740.00112A European War 1939/28781a: Telegram
The Secretary of State to the Ambassador in Bolivia (Boal)
535. Upon the basis of your report25 that participation by the Development Corporation will be politically acceptable, the Department and Export-Import Bank approved in principle your suggestion as to the use of the Development Corporation and the creation of a subsidiary.
As we understand it, the subsidiary will perform the following functions: (a) it will act as a conduit for the transfer of Proclaimed List firms; (b) it will finance the purchase of such firms by desirable firms; (c) it will act as a lender of funds to desirable firms for the purpose of implementing the replacement program in its early stages; and (d) it will be the agency charged with the responsibility for administering the replacement program with full powers to force transfers or liquidation of Proclaimed List firms and to appoint and supervise interventors. We believe that the formation of a bank which would operate generally as a commercial bank would be politically inexpedient. We request, therefore, that the use of the name “bank” be avoided and that the subsidiary’s functions be limited to those specified above.
In connection with (c) above, we have some doubts as to the advisability of providing working capital for desirable firms during the interim period in addition to capital needed for the purchase of the Axis firms. We are, however, prepared to see a $500,000 short term credit established for this purpose, if necessary, but a detailed airgram26 which will follow in the next 2 days will raise various problems in this connection for your careful consideration.
The Department and Export-Import Bank believe that initially a $2,000,000 credit will be sufficient for financing the purchase of Axis firms. This figure can, of course, be revised upwards if future investigations prove that additional funds are necessary.