Memorandum by the Assistant Adviser on International Economic Affairs (Stinebower)

Purchase of Bolivian Tin

On the basis of consultation with Mr. Welles, Mr. Feis telephoned the following points to Mr. Jesse Jones as having been suggested [Page 543] by Mr. Welles in connection with the pending negotiations for the purchase of Bolivian tin concentrates:

Mr. Welles thought that the suggestion of 1,000 tons a month or 12,000 tons a year (tin content) would prove disappointing to the Bolivians and was unduly low. He was inclined to agree with Mr. Jones’ suggestion that purchases of Bolivian tin be divided approximately 50–50 between British and American purchasers, and to suggest that the United States contract be for 18,000 tons a year.
With regard to the undertaking desired by the British that we would release to them our purchases of Bolivian tin in the event the British required these amounts for their war efforts, Mr. Welles was in full agreement in principle, but thought that the undertaking should be safeguarded to provide that such releases be made only after consultation between the British and American Governments regarding their respective defense requirements. In this suggestion he had in mind the possible development that the British might be interrupted in their ability to deliver tin to the United States from the Straits, in which event our own defense needs, as well as British war needs, would have to be weighed in reaching understanding about the release of American supplies from Bolivia.
In connection with the British desire for Bolivian tin for their industrial requirements even after the war, Mr. Welles suggested that if we took 18,000 tons, we might agree to make all of that amount available to the British, on request and subject to the consultation suggested above, during the period of war emergency, and that we might agree to continue to release to the British 6,000 of the 18,000 even after the war emergency, but that we would not so agree with respect to the remaining 12,000.
Mr. Welles had repeated the importance to be attached to negotiating the purchase contract with the Bolivian Government rather than with any single Bolivian producer or group of producers. At the same time we should make certain that the Bolivian Government will not give all the advantages of the contract to any single producer or group of producers.
Mr. Welles had also reiterated that it was extremely important that the smelter to be constructed in this country should be entirely independent of any connection with the Patiño interests in as much as one of the purposes of constructing a smelter was to offer competition to the monopolistic position held by the Patiño interests in smelting Bolivian ores.
Finally it was suggested that the understanding with the British Government should provide for compensation in tin for any Bolivian concentrates released to the British, but that if the British were unable to deliver tin, provision should be made for compensation in dollars.