740.24112 RP/3–1346

Memorandum by Mr. H. H. Barger, Economic Analyst in Bolivia, to the Chargé in Bolivia ( Adam )1


This afternoon I called on the Minister of National Economy, Jorge Zarco Kramer, and presented the replacement program covering nine [Page 407] spearhead firms and one smaller firm which was included at the suggestion of the Legal Adviser of the Ministry of National Economy, Dr. Anibal Mollinedo Imaña. The Minister read over the recommendations and had no changes to suggest. He promised to present the program as outlined to the Economic Defense Board with a recommendation for action.

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During my conversations with the Legal Adviser of the Ministry over a period of ten days, the various difficulties involved in dealing with the replacement of the above-mentioned firms were discussed and an overall plan was adopted. It was decided by Dr. Mollinedo and me that seven of the firms should be recommended for expropriation under existing Bolivian decree-laws, that one, C. F. Gundlach y Cía., should be sold to ex-employees and that the other two firms should be reorganized with acceptable democratic Bolivians gaining majority control of the firms. This program was then presented to the Ministry of National Economy who promised to present it to the Economic Defense Board for action.

In considering the program it must be realized that the sub-committee appointed to investigate the transfers of Zeller, Mozer y Cía., Kyllmann, Bauer y Cía. and Juan Eisner y Cía. has not as yet, despite the fact that it has had over three months to do so, considered the matter. However, it was decided by Dr. Mollinedo and me, that in view of the long delay, it would be best to present the plan as though these three transfers had already been declared invalid. During my conversation with the Minister of National Economy, he stated categorically that the Economic Defense Board would decide the cases of these three firms tomorrow. This evidently means that the Economic Defense Board will not wait for any decision of the sub-committee.

In presenting the recommended replacements I attempted at all times to impress both the Minister of National Economy and the Legal Adviser of the Ministry that the replacement program was that of Bolivia and not of the Embassy, and that I had been sent down to assist the Ministry of National Economy and the Economic Defense Board rather than as an employee of the State Department. Therefore, in presenting the program I added four benefits which would result to the Bolivian Government if the replacement program were enforced immediately. These points2 are also enclosed with the recommended program. The Minister of National Economy agreed to bring these benefits to the attention of the Economic Defense Board at its meeting tomorrow.

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Reasons for Immediate Enforcement of Replacement Program

With replacement program the Government will eliminate absentee owners who are draining foreign exchange out of the country, clandestinely and illegally, i.e., Elsners (one partner in Germany, another in Argentina), Zeller, Mozer (owners are in Germany and Switzerland), Findel (owner is in Germany), etc.
Funds thus kept in the country will aid to bolster the monetary position of the country and stabilize foreign exchange.
With the replacement of the Axis firms and the blocking of the funds obtained from their sale, the Government will have more than Bs. 200,000,000 which can be used for the development of the natural resources of the country.
The effective enforcement of the replacement program immediately, will open the way for free commercial relations with the other Allied nations without such obstacles as the Black List, etc.
  1. Copy transmitted to the Department in despatch 2396, March 13, 1946, from La Paz, not printed.
  2. Printed as annex to this memorandum.