The Ambassador in Bolivia (Flack) to the Secretary of State

No. 1021

Sir: I have the honor to refer to previous communications reporting the fact that the two presidential candidates, Drs. Enrique Hertzog and Luis Fernando Guachalla, recently requested a conference with me for the purpose of presenting their views on the above-mentioned subject.8

As previously stated, the two candidates then expressed their intention of submitting a memorandum setting forth more precisely the views previously expressed to me orally. This memorandum, dated February 24, was received yesterday by me and I enclose a copy with translation of the covering letter together with a copy and translation of the memorandum signed jointly by Drs. Hertzog and Guachalla.9 A copy of the Spanish text of the original letter will be submitted at a later date since it is desirable that the present report be despatched at the earliest possible moment.

The memorandum treats chiefly with the following points:

Tin is Bolivia’s chief source of foreign exchange for the purchase of imported goods, mostly from the United States, and delay in the exportation and suspension of income from tin prejudices Bolivia’s general economy.
The point is made that the tin producing companies have either suffered considerable losses requiring the closing of certain properties, including Oploca, or they have been unable to afford the necessary equipment for modernization of their mines.
Emphasis is given to the fact that the Banco Central of Bolivia has already invested all of its available assets in dollars to pay for needed imports and has been obliged to negotiate loans with the United States banks at high rates of interest, using Bolivian gold reserves in the Federal Reserve Bank as security.
Emphasis is also given to the necessity of avoiding the outbreak of social conflicts and labor disturbances resulting from unemployment and the point is made that it is a high moral duty of the United States towards Bolivia to instruct its fiscal agencies to proceed to the early conclusion of a new contract for Bolivian tin at the price which the producers have solicited.

I need scarcely emphasize the importance of the views of Drs. Hertzog and Guachalla, the two leading political figures in Bolivia, one of whom will be President of the country from early March 1947 until 1951. Their views are likewise strongly supported by the members of [Page 330] the present Junta of Government and other leading figures in Bolivia’s political and economic life as previous reports of this Embassy will reveal.

I therefore recommend to the Department the most favorable consideration of these viewpoints since I have the very distinct impression from all of the men of influence in Bolivia with whom I have talked that Bolivia will have a very strong feeling of having been let down, in addition to the dire economic consequences which she will confront if the United States is unable to come to her assistance at this time in this matter, and to consider the question of the tin price not alone as a commercial transaction.

Respectfuly yours,

Joseph Flack
  1. i.e., higher price for tin.
  2. None printed.