Memorandum of Conversation, by the Secretary of State

Subject: U.S.-Bolivian Economic Cooperation

Participants: The Secretary
Special Ambassador Javier Paz Campero
Ambassador Ricardo Martinez Vargas
Mr. James Espy—NWC

Señor Javier Paz Campero, Ambassador of Bolivia on a special mission to the U.S. called on me at noon today. He was accompanied by Ambassador Martinez Vargas.

Ambassador Martinez Vargas explained that Paz Campero had been designated by President Hertzog as a member of the Bolivian financial mission to negotiate a settlement of the Bolivian Foreign debt with the Foreign Bondholders Protective Council and that he was also commissioned by the President of Bolivia to take up other matters with this Government.

Ambassador Paz Campero said he first wished to express the greetings and best wishes of President Hertzog to President Truman and [Page 331] to me. I thanked him and asked him to convey my cordial greetings to President Hertzog.

Our conversation then turned to a discussion of the Bogotá conference1 where we had met this spring, he having been the head of the Bolivian delegation. I said I thought there were two lessons which we should learn from the sad events that occurred there. One was the necessity for the conservative and responsible people of this Hemisphere not just to sit back and allow bad conditions to develop which played into the hands of the radical subversive communist elements but to take the initiative and themselves meet the problems facing their countries. Otherwise they will find that they will be pushed into a corner and that other elements will force demands upon their governments far in excess of what is necessary.

The second point was the need for the Governments and the wealthier classes to undertake to educate, in democratic ways, the youth of the underprivileged and poor classes of the community. They should see to it that the promising young men are given an education, primary and secondary in their own countries and possibly in advanced studies abroad. I said if this is not done the communists will certainly seize the chance to train and indoctrinate those future leaders in the ideologies and ways of communism. I mentioned in this respect the part which the students had played in the Bogotá rioting.

Ambassadors Paz Campero and Martinez Vargas said that they agreed with me entirely.

Paz Campero then brought up the question of Latin-American economic development and the need for economic assistance from this country. I said that we had this very much in mind.

I then took the opportunity to mention the great difficulty we were having in meeting all the demands that are being made upon us. As an example, I said I had come back from a hearing on the allocation of steel where the problem of domestic and foreign requirements for that basic product was considered. Steel was needed for oil pipe lines in foreign countries which, in turn, would help to supply this country’s requirements for oil; but steel was in such short supply that if all the foreign requirements were met our national industries would not have enough to meet their needs. In fact this shortage was so acute that one American company reported that it would have to lay off eleven hundred workers if a supply of steel was not immediately allocated for its factory. This showed what a difficult situation we were in and the Department of State was the one that was in the middle and being pressed from all directions. I said we would continue to give our earnest consideration to the needs of all parts of the world one of which was, of course, Latin-America.

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Paz Campero then said he wished to bring to my attention, in particular, a matter which he considered of great importance to himself and his country. He explained he was a Senator in the Bolivian National Congress and all his life he had been espousing democracy in Bolivia and close cooperation between Bolivia and the U.S. He added that there had now arisen a situation which could have serious consequences both to the success of democracy in Bolivia and to relations with the U.S. He then went on to say that some years ago this Government had sent the Bohan Mission to Bolivia which had drawn up a plan for Bolivia’s economic development.2 In his opinion the plan was excellent and it had in fact come to be considered as a basic program for Bolivia and one in which the Bolivian people placed great hope. However, due to delays and other difficulties, the projects recommended by the Bohan Mission have not been executed. In particular progress on the Cochabamba–Santa Cruz highway, which is the most important of all projects, has been most disappointing. This situation has reached the state where the Bolivian Development Corporation, which was created to carry out these projects, is facing complete failure and the whole program recommended by the Bohan Mission is being seriously jeopardized. Ambassador Paz Campero hoped the Department could give its support to efforts being made to straighten out this situation and to strengthen the position of the Corporation. A specific action he requested to this end was renewed participation by the U.S. Government, through the Export-Import Bank, in the direction of the Corporation. In making this request, the Ambassador explained that such participation would restore direct cooperation between the U.S. and Bolivia in carrying out the operations of the Corporation recommended in the report of the Bohan Mission. He was confident that thereby the Corporation would be able to function much more expeditiously and effectively than it has in the past.

As further ways in which the U.S. could assist Bolivia, and which would represent a desirable complement to the original recommendations of the Bohan Mission, Ambassador Paz Campero requested that this Government give favorable consideration to the following proposals:

First: Credits be granted by the Export-Import Bank for financing hydro-electric development in the Lake Titicaca area and

Second: Assistance be provided in financing the migration to Bolivia of colonists from Europe.

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I told Ambassador Paz Campero I would study his requests and speak about them to Mr. Martin, President of the Export-Import Bank of Washington.

  1. For documentation on this subject, see pp. 1 ff.
  2. For text of agreement of January 27, 1942 and documentation on the United States Economic Mission to Bolivia (popularly known as the Bohan Mission, for the Chief of the Mission, Merwin L. Bohan), see Foreign Relations, 1942, vol. v, pp. 592 ff.