740.24112 RP/1–2546

The Chargé in Bolivia (Adam) to the Secretary of State

confidential
No. 2141

Sir: I have the honor to refer to Department’s telegram No. 35 of January 22, 1946,95 concerning the replacement program in general and the Gundlach case in particular.

[Here follows a discussion of the Gundlach case, in particular, and of other firms and individuals. Cornelius F. Gundlach, born in Holland of German parents, became a Bolivian citizen in 1919, and served in the Chaco War with distinction. His firm was placed on the Proclaimed List, but it was not subjected to an interventor and its funds were not blocked.]

. . . . . . . . . . . . . .

These examples demonstrate clearly the lack of understanding of hemisphere politics and a decided disinclination to assist in the replacement program. The Embassy in view of these facts has been well pleased with the progress made, even if it has been slow and it believes that the best possible results have been obtained.

These results are not due to the Government’s desire to liquidate the spearheads but simply because of the constant pressure from the Embassy, which feels that the Government would be only too glad to throw out the program if an opportunity was afforded it and to attempt to use the Gundlach case as a lever would afford them that opportunity which would be disastrous to the whole program.

The Minister of Economy96 has repeatedly stated that with the tight control of Foreign Exchange resulting from decree No. 385 of [Page 405]September 22, 1945, there is every reason to believe that the Proclaimed List firms will soon be forced out of business because they can only obtain Foreign Exchange in the black market, which is very limited, and then they can obtain merchandise only through cloaks since Import Licenses are not granted Proclaimed List firms.

The matter of the remaining three large firms, Kyllmann, Bauer & Co., Zeller, Mozer & Cía., and Juan Eisner & Cía. now rests with the Minister of Economy and until a decision as to the legality of their transfers has been made, nothing remains but to wait.

In its approach to the Gundlach case the Inter-departmental Proclaimed List Committee has shown such a complete inability to visualize the problems of the replacement program in Bolivia that it appears strongly advisable for this committee to limit its communications to this Embassy in the future to a bare minimum, so as not to distract the understaffed economic section from more important work.

Respectfully yours,

Hector C. Adam
  1. Not printed.
  2. Jorge Zarco Kramer.