The Minister in Bolivia ( Jenkins ) to the Secretary of State

No. 1006

Sir: I have the honor to refer to the Department’s telegram No. 127 of August 8 [1], 3 p.m., and to the Legation’s telegram No. 199 [191] of August 12, 2 p.m., both with reference to the proposed plan for economic cooperation between the American and Bolivian Governments, and to report the general reaction in Bolivia to the proposal.

The proposal has made, generally speaking, a very favorable impression, the only unfortunate repercussion thus far having been what may turn out to be a somewhat over-optimistic anticipation of the amount involved in the loan to be made by the United States Government. Although the text of the general memorandum transmitted to the Bolivian Government made no mention of any specific amount the supplementary memorandum concerning a possible survey of potential highways has been rather generally misinterpreted as being an outline of actual intended construction. On the basis of this, Cabinet discussions at first apparently centered around the maximum survey figure of 11,400 kilometers, involving an outlay of $120,000,000, but have now been moderated to the more reasonable figure of 5,000 kilometers [Page 438] mentioned later in the memorandum, for which a loan of $25,000,000 is deemed necessary. It is also being assumed that another large sum will be made available for the agricultural and mining development and the currency stabilization suggested.

In addition to these projects and despite the discouraging tone of the memorandum in this particular respect, there continues to be some discussion as to the possibility of obtaining sufficient funds to complete the Vila Vila–Santa Cruz railway. For instance, there has been presented to the Senate a draft of a law stating “from the loan which the Government is trying to get from the United States, there shall be set aside with preference the amount necessary for the Vila Vila–Santa Cruz railway”. In fairness to the Government, however, it must be stated that there has been no recent official statement of any kind with reference to this railway.

Although it has been my understanding, unofficially, that the total amount of the loan contemplated would probably not amount to more than $20,000,000 as a maximum I can understand how the Bolivians, in their usual optimistic manner, have seized upon a suggestion for a technical study to mean that the entire study project would be carried into actual production. The Government itself has made no pronouncement on the subject except to release for newspaper publication the text of the general memorandum. The newspapers however, on the basis of this and also conversations with various Cabinet members, have expanded the entire matter until only the most moderate estimates have been as low as $30,000,000 and the most optimistic have been as high as $200,000,000. The most recent newspaper reports have been as follows: Ultima Hora, $120,000,000; El Diario, between $70,000,000 and $80,000,000; La Razón, $200,000,000.

Another encouragement to the generally hopeful attitude in the country has been the return of Carlos Salamanca from the United States with very glowing reports concerning the amount of help which Bolivia may expect to receive. His newspaper interviews and report to Congress are being covered in another despatch.

Although at this moment it seems unfortunate that the Bolivian public is being misled, and that the good effect of the loan may be somewhat lessened by too optimistic expectations, it is probable that previous estimates of the amount involved will have been forgotten by the time actual projects are named, and that local disappointment will not be nearly so great as the present situation might indicate. In any event, I do not think it can be said that the Government is intentionally encouraging a misunderstanding of the matter. Rather, I believe that the reaction here is more or less what might have been expected, assuming the natural optimism of Bolivian statesmen and the nature of the survey suggestions given them.

Respectfully yours,

Douglas Jenkins