811.20 Defense (M) Bolivia/189: Telegram

The Ambassador in Bolivia (Boal) to the Secretary of State

379. Department’s May 26, 1 p.m.7 Bolivian Government is awaiting receipt by La Paz representative of Beni Rubber Producers of instructions from his principals before proceeding with negotiations. Embassy has seen advance copy of these instructions which suggest:

Five-year minimum term for contract.
Prices equivalent to those in Brazilian and Peruvian contracts.
Provision for larger producers to ship uncut balls to New York as they have in the past with guarantee of 3% shrinkage.
Bonuses of 2½ cents per pound on exports over 1,000 tons per annum and 5 cents over 2,000 tons, these to be prorated among exporters.
Absorption by Rubber Reserve of excess freight from Villa Murtinho to Pará over cost from Xapuri via Acre to Pará.
Payment by Rubber Reserve of storage costs at Pará after 30 days’ delay in shipment.
Commitment as to priorities for and assistance in securing supplies and equipment needed for rubber production.
Promise of 750 tons of shipping space per annum for Brazil nuts and 10 for raw hides and skins; this provision stated to be indispensable.
Agreement to ship to Bolivia sufficient manufactured rubber articles for its needs (Embassy understands that Government wishes guarantee that 30% of raw rubber exports will be returned in form of tires, et cetera).
Joint governmental plan of economic assistance for rubber development including improving river and land communications.

These points seem to be covered in proposals Rubber Reserve or to be adaptable thereto except for points 4 and 8. The 15% increase mentioned in second paragraph of Department’s 300 should satisfy producers in lieu of point 4 which indicates misunderstanding as to nature of bonuses. Point 8 probably not feasible because of shortage [Page 568]shipping space but Roberts has suggested that Rubber Reserve might possibly purchase some nuts and hold them unshipped.

We fear that the Bolivian Government will insist on percentage arrangement for tires as indicated under point 9 instead of the vague assurances contained in Department’s circular of May 18, midnight.8 Would appreciate instructions on this point.

With reference to the last paragraph of Department 300, Roberts, while in Riberalta conferring with rubber producers, stated that provided that rubber agreement was signed, Rubber Reserve would absorb differential in freight from Bolivia to Pará as compared with Acre to Pará but could not cover any future increases in freight rates. His statement was based on conversation with Allen in Lima and his understanding that latter had received instructions authorizing this by telephone from Washington. In view of this situation, believe that commitment should be made.

  1. Telegram No. 300, not printed; it authorized certain increases in price and premiums to be offered to Bolivia in order to effect an agreement (811.20 Defense (M) Bolivia/179).
  2. Printed in vol. vi , section under Colombia entitled “Negotiation of an agreement between the Rubber Reserve Company and Colombia …”