824.2544/8–2550: Telegram

The Secretary of State to the Embassy in Bolivia


51. Absence Amb Martinez Vargas, Min Counselor Peñaranda informed fol today:

US Govt disturbed possible impact Aug 11 exchange decree level Bol production strategic minerals and gen level Bol economy. Although Dept does not intend espouse cause mining industry nor wish interfere internal affairs Bol, reps several cos formally protested decree recent days alleging wld be forced restrict production up to fifty percent or close down completely. Dept does not necessarily accept allegations at face value but informed plans expansion operations and investment new capital abandoned. In addition natural interest US [Page 753] auth continued availability strategic materials, US wld consider unfortunate any measure tending further depress econ activity and discourage private capital investment especially while US attempting thru loans public funds and other programs contribute to development economy. This Govt aware work UN Mission and hopeful final recommendations now being coordinated Lake Success to be presented later this year will provide basis sound econ and fiscal reforms leading to stability and prosperity. Considers it unwise take precipitate action raise present decree level law without considering its place in over-all planning. Consequently, this Govt concerned precipitate enactment decree into law by Congress without opportunity full discussion. This connection, Dept recalls frequent eloquent pleas Bol Govt earlier this year special assistance tin mining industry basis industry cld not produce even at restricted post-war rate with price only about seventy-five cents and required about ninety cent price meet operating expenses. Dept cannot and will not attempt determine exact price needed, but recognizes fact Bol operations high cost and require larger dollar expenditures than in many other countries.

You are instructed make above views known Bol Govt earliest, emphasizing importance detailed study technical aspects above problems prior enactment law.1

For urinfo, Dept anticipates opportunity next week discuss Bol problems Keenleyside, especially implications statements to press Aug 15 re nationalization mining industry.

  1. In response to Ambassador Florman’s request for further instructions in telegram 98 from La Paz, August 27, the Department replied in telegram 53, August 28: “US of course cld have no objection sound econ plans fiscal and tax reform based on careful technical studies which wld enable use part present windfall high prices strategic materials in gen econ development prepare Bol avoid another crisis end present world emergency and return normal conditions. Avoid any indications US Govt requesting modification decree … Emphasize advisability postponement legis as outlined penultimate para Deptel 51.” (824.2544/8–2750)