824.6363 St 2/302
The Minister in Bolivia (Caldwell) to the Secretary of State
[Received January 31.]
Sir: I have the honor to report that since his arrival in La Paz, Dr. Luis Fernando Guachalla, Minister of Bolivia in Washington has made no secret of the fact that he believes that an equitable solution of the pending controversy between the Bolivian Government and the Standard Oil Company is highly desirable from the point of view of Bolivian credit. On account of his close acquaintance with the whole subject and the reputation for disinterested integrity which Dr. Guachalla enjoys to a very high degree, I have reason to believe that Dr. Guachalla’s opinion on this subject has definitely strengthened the position of those members of the Government who were already personally favorable toward such a solution as Dr. Guachalla has in mind.
In recent conversations of a personal and confidential character, Dr. Guachalla told me that he had already discussed the whole subject in some detail with President Busch, with Dr. Mendoza Lopez, Minister of Finance and with Dr. Gabriel Gosálvez,24 who is generally regarded as the leading influence in the present Government. He found all three gentlemen favorable in principle to the views which he had presented, although Dr. Gosálvez indicated some doubts [Page 323] whether the Bolivian Government would be in a position at this time to take the initiative in the matter.
Dr. Gosálvez, however, suggested that Dr. Guachalla should prepare a careful memorandum reviewing the whole subject and indicating possible formulas for solution. This memorandum has now been completed and will be discussed early next week by Dr. Guachalla and an influential group of Government officials which will include President Busch, the Minister of Finance and the Minister for Foreign Affairs. When this interview has taken place Dr. Guachalla indicated that he would inform me as to the results.
As to possible formulas Dr. Guachalla told me confidentially that he was giving careful consideration to the following: a) compensation to the Company for the fair value of their property, as an act of comity by the Bolivian Government without direct reference to the fundamental juridical problem; b) a direct arrangement, probably to be effected by an exchange of identical communications with the authorized representative of the Company in La Paz, providing for the repeal or the modification of the fundamental decree of March 13, 1937,25 and also providing for compensation to the Company at an agreed price to be previously determined by direct conversations; c) or as an alternative to the two solutions suggested above a decree by the Supreme Court favorable to the Company preceded by a strictly confidential agreement on the part of the Company to sell the property in question at a price previously determined.
Dr. Guachalla asked me my personal opinion on the three general formulas outlined above. I felt I owed him an equally frank reply, and told him that I did not believe that his first formula would be likely to satisfy the legitimate desire of the Company to safeguard the fundamental principles for which they had contended from the beginning.
Similarly in my judgment the third formula was open to objection both from the point of view of the Government and the Company, because it seemed to me that it would be very difficult to prevent knowledge leaking out sooner or later as to any previous understanding precedent to a court decision. Such knowledge would destroy the moral value of the decision itself and tend to compromise the dignity of both parties.
For these reasons I told Dr. Guachalla that the second of his three plans seems to me to have the great advantages of frankness and rapidity. I went on to say that if the correspondence to be made public were friendly on both sides it seemed to me that a direct arrangement at this time, if feasible, would create a favorable impression as to the strength and the good faith of the Bolivian Government in dealing with foreign investors.
[Page 324]Although the whole conversation outlined above was obviously friendly and personal and cannot be taken to bind either one of the parties in such discussions as may be later undertaken I gained the impression that the Bolivian Government was for the first time seriously considering a direct solution of a problem which they find to be increasingly embarrassing.
It is, of course, possible that the Government itself will be unwilling to take the direct initiative which is suggested by Dr. Guachalla and that it might prefer arbitration at the friendly request of the American Government. If such a step should be contemplated it seems reasonably clear that the request in question should preferably be a matter of record before rather than after any Supreme Court decision by which the Bolivian Government might feel itself to be juridically obligated. If there should be any suggestion in this direction from Dr. Guachalla in the conversation which I expect to have with him next week, it will, of course, be reported very promptly to the Department.
Respectfully yours,
- Minister for the Interior.↩
- For translation, see Foreign Relations, 1937, vol. v, p. 277; for the Spanish text, see Bolivia, Anuario Administrativo de 1987, vol. i, p. 519.↩