the uncertainty, under recent war conditions, as to the movement of tin, the terms of shipment and payment which will be allowed by Great Britain, the refining country, and the probable loss of identity of the tin before it reaches the United States, while the antimony, wolfram and tungsten shipments would be insufficient in amount, not all of suitable grades, and not in all cases readily marketable in the United States. It would therefore be difficult to relate a credit directly, at the present moment, to American imports of strategic materials, while it seems also that the credit is wanted in considerable measure for purposes other than direct payment for American exports to Bolivia. The Department understands that the Bolivian Central Bank still has about 700,000 pounds sterling of available reserves in gold and foreign exchange, so that the need for emergency relief in the suggested form is not absolute.
The credit would encounter an outcry in view of Bolivia’s debt record and particularly of the Government’s action with regard to the Standard Oil properties. This morning’s ‘New York Herald Tribune has a very strong editorial on the suggested credit attacking Bolivia on both the debt and the oil questions. This would undoubtedly be the attitude of public opinion and would be taken up by Congress in case governmental credit were granted to Bolivia at this time. The Congress in its present session, convened for discussion of questions of international policy, has already shown itself attentive to every international development. This is another reason why I have been so anxious to see some disposition on the part of the Bolivian Government to deal with the oil difficulty at least. Moreover, last July, in testimony before the Senate Committee on the request for increase in Export-Import Bank lending power, Mr. Pierson and Mr. Jones were asked about Bolivia and replied that they would not make loans to “a country that is confiscating our property”. This was widely quoted in the newspapers.
For all these reasons the lending authorities would be very reluctant to grant at the present moment a credit which might prejudice the smooth development of the whole plan of financial cooperation, which depends on Congressional action, and I am equally reluctant to press them to act against their judgment.[Page 321]
It is therefore the opinion of this Government that the appropriate method of dealing with this question should be through discussion with a representative of the Bolivian government, preferably the Bolivian Minister, authorized to that effect, and that such discussions be commenced promptly upon his return from Panama. It is not believed that publicity can be other than harmful. It is hoped that under these circumstances the Bolivian government might assist by clarifying the difficulties and uncertainties with which we are necessarily faced.