811.20 Defense (M)/1497: Telegram

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

34. Department’s 19, March 20, 7 p.m. Opposition to proposed terms of tungsten contract comes not from large producers but from small tungsten miners who produce about 30% of Bolivian tungsten and who sell through Banco Minero and Hochschild to Japan for prices now as high as $24 per unit. Argument advanced in last paragraph of Department’s telegram does not appeal to them as most do not produce tin. They have little capital invested and higher immediate profits interest them far more than security over a period of years.

Unless opposition of tungsten miners can be overcome (it is not apparent how this can be done) and their production covered by proposed contract, result would be our getting only 70% of Bolivian production with remainder going to Japan as at present.

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Three of four large producers envisage contract between Metals Reserve Company on the one hand and them and Banco Minero (latter to cover production of small miners) as in case of tin contract and would strongly oppose contract solely between Metals Reserve Company and Banco Minero purporting to bind them.

Despatch follows.