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

No. 1088

Sir: I have the honor to refer to the Department’s telegram No. 127 of August 8 [1], 1941, 3 p.m., with reference to the proposed plan for economic cooperation between the American and Bolivian Governments, and to report that Mr. Santiago Schulze, Manager of the Banco Minero, recently informed Mr. Hiern, Senior Economic Analyst and attached to this Legation, that Mr. Schulze has had considerable correspondence with Mr. Luis Fernando Guachalla in Washington on the subject of the appointment of a commission of technicians to study mining conditions in Bolivia in connection with a contemplated loan by the United States Government.

Mr. Schulze seems to think that too much emphasis has been placed by Bolivians on the financial aspect of the matter and too little on the technical nature of the loan. Mr. Schulze and Mr. C. L. Ball, Technical Adviser of the Banco Minero, think, as is evidently contemplated by our Government, that any question of a loan should be preceded by a scientific investigation of conditions more or less along the following lines:

The appointment of a commission of one or more American experts, to be assisted by Bolivian specialists.
This commission to make a rapid, preliminary survey to determine further detailed studies for the future.
This commission to omit, as unnecessary, any geologic work and, for the time being at least, any improvements in mining methods.
The commission should be prepared to recommend improvements in existing milling methods, especially for the smaller mines and mills.
The commission should be prepared to recommend the installation of new mills to replace existing inefficient units; to recommend the installation of mills to serve as central processing units to replace numerous small, inefficient units now in use; to recommend the installation of mills to handle ores not now being treated and to open new mines for which no treatment plants are now available.
The commission should be prepared to recommend methods of operation which will place Bolivia in a better position to cope with post-war adjustments in prices. (For instance, some mines are shipping mixed concentrates of WO3 and Sn for the WO3 value only, being penalized for the Sn content. After the war, with proper separating equipment, these mines could ship the tin as their major product and the wolf ram as a by-product.)
The commission should be prepared to make recommendations covering improvements in process, even where no loan is contemplated.
The nature and amount of any possible loan should be determined after the report of the commission is completed.

While the foregoing is an outline of the opinion of Messrs. Schulze and Ball, I understand that an extensive correspondence on the subject has been carried on directly between Mr. Guachalla and Mr. Schulze. The latter seems to think that an attempt may be made to secure a loan in advance of the commission’s report and that such an attempt would only serve to delay matters.

In a letter dated the latter part of last August, Mr. Guachalla informed Mr. Schulze that it was the desire of the State Department that any loan to Bolivia for mining purposes should be handled through the Banco Minero.

The Economic Analyst of this Legation advises that he has seen the facilities which would be available here for the use of the technical commission. These consist of a fairly well equipped assay laboratory and a small experimental laboratory with limited equipment.

Respectfully yours,

Douglas Jenkins