811.20 Defense (M) Bolivia/11–2944
Memorandum of Conversation, by Mr. Louis J. Halle, Division of Northwest Coast Affairs
| Participants: | Ambassador Andrade of Bolivia |
| Señor Don René Ballivian, Financial Counselor of the Bolivian Embassy | |
| Mr. Wright, NWC | |
| Mr. Halle |
The Bolivian Ambassador came in at his own request, accompanied by Mr. Ballivian. He said he had now heard from his Government in response to the tentative proposal for an amendment to the tin contract made by representatives of the FEA on November 23. The Government proposed that the United States proposal be revised in accordance with the following considerations:
During the tin negotiations held in 1943,77 the United States had offered a price of 63½ cents retroactive to July 1 of that year. The negotiations had been broken off before their conclusion as a consequence of the December 20 revolution and the subsequent period in which the United States did not recognize the new Bolivian Government. At the outset, the new Government had felt so convinced that the charges made against it would be proved false within a month or so that it had expected a resumption of normal relations between the two countries by January or February of this year. Presumably, with the resumption of such relations the tin negotiations would be resumed and the offer of 63½ cents, retroactive to July 1, 1943 would stand good. The Bolivian Government, having to take some basis for estimating its income in preparing its budget, had taken the 63% cents, retroactive to July 1, 1943. The unfortunate prolongation of the period of nonrecognition had not been Bolivia’s fault. Furthermore, by taking a cent and a half off the base of the smelter schedule rather than adding it to the price of tin, the Bolivian Government would receive no increase in taxes from the one and a half cent concession. Therefore the Government suggested that (1) the price increase be made retroactive to July 1, 1943; or, if this was not possible, that (2) the price of 63½ cents be made retroactive to July 1 of this year, rather than beginning on the date of a new agreement, in order to compensate for the factors he had just outlined.
Mr. Wright made it quite clear that, when the offer of 63½ cents had been turned down last year and when the negotiations had come to an end, the offer no longer had any validity whatsoever and could not justifiably be made a basis for the calculation of the Bolivian Government’s income. He said further that the proposal now under consideration [Page 494] had not been cleared by the Board of the U. S. Commercial Company78 and he indicated that it was being very seriously questioned in certain quarters here. He said the only legal justification the FEA had for a price increase was that it would benefit production, and that such a price increase could not be made on any terms that would result in a restriction of production. Consequently, as had been discussed in the course of the tin negotiations, there would have to be formal agreement in connection with an amendment to the tin contract, that the Bolivian Government would not increase its taxes on tin. He referred to the difficulties encountered in arriving at the present proposal, since the original disposition within this Government had been to continue the price of 60 cents, and he said that there was no question of going beyond the terms offered in the present proposal.
The Ambassador asked how Mr. Wright’s comment on the need of an agreement to prevent an increase in Bolivian taxes on tin would apply to a revision of taxes for the purpose of preventing excess profits. He pointed out that Patiño79 had remained in New York, taking no part at all in the negotiations, but that the result of these negotiations, if the tax structure remained unaltered, would be to put $2,000,000 additional profits into his pocket. He said that, having come up here to participate in the negotiation of a new price agreement that would assist the Bolivian Government in its difficulties, he could not go back home and say that the net result of his efforts had been to increase the wealth of Patiño. He said his own career would be definitely finished in such case. Mr. Wright replied that he was referring only to export taxes.
Mr. Wright then undertook to speak frankly to the Ambassador regarding the concern felt in this Government at recent political developments in Bolivia. He said we had confidence in the high-minded and decent elements in the Government represented by President Villarroel, by Foreign Minister Chacón, and by the Ambassador himself. However, reports reached us from every direction that these elements were being pushed aside in La Paz and that the real power was falling into the hands of an irresponsible and extremist group. He alluded to the very bad impression that had been created here by the recent execution of eight persons in La Paz for alleged complicity in the abortive revolution of November 19, and to the fact that President Villarroel and Minister Chacón had apparently not been consulted in connection with this deed. He also referred to the recent political maneuver involving Major Inofuentes.80 He mentioned that [Page 495] Ambassador Thurston had expressed our concern to Minister Chacón about this matter. He said we were the friends of Bolivia and wished to be of assistance, but the political situation to which he referred created great difficulties for us.
The Ambassador said he felt he could assure us that no more such political killings would occur. He said further that our cooperation in the matter of the tin contract would strengthen himself and the elements he represented.
Mr. Wright said it was felt that a favorable offer on the price of tin by this Government might, rather, be taken by the extremist elements in Bolivia as an encouragement to further extreme action on their part. Actually, Mr. Wright said, the Ambassador could claim credit with his Government because, since he had arrived in Washington, he had succeeded in obtaining an offer that was almost five cents better than what was being offered before his arrival. The Ambassador asked whether there would be any possibility of making this clear in La Paz through our Embassy there. Mr. Wright said we would be glad to give the matter thought and that, in any case, there was a possibility he might be able to visit La Paz for a day or two in the course of his forthcoming trip to Chile.
The Ambassador expressed his appreciation of Mr. Wright’s frankness. He said he was going to Miami tomorrow to meet his family and, after his return to Washington next Monday (December 4), would communicate further regarding the tin negotiations with Mr. Halle.
- See Foreign Relations, 1943, vol. v, pp. 552 ff.↩
- A United States Government instrumentality, successor to the United States Purchasing Company.↩
- Simon I. Patiño, president of the Patiño Mines and Enterprises, Inc.↩
- Maj. Clemence Inofuentes, said to have been elected and to have resigned from the vice presidency earlier in November.↩