811.20 Defense (M) Bolivia/269

Agreement Between the Rubber Reserve Company and the Government of the Republic of Bolivia26

This Agreement, made and entered into this fifteenth day of July, 1942, by and between the Rubber Reserve Company (hereinafter called “Reserve”) an Agency of the United States Government and a corporation existing under the laws of the United States of America and having an office for the transaction of business in Washington, D. C, party of the first part, and the Republic of Bolivia (hereinafter sometimes called “Bolivia”), party of the second part;

Witnesseth:

1. Reserve agrees to establish or cause to be established an agency (hereinafter called the “Agency”) which shall be authorized to assist in developing the rubber resources of Bolivia and to acquire and sell all types of rubber and rubber products produced within the territory of the Republic of Bolivia. Reserve and Bolivia agree that the [Page 577]Agency shall have all powers necessary and appropriate to the performance of these functions.

2. Bolivia recognizes the large rubber requirements of the United States for the war emergency and agrees that the Agency shall have the exclusive right to export rubber from the Republic of Bolivia, with the exceptions provided for in Article 3 of this agreement. Bolivia agrees to use its best efforts to bring about the maximum production of rubber and to cause it to be sold to the Agency, and to take effective measures for the purpose of conserving rubber and directing it into essential war time uses, including measures to prevent the hoarding of rubber and rubber products.

3. Reserve agrees that the Agency will buy and Bolivia agrees that it will cause to be sold to the Agency all of the rubber, with the exception of a quota for export to neighboring countries, produced within the territory of the Republic of Bolivia which is not required by the Republic of Bolivia for domestic use and consumption. The quota for export to neighboring countries shall be 150 tons per calendar year.

Until the exact capacity and costs of production in the provinces of Larecaja and Caupolicán of the department of La Paz can be established, the production of these provinces exported through the city of La Paz, will not be included in the present agreement, Bolivia undertaking for its part to have this production included in the agreement as soon as commercial and industrial conditions permit. It is further mutually agreed that the exports under this provision shall not exceed 60 tons a year and that in the event that production should exceed this amount, the contracting parties may proceed to an adjustment of the aforementioned conditions by mutual consent.

It is further mutually agreed that the rubber production from the triangle formed by the rivers Tarvo and Paraguá in the Department of Santa Cruz exported through Puerto Suárez will not be included in the present agreement for the first year of its life, at the end of which time the question of the production from this triangle will be rediscussed with a view to reaching a mutual accord. It is further provided that the total exports of rubber from the provinces of Larecaja and Caupolicán and from the aforementioned triangle plus the above mentioned quota for neighboring countries, constituting all exceptions from this contract, shall not be in excess of 250 tons per annum, Reserve to be entitled to and to receive all rubber produced in all areas of Bolivia with the exception of said maximum of 250 tons.

Regulations for the administration of the quota for export to neighboring countries shall be established by common accord between Reserve and Bolivia and the figure of 150 tons shall likewise be subject to adjustment by mutual consent of Reserve and Bolivia at the end of the first year of the life of this agreement.

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The amount required for domestic use and consumption in Bolivia shall be determined by mutual agreement between Reserve and Bolivia. Should it become possible, during the period of this agreement, for Bolivia to establish a domestic tire factory, the quota for domestic use and consumption will be subject to adjustment by mutual consent.

4. Reserve and Bolivia agree that the base price to be paid by the Agency for purchases of rubber hereunder shall be forty-five (45) cents, U.S.A. currency per pound, f.o.b. Belém, Brazil, or f.o.b. Chilean or Peruvian Pacific Ocean ports as designated by Reserve for Beni hard fine on a washed and dried basis, and thirty-seven and one-eighth (37⅛) cents, U.S.A. currency per pound, f.o.b. Belém, Brazil, or f.o.b. Chilean or Peruvian Pacific Ocean ports as designated by Reserve, for usual good quality crude Beni, fine, cut and classified, with appropriate differentials for other types and grades (which shall include forty-eight and one-quarter (48¼) cents for smoked sheet rubber); and twenty-seven and one-half (27½) cents, U.S.A. currency per pound, f.o.b. Belém, Brazil, or f.o.b. Chilean or Peruvian Pacific Ocean ports as designated by Reserve, for usual good quality Castilloa scrap (as understood in trade circles in New York City) with appropriate differentials for other types and grades (said base price together with said differentials being hereinafter referred to as the “Fixed Price”). Reserve agrees to advance to producers substantially eighty per cent of the Fixed Price (after deducting export taxes, freight and other charges to the ocean port of shipment) upon delivery (a) at air or river ports designated by Reserve, (b) at rail head for transportation to Pacific Ocean ports or (c) at border rail head of the Madeira-Mamoré Railroad for transportation to Belém, title however, not to pass to Reserve until delivery f.o.b. ocean port. Reserve further agrees to absorb all freight costs from (a) air or river ports designated by Reserve, (b) rail head for transportation to Pacific Ocean ports or (c) border rail head of the Madeira-Mamoré Railroad for transportation to Belém which are in excess of two and one-quarter (2¼) cents per pound, understood to be approximately the present freight cost from Acre to Belém. If the Agency purchases rubber at internal points other than those specified above, the price to be paid by it shall be the Fixed Price less appropriate differentials to cover transportation to such specified points, transportation from them to ocean ports on a basis of two and one-quarter (2¼) cents per pound and customary handling charges.

