811.20 Defense (M) Bolivia/189: Telegram

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

334. Your 379 of June 2.

Contract should expire December 31, 1946, to be consistent with other rubber contracts. This is not, however, an important issue.
Agreed, except that entire 15 percent increase referred to in the Department’s telegram 300 of May 269 should go to producers. The price of 39 cents plus approximately 15 percent has now been fixed at 45 cents per pound.
Because of the lack of familiarity here with the various types and grades of Bolivian rubber, it is very desirable that in the agreement as initially signed the price be given only for Beni Hard Fine, washed and dried, and for Castilloa scrap with a provision that prices for other types and grades be fixed at appropriate differentials from the specified price based on past trade practice. It is planned to have representatives of Rubber Reserve go to Bolivia as soon as possible after the execution of the agreement, and these representatives would be in a position to agree on prices for these other types and grades, including the price for uncut balls. Since all prices are on the basis of f. o. b. Brazilian ports, it will be unnecessary to have any guarantee with respect to shrinkage in transit from Brazilian [Page 569] ports to this country, but this will be a factor in determining the price which will be agreed upon. Past trade practice in this connection will, of course, be given effect to.
Your suggestion that 15 percent increase takes care of this is agreed with. However, if essential to obtaining execution of contract you are authorized to agree that the premiums are to be based on the lower figures of 1,000 and 2,000 tons. However, such premiums are not to be prorated among exporters but paid to Government of Bolivia to be used by it in increasing quantity and improving quality of rubber production.
Satisfactory, so long as agreement does not cover future increases in freight rates from Villa Murtinho to Pará.
A general undertaking will be given that this Government will use its best efforts so far as consistent with conduct of war, to arrange to furnish necessary supplies and equipment. It is out of the question to give a flat commitment in this respect, for reasons apparent to you. Any “assistance” of a financial nature would be limited to expenditures from the fund of $1,125,000, which can be supplemented to the extent required in reasonable projects for increasing rubber production.
It is unlikely that shipping could be made available for Brazil nuts. In any event they are thought here to be directly competitive with rubber and they are of no value as strategic materials. The same question has arisen in Brazil. It is in substance a problem caused by the factors referred to in the Department’s circular telegram of May 27, 6 p.m.,10 and it will have to be handled on the basis there referred to. The hides are not of the quality used here, but the amount seems unimportant one way or the other and they should not be permitted to be an important issue. Under ordinary circumstances very little attention would be paid to this proposal, and there is no disposition here to give it favorable consideration. However, your comments are requested.
It is regretted that nothing more definite can be agreed to than the assurances contained in the Department’s circular telegram of May 18.11 In addition to the factors outlined in that telegram, it will be readily apparent to you that shipping difficulties alone would make impossible an unconditional agreement in this respect. The only feasible alternative seems to be that being followed in Ecuador12 where Ecuador’s obligation to sell crude rubber is conditioned on there being [Page 570] available to Ecuador rubber products, including tires and tubes, in amounts sufficient to satisfy its indispensable requirements.
Acceptable so long as Rubber Reserve retains control over and direction of expenditure of $1,125,000 fund.
  1. See footnote 7, p. 567.
  2. Not printed.
  3. See footnote 8, p. 568.
  4. For correspondence on the negotiations with Ecuador concerning rubber, see vol. vi, section under Ecuador entitled “Negotiation and application of an agreement concerning the production and export of Ecuadoran rubber.”