Memorandum of Conversation, by the Adviser on International Economic Affairs (Feis)
Under arrangements made by Mr. Welles,14 the Bolivian Minister called upon me to talk about two elements of the tin situation:
(1) As to the progress being made in the plans for the construction of smelters in the United States for the use of Bolivian tin ores. I told the Minister that active negotiations have been carried on between Mr. Jones, the officials of the R. F. C., and two American smelting companies. I said, however, that the terms asked by these companies up to the present did not seem satisfactory and discussions would still continue, and that Mr. Jones was giving consideration as well to the alternative of constructing a smelter. I gave the Minister a copy of the memorandum given to the Department by Mr. Jones this morning on the subject (copy attached).15
I went into some further explanation regarding the necessity of having adequate assurances as to the availability of Bolivian ores. I explained that our computations as to what outlay would be required by the American Government was based upon the present relationship between the price of Bolivian ores of various grades and the world price for refined tin (the prices that we had in mind were 41–42 cents a pound for the ores of 50–60 percent grades, and a 50 cent price for refined tin). I explained that if the relationship changed unfavorably, the Government outlay would be much more than anticipated and that was the reason for seeking assurances. I explained that the idea we had in mind was the preservation of approximately the present differential between the ore and the price of refined tin.
The Minister stated that he would consult his Government with regard to securing the desired assurances.
We talked a little about additional possibilities, either in connection with ores to be procured from the East, or from Belgian Congo, or of [Page 529] additional Bolivian ore supplies (those coming from the Patiño properties). I said that I knew that other discussions were in prospect and that the plan contemplated in the memorandum was regarded by us as a minimum plan.
(2) The Bolivian Minister stated that his Government was becoming increasingly concerned over the possibility that the movement of Bolivian ores to Great Britain would be interrupted. In fact, one or more of the Bolivian tin companies, the Aramayo, had ceased shipments.
I said that we had not given direct consideration to how to deal with this situation and that if the actual interruption occurred we should be willing at once to discuss the problem with the Bolivian Government. I told the Minister that one thought that had been in our minds was that if we succeeded in completing arrangements for the creation of a smelter, the advance buying of ore might be carried out.
On talking the matter over with the Minister, I said that I would make a suggestion to him on my own responsibility (and asked him please to make clear to his Government, if he consulted them on this point, that it rested only on my responsibility). This suggestion was that he should ask his Government whether it wanted to make a direct sales offer to the Metals Reserve Company, namely, for the delivery of Bolivian ore over, say, the next six months. Such an offer would specify quantities, grades and prices. I said that if the Bolivian Government made such an offer I believed the Department would be entirely agreeable to putting it before the Metals Reserve Company and Mr. Jones for consideration. The Minister said that he had had some such idea in mind in calling upon us. He raised the question as to whether the offer should be a conditional one (that is, conditional upon their inability to dispose of their ore in customary channels) or unconditional one. I said that I thought that was for the Bolivian Government to decide.