811.20 Defense (M)/1489

The Department of State to the British Embassy


Reference is made to the British Embassy’s memoranda of February 17, March 4, and March 7, 1941,23 transmitting for the information of the Department of State and for any comments which the Department might care to make, the draft text, as amended, of the proposed United Kingdom-Bolivian agreement on tin ore. The opportunity thus afforded for comment in advance of conclusion of the agreement is highly appreciated as is also the friendly spirit which has animated the several informal explanations of purpose which have been addressed [Page 484] to the Department and to the American Embassy in London. In this same spirit the following observations are made in reply:

1. It appears that the purpose of the agreement is to ensure that all Bolivian tin ores and concentrates not exported to the United States would be exported only to the United Kingdom. In the light of the present state of emergency in both the United States and the United Kingdom, this is an objective in which the United States Government entirely concurs.

2. Does it not appear to the British Government that this purpose would be effectively accomplished, while at the same time eliminating certain other questions raised by the agreement which would otherwise call for detailed comment on the part of the United States Government, if Article 1 were amended to read somewhat as follows:

The Bolivian Government shall by all means in their power ensure that the whole of the Bolivian output of tin ore of high, medium, or low grades which is not now under contract for exportation to the United States will be made available for shipment to smelters in the United Kingdom or in the United States …

3. The purpose of the foregoing suggestion is merely to make clear to the three Governments concerned that the contract of November 4, 1940 between Metals Reserve Company and certain Bolivian producers is not to be regarded as fixing the absolute maximum of Bolivian ores that might be obtained by the United States regardless of what circumstances may arise in the future.

4. If the flexibility suggested above were to be introduced into the agreement, Article 10 would then become at least partly inconsistent with the revised Article 1 and, it is believed, could be safely omitted entirely. The contract of Metals Reserve Company of November 4, 1940 provides for reduction in the amounts of ores and concentrates to be acquired by Metals Reserve in the event of reduction of permissible Bolivian exports under the International Tin Control. The permissive nature of the language on this point has been a matter of concern to the British Government and the United States Government is entirely willing again to record its intention that the language shall be interpreted as mandatory rather than merely permissive. In these circumstances there would be no question of Metals Reserve purchases absorbing more than their proportionate share of the Bolivian output and it would automatically ensue that the remainder would be available to British smelters except as agreement might have been reached to provide additional amounts to the United States.

5. In referring thus to possible additional quantities of Bolivian ore to be made available to the United States, the Government of the United States has at this time no specific thought or purpose in mind. [Page 485] In view of the unusual disturbances in world production and trade, it is readily apparent, however, that the United States Government might at some time in the future desire to approach the British Government for an arrangement by which it might have an option on some of the ores contracted for by British smelters in the same way that it has willingly given a corresponding option to the British Government.

6. It goes without saying, of course, that the United States Government would anticipate that no contracts concluded by British smelters under the terms of the British-Bolivian agreement would operate in any manner to prevent the fullfilment by Bolivian producers of the terms of the agreement of the Metals Reserve Company of November 4, 1940, or any renewal thereof. The United States Government is, as is known, engaged in constructing a smelter to treat Bolivian ores. The decision to take this step was based on considerations of national defense, and in the present circumstances these considerations are of importance to the United Kingdom as well as to this country. Further, the erection and operation of this smelter is intended as a continuing activity in the United States and not merely as a temporary activity in the present emergency. It is quite possible that the effective life of the proposed British-Bolivian agreement might extend beyond the period of Metals Reserve Company’s contract and the United States Government would, of course, expect that nothing in the British-Bolivian agreement would operate to prevent a renewal of the American contract beyond its present term.

  1. None printed.