The Foreign Economic Administrator ( Crowley ) to the Secretary of State
Dear Mr. Secretary: This will acknowledge receipt of your communications of December 24 and January 1,27 on the subject of general policy towards Bolivia. Appropriate instructions have been issued to the various branch offices of the FEA to insure conformity with the statements of foreign policy and the related directions contained in your letters.
I understand that a verbal request to withhold all lend-lease shipments to Bolivia has also been received from the Department. I assume we will, in due course, receive written confirmation of this request.
In your letter of December 24, and repeated in your letter of January 1, there is the request that the FEA “undertake no special procurement activities for the time being.” For some time we have been considering the advisability of purchasing, and subsequently turning over to the Bolivian Development Corporation,28 the Quimbol plant, a Bolivian private enterprise manufacturing quinine sulphate. It has been felt that our cinchona program would be benefited by this step as it would bring under our control the principal factor of competition in the acquisition of cinchona bark in Bolivia. It would also enable us to control the disposition of the entire output of the plant and thus prevent any further leakage to Argentina from this particular source. Your letter advises us to “continue routine field activities with private contractors and producers,” On the other hand, to purchase the plant may be considered a “special procurement activity.”
We have recently received revised offers for the outright sale as well as for the granting of an option to purchase this plant. We would like to proceed with negotiations on this matter and to be [Page 475] free to act when we have settled upon a satisfactory price. Bolivia is our only remaining source of cinchona bark of high quinine content. I need not point out how vital this material is to the conduct of the war, nor need I stress the necessity of preventing the shipment of manufactured products containing quinine from reaching the Argentine as that point has been specifically referred to in both of your letters. We regard the acquisition of this plant as the most effective means of controlling shipments of quinine from Bolivia. On the other hand, we are quite aware of the fact that there may be overriding reasons for temporarily abandoning these negotiations. It would therefore be most helpful to us to receive advice and guidance from you on this subject.
Another matter which I wish to bring to your attention pertains to the inventories under the control of the Mine Supply Control District in Bolivia. These supplies, though owned by private dealers, were obtained under an FEA mine serial number and are subject to allocation by FEA. We have a commitment from the former Bolivian Government that these supplies would not be molested, diverted to other uses or confiscated. There had also been granted an exemption from the Bolivian sales tax on the resale of this equipment to mine operators which had been of considerable assistance to small miners. It is of great importance to our programs that there should be no change or interference in the operations of the Bolivian Mine Supply Control District. In the meantime, we assume that we should continue our operation of this service as heretofore.
As requested in your letter of January 1, we are reinstating the granting of export licenses for merchandise to be shipped to Bolivia. We must, however, point out that we are unable to handle those applications which require consultation with the Certifying Agency in Bolivia. The decentralization plan has been in full effect in Bolivia but, as Government to Government relationship no longer continues, it is evident that so long as this situation prevails, we cannot expect the continued issuance and receipt of import recommendations from Bolivia. Therefore, it will be necessary to adopt a changed procedure for the handling of exports to Bolivia.
A full and up-to-date description of the FEA production and development programs in Bolivia together with an analysis of their relative importance to the U. S. war program is available for the use and guidance of the Department in shaping its political policies. We are also preparing a current appraisal of the economic dependence of Bolivia upon exports from the U. S. which we will be pleased to submit to the Department when it is completed.