Memorandum of Telephone Conversation, by Mr. James Espy of the Division of North and West Coast Affairs


At 3 o’clock today Mr. Jesse Johnson, Deputy Director, Metals Reserve, RFC, telephoned me and said that at the meeting of the Board of Directors of RFC this morning, it was decided to reconsider RFC’s position that RFC would not agree to enter into a new tin concentrates purchase contract with the Bolivian producers for a higher price than that of the last contract; and to offer to negotiate a new firm contract with the Bolivian producers at an “acceptable” price for the rest of the year. Mr. Johnson said that RFC would not be able to pay 76¢ which the Bolivians are asking and I gathered that RFC’s top limit might be something around 72¢.

Mr. Johnson continued by informing me that he was consulting the political side of the Department for its views and also the economic side. He mentioned that the Economic Division, Mr. Kennedy’s office,6 had registered its strong opposition to any increase in price to be paid for Bolivian tin but he also wanted to know our opinion. He mentioned in this connection that he imagined that if political disturbances were occasioned in Bolivia because of the tin price they could affect the production of Bolivian tin which would be a natural concern to RFC.

I told Mr. Johnson that I believe that our views were the same as those which had been conveyed to him during the meeting in Mr. Kennedy’s office on Feb. 5th. I repeated them as follows, saying that unless he received word from me to the contrary, they could be accepted as stated: (a) we were not requesting RFC to raise the price of Bolivian tin; (b) we considered that the negotiations between RFC and the Bolivian producers were a commercial transaction between that Agency and the Bolivians and that we did not enter into it as regards price or terms; (c) we feel however, that if RFC could not arrange a contract or other methods of purchase with the Bolivian producers for their tin concentrates at a price acceptable to the Bolivians then (d) tin should be placed on a free market status which would allow Bolivians to sell it wherever and at such a price and on such terms as they were able to arrange.

With respect to the last point (d) I said that it was my opinion that unless the Bolivians were able to sell on a free market, then—despite the fact that there was no intent to do so, despite the fact that we have and are paying a very high and fair price, despite the fact that before any hypothetical court we could without question prove that we were [Page 328] fair and square with the Bolivians and that they had been remiss in not making the necessary readjustments to set their economic house in order—in the eyes of the Bolivian public, and possibly even the world at large, this country and Great Britain may well appear to be constituting what amounted to a purchasing cartel and that this again, with all the provisos that I have mentioned, laid us open to criticism on the part of Bolivia of restricting their trade in tin concentrates. Accordingly, to get this Government out of this position, we feel that our views as expressed in point (d) are logically justified. Mr. Johnson remarked that he fully appreciated this position and agreed with it.

  1. Donald D. Kennedy, Chief, International Resources Division.