800.6354/254: Telegram

The Acting Secretary of State to the Ambassador in the United Kingdom ( Winant )

955. Your 1100, March 20. It is not clear from your telegram whether the Bolivian delegates have accepted and committed themselves to the basis for determining standard tonnages which you outline. If they have unequivocally accepted, there would seem to be little room for any further expression of the views of this Government. If the question is still open, however, the following considerations seem to the Department to deserve attention by the International Tin Committee and by the British and Dutch Governments:

In your 970, March 13, you indicate that any case resting on the Metals Reserve Company contract with Bolivia and plans for the construction of a tin smelter would have to be a detailed case. The case is simple and direct. Metals Reserve has contracted to buy ores and concentrates having a tin content of 18,000 tons a year for the next 5 years. The Reconstruction Finance Corporation is proceeding with the erection of a smelter adequate to process these ores; the existence of this smelter would be of the greatest usefulness if the smelter in England were put out of operation and in various other contingencies. Metals Reserve has, however, agreed that the purchase of this quantity is subject to such adjustment as may become necessary through action of the International Tin Committee; this agreement was given to allay Dutch and British anxieties. Obviously if the Bolivian standard tonnage is adjusted downward in comparison with the standard tonnages of all other major producing areas, any future reduction in the permissible export quotas will bear more heavily on the Bolivian quota than was contemplated when the Metals Reserve commitment was made. Furthermore, any such future reduction in permissible Bolivian exports under the scheme would affect the United States smelter more directly and more adversely than it would British smelters in view of the discriminatory export tax on tin ores from the British colonial possessions. In the event of a reduction of deliveries to England of Bolivian ores, English smelters can turn to colonial ores which could not be profitably purchased for smelting by the United States because of the existence of the export tax. If the Bolivian standard tonnage is in fact reduced as now proposed, this Government might well have to reopen discussions with the British Government with a view to modifying the agreement by which we would, on British request, make one-third of our purchases of Bolivian ore available to English smelters at any time.

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This Government continues firm in its desire to take no steps to hinder the maintenance of stability and order through international agreement in the tin industry. On the other hand, it cannot passively accept steps which might endanger its efforts to provide a minimum security in this important strategic material; this is a judgment in which all interested Government departments concur.

Unless the allocation of standard tonnages has been irrevocably made or unless you believe that the Bolivian delegates would not support any effort to increase the Bolivian standard tonnage beyond that now contemplated, you are requested to present the foregoing to the British and Dutch Governments.