811.20 Defense (M)/1518
Memorandum of Conversation, by the Adviser on International Economic Affairs (Feis)
The Bolivian Minister called at my request. I said that Mr. Clayton, Deputy Loan Administrator, and Mr. Charles B. Henderson, head of the Metals Reserve Company, had showed me the correspondence with him as regards the negotiations that have been taking place for the purchase of Bolivian tungsten. This correspondence seemed to bring the negotiations to an end.
I said that I had requested him to call in order to express to him my regret at the situation. This purchase arrangement was obviously of mutual advantage, and it seemed to me distinctly to be regretted that its consummation should be prevented by a small difference over price (which I had learned to be the fact).
I said that as I understood it, the Metals Reserve Company was offering to buy Bolivian tungsten production at $16.50 per unit, and was offering a three-year contract to buy it at this price. This compared with an approximate pre-war average of $9 a unit.
The Minister said that his Government too regretted the situation. The difficulty was that they were in no position to make the different mining interests accept the terms and all of them (he enumerated Aramayo,83 Patiño84 and Hochschild85) were holding out for a higher price because they were currently getting $17 in the New York market and for occasional small lots somewhat more; furthermore, they had a prospective market in the Far East. I said that his Government realized, and I should think it could bring it home to these mining interests, that our tin purchase contract and our plans for a smelter construction had been of distinct interest and advantage to them. For another matter, it strengthened their position in now dealing with the British and Dutch as regards the renewal of the International Tin Agreement—a matter on which the Minister had requested the [Page 454] assistance of this Government only a few days ago.86 I said furthermore that if and as we could successfully negotiate this agreement on tungsten, this Government would be prepared to consider agreements for other metals of Bolivian production, such as antimony. Lastly, I said that the Bolivian mining interests would be coming to this Government for licenses to export machinery needed in their operations, and on this matter too they would expect to be favored.
I suggested to the Minister that he might cable the above observations to his Government with a request to bring them home to the mining interests and endeavor to win acceptance of the offer of the Metals Reserve Company. I said that furthermore the mining interests should recognize that a term contract over three years was of great advantage to them. He observed that the mining interests were “gamblers”. I said that speaking wholly and solely on my own authority, I thought there was a chance the Metals Reserve might pay the $17 on a two-year contract, but the present proposal seemed much more equitable and desirable.
The Minister again reiterated the difficulties in bringing the mining interests around to foregoing a possible pecuniary gain. He promised however to cable at once to his Government and endeavor to persuade his Government to make another effort to try to secure acceptance of the Metals Reserve offer, or an acceptable counter-proposal.
. . . . . . . . . . . . . .
The above line of presentation was in accordance with talks with Mr. Clayton.