811.516 Export-Import Bank/7–1947: Telegram

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

us urgent

678. Situation with regard to highway and McGraw–Warren contract has changed little since my 642, July 7.43

On July 15, I handed Foreign Minister two copies Exim Bank’s memorandum to Bolivian Ambassador, Washington, of June 30, which he had translated and presented to Cabinet yesterday. In conversation today with Guachalla, he said government had abandoned insistence on unit price but would seek to retain services PRA in connection with plans. He is optimistic that agreement will be reached with McGraw–Warren.

However, financial difficulties corporation caused by nonpayment by Bolivian Government of its obligations to corporation amounting to $3,125,000 have complicated situation and produced published letter from president BDC to Minister Economy reiterating his previous [Page 351] statement to Hertzog and setting forth whole situation while calling upon the government to pay amount due lacking which corporation’s activities will have to terminate August 1. Although Minister Finance46 is openly opposed payment this amount and is publicly recommending termination of Cochabamba–Santa Cruz highway work, Minister Economy told me today he strongly favors continuation of work as does Foreign Minister Guachalla.

Guachalla at Foreign Office this afternoon referred to oral statements here by Kinnear and others that Exim Bank would favorably consider financing highway work from exhaustion BDC funds to time when petroleum program may produce funds for highway termination. Guachalla asked me to ascertain for him from Exim Bank whether more concrete assurance in principle than the Kinnear statement might be secured now from Exim Bank that upon previous inauguration payment government’s present obligations to BDC and satisfactory amended contract with McGraw–Warren, Exim Bank would take care of financing in the gap expected to arise in May, 1948, even with payment to BDC of government’s debt.

I consider this most critical situation for corporation and related highway construction and I recommend most strongly that Exim Bank send me most specific statement possible about financing highway completion which I may convey to Foreign Minister for Bolivian Government on question above set forth. Guachalla and Costas share my view of helpfulness such step now.

Embassy informed by BDC that Holloway and Durso47 may arrive shortly to complete negotiations re McGraw–Warren contract. Consequently I request urgent reply re Exim Bank’s position.

  1. Not printed.
  2. José Alcides Molina.
  3. Francis K. Holloway, Assistant to the President of Warren Brothers, and Albert Durso, Vice President of F. H. McGraw Company.