Foreign Relations of the United States: Diplomatic Papers, 1943, The American Republics, Volume V

824.001 Peñaranda, Enrique/156

Memorandum of Conversation, by the Chief of the Division of the American Republics (Bonsal)⁷⁸

[Washington,] May 5, 1943.

Participants:	President Roosevelt
	Mr. Sumner Welles79
	Ambassador Pierre de L. Boal
	Mr. Philip Bonsai
	President Peñaranda
	Dr. Tomás Manuel Elio, Minister for Foreign Affairs
	Ambassador Luis Guachalla

This conversation took place at the White House on May 5, following the State Dinner to President Peñaranda.

After a few remarks of a general character, President Peñaranda stated that taking advantage of President Roosevelt’s friendly interest in Bolivian problems, he wished to have his Minister for Foreign Affairs, Dr. Elio, set forth certain questions of major interest to Bolivia. From this point President Peñaranda practically retired from the conversation, Dr. Elio doing almost all of the talking on the Bolivian side.

. . . . . . . . . . . . . .

Tin.

Dr. Elio next turned to the subject of Bolivia’s tin. He stated that Bolivia is making a maximum effort to supply tin for the use of the United Nations. He said, however, that there was a great deal of concern regarding the future of the industry. It is of very greatest importance to the country’s economic development. He recalled that in the last war the Dutch constructed a smelter in the United States but that after the war it was dismantled with the result that Bolivia continued to depend on European smelters. Dr. Elio stated that his Government hoped that the smelter recently established at Texas City would be maintained after the war. After reviewing certain other phases of the tin problem, Dr. Elio stated that what Bolivia was interested in was a guarantee of continued purchase of Bolivian tin by the United States for a longer period than currently contemplated in the arrangements between the two countries.

The President and Mr. Welles indicated that there would seem to be no objection to an arrangement under which the present purchase contract would be extended for a period of about two years following cessation of hostilities. (The question of whether a price would be guaranteed for more than one year was not clearly brought out; it was obvious, of course, that the Bolivians wished for a price guarantee. It does not appear, however, that a price should be settled on more than a year to year basis, it being, of course, understood that the good faith of the United States will guarantee the payment of an equitable price.)

President Roosevelt discussed the smelting of Bolivian tin at some length. He acquiesced in Dr. Elio’s hope that the smelter at Texas City would be maintained after the war. He said that, most emphatically, however, a smelter should be built in Bolivia itself. Dr. Elio replied that this had long been a Bolivian aspiration and that, in fact, certain machinery for the purpose was already available in Oruro. He pointed out that Bolivia has great hydroelectric possibilities and also has petroleum available as fuel. He suggested the possibility of our sending a technical expert from the United States to Bolivia in order to draw up definite plans for a smelter. He said that the furnishing of equipment and financing would have to be taken care of by our Government.

President Roosevelt made a number of remarks concerning international cartels for the purpose of handling the marketing of such products as tin. He said that he had no objection to the establishing of such cartels provided participation therein was on a governmental basis and not on the basis of private interests. He developed the idea of a cartel which would sell the world output of tin at an average price but would buy from the producers at a price directly related to the cost of production in the different producing areas. Bolivia would receive a price higher than the average sale price, whereas Malaya would receive a price lower than the average. This concept was received by the Bolivians with considerable enthusiasm.

It was left that this matter would continue to be handled through negotiations of the type conducted in connection with the present tin contract. There was no mention of specific price or of other conditions in which the BEW⁸⁰ is interested. President Peñaranda did say that it was important to get more money to the Bolivian laborers and to implement the report of the Magruder Commission.⁸¹ In order to avoid any misunderstanding, I made it clear that the Bolivian Labor Mission was a joint enterprise of the two Governments.

Exports from the United States to Bolivia.

Dr. Elio talked of the difficulties caused to Bolivian economy by the very reduced tonnage allocated to the supplying of Bolivian import requirements. Mr. Welles was able to inform President Peñaranda and Dr. Elio that this tonnage allocation was about to be increased from 4,000 tons to 5,600 tons. This announcement produced an excellent effect. (However, the next morning Dr. Elio asked President Roosevelt if the figure could not be increased to 6,000 tons, since the latter figure would have an “excellent psychological effect”. It is understood that arrangements are being made to meet this requirement).

While President Roosevelt expressed sympathy with the Bolivian plight in the matter of imported goods, he spoke at some length and with feeling concerning the necessity for Bolivia to become as selfsufficient as possible in the matter of manufactured articles. He referred particularly to the possibility of using substitutes for certain imported goods. In his remarks not only on this subject but on other subjects, the President advocated that Bolivia follow a strongly nationalistic policy avoiding so far as possible dependence upon other countries and particularly upon capitalistic interests in other countries. (He developed this theme in his conversation with President Peñaranda the following morning in which he stated that he and Eric Johnston⁸² were in agreement that new enterprises in a country like Bolivia which require capital from abroad should raise that capital through the sale of bonds or of other senior securities, leaving the common stocks or management shares to be purchased by local capitalists). The President also spoke with great indignation of the activities of certain bankers in the twenties in loading Bolivia with an unjustified debt burden at the unconscionable rate of eight per cent interest.⁸³

Defense Materials.

President Peñaranda as a military man showed more direct interest in this topic than in the others dealt with. He asked the President to see whether it would not be possible to increase the flow of defense materials to Bolivia.

The President did not reply directly, although he did refer to the great shortage of materials needed on the fighting fronts. However, he described the possibility to which his attention had recently been called of obtaining certain types of war materials which, while not strictly modern for combat purposes, were highly valuable for training purposes. He referred, for example, to a certain type of antiaircraft gun with a range of 5,000 yards, which because of the development of a new type with a range of 7,000 yards, had become obsolescent. However, it remains highly valuable for training purposes. Both President Peñaranda and Dr. Elio stated their belief that the defense of Bolivia must be based upon development of aviation and anti-aircraft materiel.

President Roosevelt described the value of smoke-screens as defense against air attack. Ambassador Boal stated that studies were underway for the provision at the important Bolivian mines of certain smoke producing equipment as a defense against possible Axis air raids. The President expressed great interest as well as the hope that this equipment could be manufactured in Bolivia.

78. For press release issued by the White House on the discussions and agreement between President Roosevelt and President Peñaranda, see Department of State Bulletin, May 15, 1943, p. 431.
79. Under Secretary of State.
80. Board of Economic Warfare.
81. The Commission to study labor conditions in Bolivia; concerning the contents of this report, see footnote 86, p. 615.
82. President, United States Chamber of Commerce, and management representative on the Economic Stabilization Board.
83. For correspondence regarding bankers’ loans to Bolivia, see Foreign Relations, 1922, vol. i, pp. 640 ff., and ibid., 1923, vol. i, pp. 441 ff.