The Assistant Secretary of State ( Clayton ) to the Chairman of the Board of the Reconstruction Finance Corporation ( Henderson )

My Dear Mr. Henderson: During recent weeks conversations have been held between representatives of this Government (including officers of the Reconstruction Finance Corporation) on the one hand, and representatives of the Bolivian Government and tin mining industry, on the other hand, in respect of the purchase of tin from Bolivia. As a result of these discussions a tentative formula has been reached in the United States group, but not yet communicated to the Bolivian representatives, which would call for an arrangement with Bolivia along the following lines:

A revision of the present contract would provide that retroactive to April 1, 1946, the price to be paid for Bolivian tin be 62 cents per pound under the present smeltering schedule containing the l½-cent smelter credit. Also effective April 1, 1946, a production bonus of 1½ cents per pound would come into effect provided deliveries of tin to the United States exceeded a stipulated amount and with an unchanged smelter schedule and smelter credit.

As you know, this Government, under resolutions adopted at the Mexico City Conference, is pledged to ease the shock to the economies [Page 387] of the other American republics in the curtailment of our purchasing programs and in downward price readjustments. It has been in this spirit that both the RFC and the Department of State have approached these problems in Bolivia and other of the American republics. It is the belief of the Department of State that the afore described formula for the purchase of Bolivian tin would provide a solution which would at once be equitable to the Bolivian Government and economy as well as to this Government as purchaser.

The discussions which have thus far been held point to the unquestioned need on our part during the next year to year and a half of Bolivia’s tin resources. The conclusion of a contract running from July 1, 1946, to either December 31, 1946, or June 30, 1947, along the lines of the aforedescribed formula should offer us the supply security which we require.

In addition to the considerations set forth above, I should like to make clear the political desirability of maintaining in Bolivia a stable economic, political and social situation, and it is this Department’s view that the early conclusion of the contemplated tin negotiations along the lines of the discussions now being held and as set forth above will contribute greatly to that end.

Sincerely yours,

William L. Clayton