811.6354/636: Telegram

The Acting Secretary of State to the Secretary of State

37. Your 17, July 26. The present status of discussion is brought out by the following memorandum given to the Bolivian Minister on Thursday, July 25, with the approval of the Federal Loan Administrator.

“Discussions are being carried on between the Federal Loan Administrator and representatives of American enterprises for carrying out arrangements to smelt Bolivian tin ores in the United States. Plans for constructing a smelting plant or plants that shall have a minimum capacity of at least 1,000 tons per month, are contemplated.

The question arises at each discussion that successful and sustained operation will be entirely dependent upon securing continued supplies of Bolivian ores of proper grades, and at prices to enable the smelters to operate successfully.

The Federal Loan Administrator, therefore, wishes to know if such a plant or plants are constructed, will they be assured that Bolivian ores of proper grades will be available and at a reasonable price over a period of 20 to 25 years.

In order that the enterprise may operate successfully, the price for Bolivian concentrates should bear approximately the same relation to the current world price of refined tin as currently exists.

Your assurance on these points is desirable in order that the Federal Loan Administrator may be in a position to arrange for the construction of a smelter.”

The American Smelting and Refining Company and the American Metals Company have submitted proposals to the Federal Loan Administrator which in their first form were not satisfactory and further discussions are planned with these companies for next week.

For your further confidential information, the Dutch interests that have smelters in the East and in Holland (and probably working along with Patiño though we are not certain of this) are showing initiative through the National Defense Commission to obtain United States Government help for a project whereby they will construct a large smelter which would use Bolivian ores as well as ores from the East. Whether the initiative of this group will be satisfactory to this Government or to the Bolivian Government is a matter requiring much further discussion and the Department has doubts. However it was suggested to this group that they too might submit a proposal.

The Department has done everything possible to impress on Mr. Jones the wisdom of quick decision in this matter and it is hoped that some decision will be reached shortly.

Airmail letter follows.