740.24112 RP/3–1446

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

No. 506

The Secretary of State refers to the Embassy’s despatches no. 2337 of February 27, no. 2396 of March 13 and no. 2385 of March 1412 concerning recent developments with regard to the Replacement Program in Bolivia.

In the last paragraph of Mr. H. Barger’s memorandum to the Chargé d’Affaires attached to despatch no. 2337 of February 27, it is suggested that a quid pro quo manner of dealing with the Bolivian Government in the matter of forging ahead with the Replacement Program be established. In this paragraph the tin negotiations13 and the continuation of the Proclaimed List are suggested as possible quid pro quos.

In view of the fact that the tin negotiations are going on in Washington at the present time and in view of the complexity of the problems involved in these negotiations, the Department considers it inadvisable to inject the matter of the Replacement Program in these negotiations.

With regard to the possible retention of the Proclaimed List for Bolivia after it is withdrawn from other countries in the Western Hemisphere, the way matters stand at the present time, it appears quite likely that the Proclaimed List will be withdrawn approximately May [Page 411] 8 for all countries in the Western Hemisphere, with the possible exception of Argentina. If the Proclaimed List is not continued for Argentina,14 it would not appear to be feasible to continue the List for any of the other Latin American countries. On the other hand, if it is decided to continue the List for Argentina beyond that date, it could not be maintained for any of the other American Republics without placing that Republic in a class with Argentina. It is doubtful that the Department would wish to place Bolivia alone in a class with Argentina exclusively upon the basis of performance in the Replacement Program. In the first place, some of the other countries have done no more than Bolivia on the Replacement Program, and, it is doubtful whether the Proclaimed List could be continued for these countries because of excellent performance in other respects. Moreover, many of the countries which have carried through a successful Replacement Program have done so in respect to enterprises owned or controlled from Germany but have taken no more effective action than Bolivia in the case of enterprises owned locally. In view of the foregoing, the Embassy will appreciate the difficulty of continuing the Proclaimed List for Bolivia if the List is withdrawn from other countries with the possible exception of Argentina.

The Department, however, believes that the basis for a quid pro quo may be found in the circular instruction of August 17, 1945 and March 20, 194615 with regard to the establishment of undesirable trade contacts. The circular instruction of March 20, 1946 strengthens considerably the position taken in the circular instruction of August 17, 1945. The Commerce Department now informs American firms that Proclaimed List firms which were deleted for reasons other than merit are not considered to be suitable trade connections by this Government and strongly recommends against formation of such contacts. The Commerce Department knows of no reason why American firms will not follow its advice in these matters. Should any firm, however, request clarification of this Government’s position, the Commerce Department is prepared to say that business connections with such former Proclaimed List individuals and firms would have to be a factor considered in cases arising for the protection of American interests abroad. While the Government always must protect American business interests, it would not wish to take any action which would assist those who formerly had worked against our vital national interests and who might do so again if opportunity offered. What this would mean for Bolivia, if the firms were not reorganized or replaced, is that the Commerce Department would strongly recommend [Page 412] American firms against establishing trade connections with them. Thus these firms which all during the time they were on the Proclaimed List were barred from doing business with the United States would, for an indefinite period of time following withdrawal of the List, have great difficulty in obtaining worthwhile American agencies, if indeed they could obtain them at all. It may be that the Bolivian Government feels that the Proclaimed List cannot last very much longer and that after the List is withdrawn, Proclaimed List firms will be able to resume normal trade relations with the United States. The Department perceives no objection to the Embassy’s informing the Bolivian Government of the above policy; in fact a very active publicity campaign urging American firms to contact the Commerce Department before establishing trade connections has been initiated. For example the attached press release issued March 29, 194616 is being given the widest possible circulation in American trade circles. This publicity campaign, of course, will not mention the withdrawal of the List.

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  1. None printed.
  2. For documentation on the tin negotiations, see pp. 374 ff.
  3. For documentation on Nazi penetration in Argentina, see pp. 182 ff.
  4. Neither printed.
  5. Printed ante, p. 77.