811.20 Defense (M) Bolivia/6–1645
The Assistant Secretary of State (Clayton) to the Foreign Economic Administrator (Crowley)
Dear Leo: With further reference to the telephone conversation between Acting Secretary Grew and yourself on June 16, the subject of renewal of the tin purchase contract with the Bolivian producers has been under discussion between representatives of the Foreign Economic Administration and the Department during the past ten days. The [Page 581] Department has indicated to the representatives of the Foreign Economic Administration, in particular Mr. Scheuer53 and Mr. Gardiner, that, as there seems to be general agreement with respect to a continuing demand for Bolivian tin for at least one year and possibly a year and one-half or two years, it would be advantageous in the national interest to extend the tin purchase contract with Bolivian producers for one year. The Foreign Economic Administration representatives have agreed in principle to the extension of the contract for one year with a six months’ option for renewal.
The Department has taken the position that, although negotiation of price is the responsibility of the Foreign Economic Administration, whatever cut-back in price is agreed upon should be in conformity with Resolution XXI of the Final Act of the Inter-American Conference on Problems of War and Peace held at Mexico City February–March 1945.54 The Department has been informed by Mr. Gardiner that the Foreign Economic Administration wishes to negotiate a contract which would reduce the price paid for Bolivian tin ores from the present price of 65 cents per pound to 55 cents within a six months’ period, on the basis of a year’s contract, during which reductions from 65 cents to 55 cents would be carried out every two months during the first six months of the contract, the price during the second six months to be at the average world price or the highest price paid to any other country.
Reviewing the criteria established in Resolution XXI referred to above, specifically paragraph 2 (a), it would appear that the reduction contemplated by Mr. Gardiner runs counter to both the spirit and letter of the commitment entered into by this Government at Mexico City. It will be recalled that the resolution under reference was cleared with the representatives of the Foreign Economic Administration on the American delegation who contributed most constructively in the drafting of the resolution.
Under the terms of the tin contract which expires June 30, 1945, this Government has been purchasing Bolivian tin concentrates at 63½ cents per pound, plus one and one-half cents bonus on smelting charge deductions, f.a.s. West Coast ports. The Department is fully in accord with the principle that, in accordance with the terms of Resolution XXI of Mexico, there should be an orderly reduction of our purchase program of strategic materials for war so that the other American [Page 582] republics which are producers of such materials may as rapidly as possible place themselves in a position to re-establish normal commercial trade in these commodities.
The Department feels that, in view of the continuing demand for tin for the war effort and the importance of continued access to the Bolivian ores at this stage in the prosecution of the war, it would be desirable both from the point of view of securing a strategic war material which is critically needed and from the point of view of carrying out the commitment entered into at Mexico that the reduction in the price of tin be along the following lines:
- 90 days at present price, which is equivalent to 65 cents per pound.
- 90 days at 63½ cents.
- 90 days at 62 cents.
- 90 days at 60 cents.
- Prices to be on present basis, which is f.a.s. West Coast port.
- Option for year: Six months at 57½ cents; six months at average world price.
If you concur in the above suggestion, may I suggest that an early meeting be scheduled with the representatives of the Bolivian Government in Washington and, as has been the case in the past, with representatives of the Bolivian tin producers with whom the contract is to be negotiated.
- Sidney H. Scheuer, Executive Director, Bureau of Supplies, Foreign Economic Administration.↩
- For text of Resolution XXI, see Pan American Union, Final Act of the Inter-American Conference on Problems of War and Peace, Mexico City, February–March, 1945 (Washington, 1945), p. 61. For documentation on this Conference, see pp. 1 ff.↩