In addition to the aforesaid prices Reserve agrees to make premium payments on account of purchases and sales of rubber in the Republic of Bolivia as follows:

Two and one-half (2½) cents per pound for all of the rubber so purchased and sold in excess of fifteen hundred (1500) long tons and [Page 579]not in excess of twenty-five hundred (2500) long tons during any one calendar year of this agreement;

And five (5) cents per pound for all of the rubber so purchased and sold in excess of twenty-five hundred (2500) long tons during any one calendar year of this agreement.

The amounts of any premiums so paid may be deducted from the unexpended balance of the development fund provided for in clause seven of this agreement. Bolivia agrees that all premiums not so deducted shall be used by the Government of the Republic of Bolivia or an appropriate agency thereof for the purpose of financing the immediate expansion of production and improvement of quality of wild rubber in the territory of the Republic of Bolivia.

5. It is understood that purchases by the Agency f.o.b. Belém or Chilean or Peruvian ocean ports shall be on the basis of cash against shipping documents endorsed “on board” ocean carrying vessel at the designated port destined for continental ports of the United States of America, provided however that in the event the shipping space to be provided by the Agency in any such case is not available within thirty days after notice to the Agency of the readiness of the rubber for shipment, the rubber shall be stored in a place at the port to be designated by the Agency and the Agency will arrange for payment for the rubber against warehouse warrants or receipts of other documents of title (in lieu of ocean bills of lading) acceptable to the bank negotiating the payment draft and in any such cases such payment shall be at the f.o.b. price less any export duties and taxes and charges for loading on board ship in effect at the date such payment is made; storage charges in this event will be paid by the Agency.

6. It is understood that Bolivia will cause to be established the Fixed Price for all sales of rubber for domestic use or consumption in the Republic of Bolivia.

7. Reserve agrees to establish a development fund of two million, one hundred and twenty-five (2,125,000) dollars to be expended by Reserve in its discretion in accord with Bolivia on developing and increasing the production and improving the quality of rubber in Bolivia, the methods of producing it and the stimulation of conditions favorable to maximum rubber output. The Agency will appoint an adviser designated by Bolivia and satisfactory to the Agency whose duty it shall be to advise the Agency upon methods of securing maximum rubber production in Bolivia.

It is mutually agreed that the amount of the development fund will be reduced by seventy-five thousand (75,000) dollars per annum during the maintenance of the quota of 150 tons for export to neighboring countries provided for in Article 3 of this agreement with the annual reduction being increased or decreased five hundred (500) dollars for each ton by which the export quota is augmented or cut.

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8. Reserve agrees to use its best efforts so far as consistent with the conduct of the war to facilitate the furnishing of necessary supplies and equipment for the maintenance and expansion of the Bolivian rubber industry.

9. It is mutually agreed that existing contracts for the purchase of Bolivian rubber which have not been filled may be taken over by Reserve with payment to be made on the terms contained in such contracts.

10. Reserve agrees to purchase during the calendar year 1942 up to five hundred (500) long tons of Brazil nuts produced in Bolivia, and now owned in Bolivia or Brazil by Bolivian producers at a price to be mutually agreed upon by Reserve and Bolivia but in no case less than the price to be paid by Reserve for Brazil nuts under similar agreements with other countries, this purchase being in the nature of relief to such producers during the year 1942 to facilitate readjustment of their production and the labor now engaged therein with a view to utilizing them in developing vegetable oil or other products, preferably strategic, until such time as the world market for Brazil nuts shall again be normal.

11. The term of this agreement shall be for a period beginning with the date hereof and ending December 31, 1946, unless sooner terminated by the mutual consent of the parties hereto.

Ed. Anze Matienzo
John Worcester
  1. Copy transmitted to the Department by the Ambassador in his despatch No. 310, July 17; received July 22.