Memorandum by the Assistant Chief of the Division of North and West Coast Affairs (Mills)29
Mr. Jewett of Metals Reserve, RFC, telephoned this morning to inform me that late yesterday RFC reached an agreement with Bolivian producers for the purchase of Bolivian tin by the Corporation during the years 1948 and 1949.
The contract covers all non-Patiño tin except 8,000 tons which Bolivia may be required to sell to Argentina under the recently concluded trade agreement with that country. In 1949 RFC can exercise an option and cancel the contract on six months’ notice.
The base price is 90 cents a pound compared with 76 cents in the 1947 contract. There is a tie in with the RFC selling price for Grade A tin—the price paid the Bolivians will go up or down if the RFC selling price fluctuates. There is also included in the contract a deferred pricing arrangement under which the Bolivian producers can select [Page 342] the effective pricing date which cannot be before and must be within three months after the delivery date. Another provision reduces the “unit deduction” by one tenth or by 2.2 lbs. per ton. The effect of this as I understand it is that RFC pays for 2.2 lbs. more in each ton than under the 1947 contract.
There was almost a last minute hitch in the negotiations. The Bolivian producers and the RFC negotiators were congratulating each other on having concluded the agreement late yesterday afternoon. Jewett of RFC mentioned to the Bolivian Ambassador that as soon as he sent to the latter a signed copy of a draft letter regarding a guarantee of deliveries by the Bolivian Government, and the Ambassador replied, the agreement would be complete. The Ambassador replied that he was not happy about the terms and the Bolivian Government could not agree to them. Jewett was greatly surprised since the Bolivian Ambassador had had his draft letter for a week and had not raised any points with respect to it. Its provisions are the same as those which have been observed during the past seven years. He said if the Bolivian Ambassador meant that the Bolivian Government would not guarantee deliveries then the whole agreement fell to the ground. The Bolivian Ambassador talked vaguely about a free market and if higher prices were paid in such a market Bolivia should receive them.
This morning the Bolivian Ambassador told Jewett by telephone he would answer the letter guaranteeing deliveries and deliver his answer by 10:30.
At 11:15 Jewett called to say that the Bolivian Ambassador had informed him by telephone he had been delayed but he would deliver his letter of guarantee this afternoon. He authorized RFC to issue, at 11:30 as planned, the agreed press release and Jewett planned to do this.
Jewett said that agreement with the producers is complete while that with the Bolivian Government may be a little fuzzy, but probably it will do.
- Addressed to Messrs. Daniels and Anderson and to Mr. Lyons of A–A.↩