811.20 Defense (M) Bolivia/1–2244

Memorandum by Mr. Paul Linz, Division of Supply and Resources, to the Director, Office of Wartime Economic Affairs ( Taft )

Mr. Taft: As a result of there being no Bolivian Government recognized by the United States for over a month now, our procurement program for critical materials may be adversely affected and the injuries which result are not necessarily such that a later clarification of relations with Bolivia will undo the damage which may have been done. I have in mind the following:

Rubber. With no way of communicating with Bolivian officials, there is no way of preventing smuggling of rubber to the Argentine, or, in fact, of preventing the Bolivians from making sales openly to the Argentine. It is also difficult to ascertain whether shipments of rubber in excess of 250 tons a year, permitted under the agreement, are being made to the Argentine. Once any excess rubber has been shipped, it is lost to the war effort for good. The proposed increase of 15 cents a pound will complicate the matter still further. Please refer to the attached memorandum,30 copies of which I have sent to Messrs. Duggan,31 Bonsal,32 and Knox.33 The attached telegram No. 241 of January 18, from La Paz,30 as well as the telegrams referred to therein, give some idea of the complications which are resulting from the existing situation.
Tin. A telegram has come in from Buenos Aires, indicating that Bolivia is offering high grade tin concentrates to Argentina. Here again, if tin is once shipped to the Argentine in any form, it is presumably permanently lost to the United Nations. We have also received indications from the Bolivian Embassy and from the intercept of the conversation between Hochschild34 and Carrasco35 that Argentina may be considering a preclusive purchase of Bolivian tin output. This may or may not be a bluff. However, from the point of view of our objectives, it would appear to me that it would be better for us to announce that we discontinue the purchase of tin at 60 cents, f.o.b. Chilean ports, and live up to the letter of our commitment, which would be to adhere to the only contract now in force, the original one which was made in 1941 and runs for five years, on which the price is 48½ cents, c.i.f. U. S. ports, than to be confronted with an announcement that Argentina had purchased the Bolivian tin production.
Quinine and Cinchona Bark. There have been continuous leaks of these products to the Argentine. It is to be assumed that this traffic either has increased or may increase in the future. The grade of cinchona bark from Bolivia is better than can be obtained anywhere else. Here again, whatever goes to the Argentine is lost to the United Nations, and, what is still worse, in the case of this particular product, will probably find its way to the Axis.

I wonder whether this would not be an appropriate subject for the Policy Committee.37

Paul Linz
  1. Not printed.
  2. Laurence A. Duggan, Director, Office of American Republic Affairs.
  3. Philip W. Bonsal, Deputy Director, Office of American Republic Affairs.
  4. Charles F. Knox, Chief, American Republics Requirements Division.
  5. Not printed.
  6. Mauricio Hochschild, head of the mining firm of Mauricio Hochschild, S.A.M.I.
  7. Manuel Carrasco, Legal Counselor to the Hochschild firm.
  8. Department of State Policy Committee, established by virtue of Departmental Order 1218, January 15, 1944.