Memorandum of Understanding Between the Department of State and the Foreign Economic Administration Concerning the Purchase of Bolivian Tin
In the course of negotiations now being carried on with the Bolivian tin producers (with the informal participation with representatives of the Bolivian Government) it was agreed between the Department of State and the Foreign Economic Administration that our point of departure in negotiating for the purchase of Bolivian tin until the expiration of the present contract on June 30, 1945 should rest on a 63½¢ base price with a revised smelter schedule, in accordance with letters exchanged on November 6 and November 14, 1944.75 The Bolivian producers and the Government have insisted on a price of 660 with the old smelter schedule or a price of 67½¢ with the revised smelter schedule.
After a number of meetings, in the course of which we rejected the Bolivian proposals of either a 67½¢ or 66¢ price and in the course of which the 63½¢ price with the new smelter schedule was proposed, the negotiations deadlocked. A further meeting was held in an effort to break the deadlock. This was unsuccessful. Subsequently two meetings were held by the representatives of State and FEA in an effort to determine upon some alternate course of action which would [Page 492] be in keeping with our common desire to assure an adequate supply of tin at the lowest possible price.
On grounds of straight procurement (disregarding political conditions in Bolivia) FEA is satisfied that production would continue at substantially the present levels on a 63½¢ basis; that while some of the high-cost mines might close, no reasonable price increase would maintain them in operation. Furthermore, FEA is currently procuring tin from other sources at lower prices.
In view of the financial condition of the tin mining industry and of the Bolivian Government, and owing to the fact that the political situation in Bolivia has been disturbed for over a year (due to one successful revolution and a recent abortive one), and in the light of the present situation of Argentina vis-à-vis the other American Republics (in particular their next door neighbor, Bolivia), it was agreed between State and FEA that the political situation in that part of the Hemisphere has a direct bearing on our making secure an adequate source of supply, as a political upset might well seriously interfere with tin procurement.
In the light of the foregoing, it was jointly determined that a final offer would be made to the producer-Government group of negotiators as follows:
- The base price of tin between July 1, 1944 and the date of acceptance between producer and Government of the offer to be 62¢ per pound with the smelter schedule presently in force.
- On the date that this offer is accepted, the price of tin to be 63½¢ per pound of payable tin; the revised schedule of smelter charges proposed on November 4, 1943, to become effective simultaneously, but deductions to be made from such schedule in a manner to yield an additional 1½¢ per pound of payable tin.
- The State Department will secure an undertaking, through an exchange of notes with Bolivia, to freeze the export taxes now levied on tin at the existing rates.
Department of State
Office of Wartime Economic Affairs 76
November 25th, 1944
Foreign Economic Administration
Foreign Procurement and Development Branch