Memorandum of Conversation, by Mr. William P. Hudson of the Office of South American Affairs


Subject: RFC Tin Contract Offer

Participants: Sr. Ricardo Martinez Vargas, Ambassador of Bolivia
OSA—Mr. Warren
OSA—Mr. Krieg1
OSA—Mr. Hudson

Ambassador Warren said that the officers of the Department had been glad to hear yesterday the good news that the RFC had made a new tin contract offer to Bolivia. He would like to hear from the Ambassador the full details of this offer.

Mr. Symington had informed him, Ambassador Martinez said, that he realized that a price of $1.03 per pound was too low for the high-cost Bolivian producers. In order to save time while necessary further consideration was being given to the question of a price which would be fair to both parties, Mr. Symington had proposed the immediate signing of a contract on the following terms. Bolivia would receive a price of $1.12 per pound pending further negotiation of the price question on the basis of the study now being made by the RFC. If a different price were later mutually agreed upon it would be applied retroactively to cover all shipments previously made under the contract. The period of the contract would be June 1, 1951 through May 31, 1952. This one-year contract would be extended for an additional year at a price to be determined by further study at the appropriate time. Ambassador Martinez had inquired whether the price would be related to the export prices of United States goods. Mr. Symington had replied that this was too complicated a question to be discussed at present. Mr. Symington had told him that he was aware of Bolivia’s need for assistance but that such assistance did not fall within his jurisdiction.

[Here follows an exchange concerning the possibility of an increase in the production of Bolivian tungsten.]

Mr. Warren said that the Department of State would of course continue to think hard and sympathetically about Bolivian problems. However, the United States also had an obligation to try to relate its [Page 1160] evaluation of Bolivian problems to United States aims throughout the world. At this moment the United States was thinking in the broadest terms of its history. It was under attack throughout the world in defense of ideals common to the western hemisphere. Recognizing the special difficulties in Bolivia, the highest officers of the American Government had studied the Bolivian tin problem and had formulated the RFC offer in the light of world-wide U.S. obligations. The Department realized that the Bolivians did not find the offer completely satisfactory, but the Department considered it generous under all the circumstances, especially as it evidenced willingness on the part of the United States to continue studying the problem. Mr. Warren hoped that Ambassador Martinez would point out to his Government that the contract offered by RFC represented a beginning and would recommend that his Government make the best of the present difficult situation by accepting the offer.

Ambassador Martinez said that he had already pointed out to his Government that the offer was of a provisional nature and designed to serve as a stopgap in the present emergency. In his cable transmitting the offer, he had reported that Assistant Secretary Miller had told him that he thought it was worthy of very serious consideration. He was afraid, however, that the Government and the Bolivian producers might not feel that the offer was sufficient even as a stopgap measure, since the $1.12 price would not cover the costs of many Bolivian producers.

Mr. Warren inquired what measures the Bolivian Government might take to make the $1.12 tin price economically feasible to the high-cost producers. The RFC offer at that price had been made, he said, after the very highest officials of the United States Government had given considerable time and thought to determining the maximum degree of assistance which the United States could give to Bolivia under the present circumstances. The price arrived at was about halfway between what the RFC wanted and what conservative tin interests in Bolivia considered an acceptable minimum. The offer made by the RFC afforded the possibility of a later price readjustment on the basis of further sympathetic consideration. While he realized that the $1.12 price was not fully satisfactory to the Bolivians, he wondered whether the Bolivian Government might not take steps to make this price practicable in the interim until full consideration could be given to the possibility of a readjustment. [Ambassador Martinez made a special note of this idea.]2

Ambassador Martinez estimated that the United States must require 100,000 tons of tin a year, including its stockpile acquisitions. Since Bolivia provides only 18,000 to 20,000 tons of this total, a price increase would not amount to much if applied to Bolivian tin alone, but would [Page 1161] be costly if it had to be applied to all United States imports of tin. He thus felt that, in view of Bolivia’s position as the only western hemisphere producer, Bolivia should receive preferential price treatment.

Ambassador Martinez was not sure what his Government might be able to do for the high-cost producers, although he supposed it might give them relief through differential exchange rates. He wondered if the Departmental officials had any suggestions.

Mr. Warren replied that he had nothing specific in mind; he was convinced, however, that the Bolivian Government must do something because the offer made by RFC represented the farthest point to which the United States could go at this time.

  1. William L. Krieg, Officer in Charge, North and West Coast Affairs, Office of South American Affairs.
  2. Brackets in the source text.