824.24/11–1444: Telegram

The Acting Secretary of State to the Chargé in Bolivia (McLaughlin)64

1118. For Ambassador and Egger from Department and Ex-ImBank. A meeting was held in the Export-Import Bank November 11, attended by representatives of the Department of State and Public Boads Administration, to consider the Cochabamba–Santa Cruz highway. A few days ago a strong letter of support was addressed by the Department to the War Production Board in an effort to obtain the requisite priorities for the equipment necessary to construct the road. The War Production Board (at a high level) has replied65 in categorical terms that it is impossible at this time to approve the scheduling of new equipment of the type requested and in the quantities necessary. The best the War Production Board could promise was an AA–5 rating which should enable the Corporation66 to start negotiations with manufacturers but which would not make new equipment available in much under a year. It seems clear that in the absence of a Presidential directive adequate equipment cannot be obtained on any basis better than the aforementioned AA–5 rating which the War Production Board is agreeable to assigning to the project.

The Department’s views are that from both a political point of view and in the interest of improving Bolivian economy as rapidly and as efficiently as possible construction of this road is desirable at the earliest possible moment. Nevertheless the Department has assurances [Page 540] that the state of the war is such that all the equipment that would be needed is destined to war uses and there is little likelihood of improvement in the foreseeable future. It is the Department’s further view that although the construction of the road is desirable this must be done in an efficient manner and on a sound financial and technical basis.

The Public Roads Administration has made clear that the survey of the road is not far enough along and that the estimates of contractors are so divergent (ranging from 13 million to 20 million dollars) that it is impossible at this time to say which kind of a road should be built, over what route it should pass, and how much it would cost. It is obvious that if the road far exceeds the 10 million dollars requested of the Export-Import Bank together with the amount allocated by the Corporation from its own funds to the project the other important aspects of the Development Corporation program would thus be seriously affected.

It was the consensus of the meeting that given the unavailability of new equipment at this time and the lack or indefinite nature of information of a technical character the best course now open to us is to have the Public Roads Administration send Messrs. Palmer and Harshberger,67 resident engineers in charge of the Central American work, to Bolivia to go over the situation fully with Cottrell68 so that the Corporation’s estimates of construction costs can either be confirmed or revised to determine the financial aspects of this project while at the same time to determine finally the design of the road to meet anticipated traffic demands as well as to ascertain the extent and availability of labor on the basis of which the minimum degree of mechanization can be appraised. It is our view that once this has been done and should it result that the work can be undertaken in an effective manner at a figure acceptable to the Bank we might then be able to go back to the War Production Board with the reduced mechanical equipment request which might, (repeat might) have some chance of approval and if in the near future or while the program of construction with reduced quantities of mechanical equipment is being carried forward the supply situation should improve then we could, of course, go forward quickly with full mechanization to meet the desired rate of progress.

We would appreciate the Embassy’s and Egger’s frank and full views as soon as possible.

Stettinius
  1. Drafted jointly by representatives of the Department of State and the Export-Import Bank.
  2. The War Production Board letter of October 21, 1944 (not printed), answered an application of the Foreign Economic Administration for materials, supported by the Department of State, and in a letter of November 1 (not printed), the Department of State informed the Board that political considerations outweighed economic factors (824.24/10–2144).
  3. Corporación Boliviana de Fomento.
  4. Wallace C. A. Palmer and Marvin L. Harshberger were Public Roads Administration engineers resident in El Salvador and Cuba, respectively.
  5. Benjamin Cottrell, an engineer of the Public Roads Administration, who supervised the surveying of the Cochabamba-Santa Cruz Highway.