811.20 Defense (M) Bolivia/517

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

No. 784

Sir: I have the honor to enclose a copy of a contract35 which was signed on October 19, 1942, between the authorized representatives in La Paz of the Rubber Reserve Company and the Banco Agrícola of Bolivia providing principally that the funds to be provided to rubber producers in Bolivia to finance increased production will be loaned through the Banco Agrícola, but that the Rubber Reserve Company shall be the sole purchaser of rubber production in Bolivia.

The Banco Agrícola, according to the provisions of the contract, is to receive all of the interest paid on the loans by the rubber producers, in return for which the Banco Agrícola is required only to assume a maximum risk of 25 percent of the loans and to perform the detailed services of the collections and checking on the manner in which specific amounts of funds are expended.

The Rubber Reserve Company considers this contract to be advantageous principally because it includes the agreement of the Banco Agrícola that the Rubber Reserve Company shall be the sole purchaser of Bolivian rubber production. Also, it is definitely advantageous to the Rubber Reserve Company to be relieved of the accounting details of handling the large loans that are being made to producers. It is expected that these loans to be handled by the Banco Agrícola may total between 50,000,000 Bolivianos and 100,000,000 Bolivianos (approximately between $1,000,000 and $2,000,000).

It will be noted that the contract provides that the Rubber Reserve Company shall sell to the Banco Agrícola the 250 metric tons per annum that is to be available for shipment from Bolivia to countries other than the United States. It is expected that the Banco Agrícola will realize a comparatively large profit on this amount of rubber.

Respectfully yours,

Pierre de L. Boal
  1. Not printed.