Memorandum by the Assistant Adviser on International Economic Affairs (Stinebower)
Bolivian Tin Negotiations
A meeting was held at 11 o’clock October 9 in the office of the President of the Metals Reserve Company to discuss in a preliminary way the Company’s proposal for the purchase of Bolivian tin. Present at the meeting were:
- Senator Charles Henderson, President, Metals Reserve Company
- The Bolivian Minister
- Mr. Mauricio Hochschild
- Mr. Enrique Ellinger
- Mr. Carlos Aramayo
- Mr. Carlos Bowers
- Mr. Martinez Vargas
- Mr. Gunderson, Metals Reserve Company
- Mr. Vogelsang, Defense Commission
- Mr. Alexander Henderson, Defense Commission
- Mr. Donovan
- Mr. Stinebower
Copies of the revised memorandum outlining the terms on which the Metals Reserve Company would offer to purchase tin concentrates from the Bolivian Government were circulated and briefly examined. After some general protests, particularly from Mr. Hochschild, that the price terms were extremely unfavorable to the Bolivians, it was agreed that the Bolivian representatives should make available to the Metals Reserve Company the terms of their respective British contracts and should have time to study the Metals Reserve Company proposal, and that a further meeting would be held in the afternoon.
Mr. Aramayo was particularly interested that no quantity limit should be expressed in the contract, preferring that we should undertake to buy all of the Bolivian production outside the Patiño interests. In this suggestion it was assumed that Patiño had concluded a contract with the British smelters and that an undertaking by the United States to take 18,000 tons a year would leave a few hundred tons a month for which no market would be assured and which would be at the mercy of any terms which the British buyers wished to offer.
The meeting was reconvened at 3 o’clock in Senator Henderson’s office, all of the foregoing being present except Mr. Alexander Henderson.
Mr. Gunderson explained that the objective of the price formula was to make the return to Bolivian producers the same or somewhat [Page 545] better on their sales to the United States as compared to their sales to the United Kingdom. The particular returning charges and the other adjustments might not work out on an exact parity with similar terms offered by the British but we desired the net result to be equally favorable to the Bolivians.
The Bolivian representatives did not like the particular price formula and wanted the New York price for Straits tin, less a reasonable normal treatment charge. For this Mr. Hochschild suggested that he would like to prepare a proposal to apply to the New York price returning charges based on normal conditions, by which he meant prewar returning charges in England figured at a $4.68 rate for the pound.
It was agreed that the Bolivian representatives would prepare a counter proposal for a price formula and submit it to the Metals Reserve for study.
The points in the memorandum were then taken up seriatim with the following decisions:
(1) Mr. Aramayo objected to the suggestion that the contract would be between the Bolivian Government and the Metals Reserve Company. He said the Bolivian Government does not own ores and should not procure them to sell, that it should only guarantee the contract for the Bolivian producers. This question was left for settlement between Mr. Jones, the Bolivian Minister, and the State Department.
(2) The Bolivians resumed the request to take all Bolivian ore other than that produced by Patiño. In response to an inquiry it developed that this would amount to between 300 and 400 tons over the 1,500 tons a month proposed in the contract, but that these excess amounts would be practically all of ores of less than 35 percent tin content. In reply it was suggested that we hope at a later time to consider the smelting of low grade ores but we preferred to deal with that question separately and at this time to consider only ores of 35 percent or better. There was no objection, however, to Mr. Hochschild submitting a proposal on the lower grades.
(3) Price basis and treatment charges.
The Bolivians agreed to submit a counter proposal.
The Bolivians pointed out that the port selected for delivery in the United States would have to be an accessible port, i. e., that it would be a port regularly reached by shipping services leaving Chile.
(5) The Bolivians wanted an advance of 90 percent on concentrates sold at a fixed price, 80 percent on other concentrates. This was to be included in their counter proposal.
It was agreed that after the counter proposal should have been received and studied, a further meeting would be held, probably on Friday afternoon, October 11.