Memorandum by the Assistant Secretary of State for American Republic Affairs (Braden)

If, as I understand is the case, the Eximbank has definitely committed itself to the 5½ million dollar credit for the development of petroleum resources in Bolivia, we must of course stick to this commitment.

If, however, we have not committed ourselves, I think we had best take a good look at the situation from the aspects that (1) such a credit is unsound, and (2) it would be in contradiction to the policy which we have established in Chile.

If the latter (re no commitment) proved to be the case, I would regret it because we have of course wished to assist the present Bolivian government but, in point of fact, I do not feel that the issuance of this credit would really assist them. On the contrary, we had better look around for some other way of doing so.

In reading through the attached memorandum,87 the following additional considerations occur to me:

Perhaps the drilling rigs are already in the field and the necessary geological and geophysical work completed so that fifty wells could be drilled for $20,000 apiece. Especially would this be true since I understand the oil stratae are relatively shallow. On the other hand, have the possibilities of deep drilling been thoroughly investigated?
During 1937 and 1938 I sent in extensive reports from my Chaco delegation on oil developments in this entire area. A search of my files has not produced any copies of this correspondence which probably was in official despatch form but, as I recall the figures, the expenditure of 10 million dollars would be insufficient and in any event the return inadequate. This is one of the reasons why I say that perhaps the extension of this credit would not be of genuine assistance to the Bolivian government.

As a further consideration, instead of the Bolivians trying to keep on half government and half private enterprise, would it not pay them to get two or three private companies in to do a real job?

Spruille Braden
  1. Not printed.