Memorandum of Conversation, by Mr. Spencer M. King of the Division of North and West Coast Affairs


Subject: Cochabamba–Santa Cruz Highway

Participants: Bolivian Ambassador, Señor Don Ricardo Martinez Vargas.
ARA—Mr. Daniels1
NWC—Mr. King

On November 17, 1948, the Bolivian Ambassador called on Mr. Daniels to leave with him a copy of a formal application for interim credits of $175,000 per month which he had presented to the Export-Import Bank the preceding day on behalf of the Bolivian Development Corporation which hopes to receive the funds to continue work [Page 337] on the Cochabamba–Santa Cruz Highway pending completion of a new contract with a United States construction firm.2

The Ambassador stated that he felt this to be the most important visit he had paid Mr. Daniels because of the vital importance to his country of ensuring that there would be no interruption of the Corporation’s activities. He gave a brief resumé of the importance of the project in consideration of the precarious economic, social and political conditions existing in Bolivia and the international aspects of the program. He noted that the resources of the Corporation have been exhausted and that it cannot continue operations without the assistance requested of the Export-Import Bank.

Mr. Daniels asked the Ambassador to clarify the “international aspects” of the project. The Ambassador said there were two: Argentine-Brazilian rivalry and United States prestige and interests. On the first score, he mentioned Bolivia’s role as a “buffer state” preventing open conflict between its two powerful neighbors. Each of these is building a railroad into eastern Bolivia and the region must be tied to the rest of the country by the Highway in order to avoid a conflict for control of the Santa Cruz area. On the second point, the Ambassador expressed his feeling that the friendly feelings existing between the United States and Bolivia might be jeopardized by any action which could be interpreted as a discontinuance of interest in the Highway on the part of the United States. He said that the “Fifth Column” would attack the United States and convince people that we had taken all we could from Bolivia during the war, made big promises of economic assistance and were now refusing to carry through a program begun only for our own selfish interests.

The Ambassador stated that there were several United States construction firms interested in undertaking the completion of the Highway. He seemed especially interested in one which he repeatedly called “The Miller Company”. It is assumed that he referred to the Mills Company. He also mentioned the “Johnson Company of South Carolina” and the “Utah Company”. Mr. Daniels pointed out that selection of a contractor was a problem of the Bolivians in which the Department could not be involved.

Mr. Daniels promised that the application would be studied and that the Department would do its best to obtain favorable action on the request for interim financing. The Ambassador stated that he was [Page 338] aware of the Bank’s position as an economic agency, but he had approached the Department in the hope that the other aspects might be considered.

  1. Paul C. Daniels, Director of the Office of American Republic Affairs.
  2. In despatch 799 of November 5, 1948, not printed, the Ambassador in Bolivia (Flack) reported that the Chief of the Public Roads Administration Mission (Cottrell), which had been in Bolivia for the last five and one-half years to survey and prepare the engineering plans and specifications for the Cochabamba–Santa Cruz highway, had informed him that the entire survey and all the plans and specifications had been completed and members of the survey mission planned to depart about November 8 (824.154/11–548).