824.6363 St 2/434

Memorandum of Conversation, by Mr. Andrew E. Donovan of the Division of the American Republics

Participants: The Bolivian Minister;2
Mr. Duggan;3
Mr. Donovan.

Señor Guachalla called without previous appointment, on Mr. Duggan on January 17. After discussing another matter which the Minister had brought up, Mr. Duggan mentioned his regret that the Minister’s last proposals with respect to the Standard Oil question seemed to impose additional difficulties to reaching a final agreement on the proposed formula of settlement. Mr. Duggan said that, while no answer had been received from the Company regarding the Minister’s suggested inclusion in the scope of the questions to be submitted to the Board of the Government’s numerous counter claims against the Company for non-fulfilment of its contract obligations, we were aware that the idea did not find ready acceptance and that in thus broadening the questions to be considered the Company felt that it also should include any additional claims it might have against the [Page 514] Bolivian Government. Thus the scope of the whole matter would be greatly enlarged and would lead to further difficulties.

The Minister then said that he had recently heard from Ostria Gutiérrez, the Bolivian Foreign Minister, and had told Mr. Welles4 that the Bolivian Government’s position, while wishing to obtain a settlement, was based on three considerations: (1) There could be no question of the return of the properties; (2) The validity of the Government’s action could not be contested as the Supreme Court had already decided that part of the matter and (3) that the Bolivian Government could not agree to formal international arbitration.

The Minister then referred to the draft agreement and said that an idea had just come to him which might get around the present difficulty. He suggested that it would be possible to include in the formal agreement only the questions which have now been agreed to, namely: (1) What was the value of the Company’s rights and interests at the time of the cancellation and (2) what taxes, if any, did the Company owe the Government. In addition, the formal agreement would be accompanied by two “notas reversales” or statements giving, for the consideration of the Board, clarification of the understanding of each of the parties of the meaning and scope of the questions to be decided and the claims of each party against the other. These statements would therefore not be subject to prior agreement and would simply accompany the signed formal protocol therefor being made public at the same time and thus possibly allaying public opinion in Bolivia.

Mr. Duggan said that the idea seemed to offer some promise and said that he would like to consider it further and that perhaps the Minister could also consider it at greater length.

  1. Luis Fernando Guachalla.
  2. Laurence Duggan, Chief of the Division of the American Republics.
  3. Sumner Welles, Under Secretary of State.