824.01/582
Memorandum of Conversation, by Mr. James H. Wright, Assistant to the Director of the Office of American Republic Affairs (Duggan)
Señor Iturralde called at Mr. Duggan’s request. Mr. Duggan told Señor Iturralde that he was sorry to have to ask him to come in on such short notice, but that he wanted on an urgent basis to take up with him certain foreign exchange movements between the Bolivian Central Bank and the Argentine Central Bank which were a source of great concern to this Government. Mr. Duggan recalled how after careful consideration the Peñaranda Government had limited the number of items which Axis firms in Bolivia could import to six commodities which could be purchased more easily and on better terms in Argentina than elsewhere. The Bolivian and United States Governments had for over a year been working diligently on a plan to control Axis firms in Bolivia looking to the eventual replacement of these Axis firms by Bolivian concerns. The limitations placed on imports of Axis firms was a part of this plan. This Government had been distressed to learn that the Minister of Finance had issued an instruction to the Bolivian Central Bank which radically altered the previous arrangement. Under the new instruction the Central Bank would make available to Axis firms foreign exchange and would discount drafts and bills of exchange for importation of “articles of prime necessity”. This definition was so loose that it threw the bars completely down and Axis firms could now trade freely. This was substantiated by the fact that over a period of three days the Central Bank of Bolivia had transferred to the Argentine Central Bank New York funds to the amount of $600,000. Mr. Duggan said that these large transfers were a source of much concern and that if further transfers occurred this Government would be forced carefully to review the situation to determine whether it might not be necessary to prevent [Page 445] the transfer from the United States of further funds. Mr. Duggan made it clear that we were fighting the Axis wherever we found them and that we would like to see each and every Axis firm suppressed and wound up. It was not a matter of denying Bolivia necessary commodities and this was proved by the fact that the previous arrangement enabling the importation of six items had been considered by the Bolivian Government to be fully satisfactory.
Sr. Iturralde said that he had no knowledge at all of the subject matter but that he would immediately communicate with La Paz and hoped to give Mr. Duggan an answer by the following day. Although he could not be sure he speculated that these transfers might well have been made to Argentina for the importation of additional food stuffs for distribution by the Agency of Public Entities to poor segments of the Bolivian population. He said that the revolutionary junta was much concerned over the welfare of down-trodden elements in Bolivia who scarcely had enough to eat and that it was their intention to import substantial quantities of food stuffs and other prime necessities to break speculation rings and put into public consumption greater amounts of necessities at reasonable prices.
The interview was on the point of terminating when Sr. Iturralde said that before leaving there were a few general matters which he would like very much to take up. He had about completed his mission in Washington and was on the point of returning to La Paz. While he was here he had been able to learn almost nothing on what we might want the Bolivian Government to do as a prerequisite to recognition. He said that he could not go back to La Paz without some answers to these questions. He wondered if Mr. Duggan could not enlighten him on this score so that he would be in a position upon his return to Bolivia to report accurately and to assist in breaking the deadlock. He held forth at great length on the sincerity, patriotism and altruistic motives of the revolutionary junta, indicating unequivocally that he was personally convinced on all points. He could not understand our attitude and was most anxious to know what the junta could do to get in our good graces.
Mr. Duggan told him that it would be neither dignified nor proper for this Government in any way to endeavor to tell Bolivia what it should do in connection with its own Government. He was sure that neither Sr. Iturralde nor Bolivia as a whole would wish this. We would not enter into a discussion with them of who was good or who was bad and put ourselves in a position of saying that if Bolivia would do thus and so we would do this or that. Suffice to say that this Government was convinced from information which it was fully satisfied was accurate that the revolutionary junta as it now stood contained elements which were wholly inacceptable and whose Axis taint was such that their continued presence precluded recognition [Page 446] by this Government and that so long as these elements remained there would be no recognition. Mr. Duggan made it clear that the friendship of the United States for the Bolivian nation and people had altered in no way. This had been a real friendship and Mr. Duggan reviewed for him, giving numerous examples of cooperation, the policies which we have followed in recent years. He cited specifically the Magruder mission, the Bohan economic mission and the subsequent creation of the Development Corporation, the health and sanitation program,54 the program for the replacement of Axis firms55 which would be carried forward by Bolivian interests with our financial and technical help, and other important items of cooperation. The United States felt that its best security and the security of the hemisphere lay in well-fed, self-sustaining and contented republics and we had worked only for that in Bolivia. All of our efforts had been directed to the best possible security and stability for the country and its people who fully understood the situation and were sympathetic. Bolivia must best know what elements in the revolutionary junta were undesirable and it was up to Bolivia to work out its own situation and not up to the United States to tell Bolivia what to do.
Sr. Iturralde answered by reiterating a good part of what he had already said and pressing again for concrete suggestions. Mr. Duggan politely but firmly told him that the case was as he had stated it and that we would not assume the undignified and dangerous position of meddling into Bolivia’s local politics. He did reiterate that there were the undesirable elements mentioned and that Bolivia should know the solution.
Sr. Iturralde, who like Banquo’s ghost would not be downed, continued to press. He said that now that Argentina had broken relations with the Axis,56 would that not place Bolivia in a different light? Mr. Duggan said that he could see what Sr. Iturralde was driving at but that the answer was “no”. Sr. Iturralde tried to convey the impression that now that Argentina had broken relations with the Axis it per se became a bosom friend of the United States. Mr. Duggan discreetly said that Argentina had taken this first and important step but that there was still a long road to travel in implementing inter-American commitments which would put Argentina on a level with the other Governments.
Sr. Iturralde thanked Mr. Duggan for the frank way in which he had spoken and said that he would think the matter over carefully.
- For text of the agreement between the United States and Bolivia providing for a health and sanitation program, signed at La Paz, July 15 and 16, 1942, see Department of State Executive Agreement Series No. 300, or 56 Stat, (pt 2) 1864.↩
- See Foreign Relations, 1943, vol. v, pp. 578 ff.↩
- See pp. 228 ff.↩