824.6363 St 2/505

The President of the Standard Oil Company of New Jersey (Farish) to the Under Secretary of State (Welles)

My Dear Mr. Welles: Thank you very much for your letter of December 13 on the Bolivian matter. I had already written the enclosed letter to Mr. Bonsal, so I am enclosing a copy to bring you up to date.

I do hope you can go forward with the negotiations as suggested.

Sincerely yours,

W. S. Farish

The President of the Standard Oil Company of New Jersey (Farish) to the Acting Chief of the Division of the American Republics (Bonsal)

My Dear Mr. Bonsal: Upon my return after our conference on December 5 my associates and I immediately addressed ourselves to the subject matter of my interview with the Bolivian Minister at which you and Mr. Daniels were present.

You will recall the Bolivian Minister’s statement that while Bolivia is perfectly willing to settle our differences by arbitration he has reason to believe that the Bolivian Congress is unwilling to approve the arbitral protocol in its present form lest it permit a technical finding of some value for the property in question, such as “seven to ten million dollars,” which Bolivia would consider “impossibly high” but would nevertheless be bound by the terms of the arbitral award to pay. The Minister suggested as a way out of this difficulty some change in the arbitral protocol that would limit the amount of any award to be made, or, in the alternative, the direct negotiation of an agreed value for the seized properties by the Minister himself and representatives of the Standard Oil Company of Bolivia.

We have concluded that we cannot agree to limit the possible arbitral award in advance because to do so would invalidate the whole arbitration. As to the alternative suggestion, I told the Minister that we would study it and determine promptly whether we could agree to the direct negotiation of a fixed net value for the properties.

In conformity with the expressed desire of the State Department that we give full consideration to the viewpoint of the Bolivian Minister, [Page 522] and in response to the suggestions of the Bolivian Minister, we have now to submit the following proposal:

If the State Department is willing to attempt to negotiate a settlement of the dispute with Bolivia on a basis which secures the inclusion in the final agreement of the clauses comprising the attached memorandum, and if the Bolivian Minister will assure the State Department of his authority on behalf of Bolivia to conclude such negotiation, we will undertake through direct conversations with the Bolivian Minister to agree on a fixed sum to be paid to the State Department for the account of the Standard Oil Company of Bolivia in full settlement of its claims.

This proposal contemplates a formal agreement between the Bolivian Government and the State Department on behalf of the Standard Oil Company of Bolivia. Our part in concluding this agreement would be the negotiation with the Bolivian Minister of the amount to be paid by Bolivia in the settlement.

We are hopeful that the State Department will find it possible to undertake this settlement.

Very truly yours,

W. S. Farish

Draft by the Standard Oil Company of New Jersey

Whereas negotiations for the sale of the properties of the Standard Oil Company of Bolivia were under way in 1936;

Whereas these negotiations were suspended by virtue of the decree of March 13, 1937, purporting to cancel the Company’s concessions;

Whereas the Department of State undertook in 1939 to negotiate with the Bolivian Government a protocol of arbitration by which Bolivia was to pay to the Company the appraised value of the properties of the Standard Oil Company of Bolivia, including the value of the unexpired term, running to 1979, of the concession contract and including the subsoil rights thus purported to be abrogated;

Whereas the Bolivian Government advised the Department of State that it would prefer to make an agreed settlement and payment for the value of the properties in question to avoid the long delay which an arbitral proceeding would involve;

Whereas the Bolivian Government renounces all its claims for the alleged non-payment by the Company of back taxes and patentes;

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Whereas the Company is not averse to substituting an agreed settlement for an arbitral appraisal of the properties; and

Whereas the Department of State is desirous of a prompt settlement of the case;

It is agreed by the Government of Bolivia on the one hand, and by the Department of State, acting on behalf of the Standard Oil Company of Bolivia on the other hand,


The Government of Bolivia shall pay to the Department of State on behalf of the Standard Oil Company of Bolivia the sum of $ . . . . . . . . in full settlement of the claims of the United States and of the Standard Oil Company of Bolivia arising out of the purported cancellation on March 13, 1937, of the concession contracts of the Standard Oil Company of Bolivia.

The sum of $ . . . . . . . shall be paid as follows:

(State terms of payment).

Title shall not be deemed to have passed to the Bolivian Government until the final payment herein agreed to shall have been made.

Thereafter no issue will remain pending between the Bolivian Government and the Standard Oil Company of Bolivia and there will be no occasion on the one or the other part for any subsequent claims or counterclaims of whatsoever character, since the fulfillment of the present agreement, which has been freely entered into, shall be regarded as having terminated satisfactorily and amicably the existing differences between the Bolivian Government and the Company.