811.20 Defense (M) Bolivia/110: Telegram
The Chargé in Bolivia (Dawson) to the Secretary of State
[Received 11:32 p.m.]
193. Department’s 161, March 18, 1 p.m. Presented rubber proposal to Ministers of Foreign Affairs and Economy.93 Their immediate reaction was that price was too low explaining they had received higher offer from Argentina without specifying price. They also object to exclusive provisions stating that in any event they would want to sell Santa Cruz rubber to Argentina because of difficulty of communications from Santa Cruz to the Amazon. (There have been no exports from Santa Cruz for last 10 years.) Furthermore they indicated they would desire commitments for help propriety [sic] establishing plantation rubber as well as in financing of labor and expansion of needs ($1,500,000 has been talked of in Government circles).
I did not include provisions for exception for domestic ties [tires?] or commitments as to restricting manufacture in my [apparent omission] as there is no manufacture in Bolivia and these would merely give additional points on which Bolivians could raise objection. If contract is made commitment to sell us all Bolivian production would seem to serve our purpose.
Press campaign similar to tungsten campaign94 has already started alleging that rubber is now quoted in Buenos Aires at $2.70 per kilo as compared to $1.30 in New York and that Bolivia should not make long term exclusive contract with the United States at low price. There has been no leak as to our negotiations but press has jumped to conclusion that Bolivian Government is contemplating rubber contract as a result of issuance of supreme decree March 16 prohibiting sale of rubber abroad without approval of Ministry of Economy.
Present production of rubber in Bolivia is about 1,000 tons per annum and I do not see how it can be increased much beyond 3000 tons in any appreciable future because of lack of labor in rubber regions.