The Assistant Secretary of State for Inter-American Affairs (Miller) to the Chargé in Bolivia (Maleady)


Dear Tom: I have read with interest your letter to Bill Hudson of October 29, 1951 regarding Bolivia’s reaction on the tin contract.1 I sympathize fully with your position on this matter and feel that I owe you some personal explanation of our role (or lack thereof) in these negotiations.

After the installation of the Military Junta last August, the Department was so concerned over the situation in Bolivia that at the risk of incurring severe congressional criticism, we intervened with the RFC and Secretary Acheson himself personally pulled out of the air the figure of $1.12 for an interim contract. The reason for doing this was that we wanted to find some temporary break in the impasse with which we were then faced and we were motivated by the apprehensions; which had been expressed by various Bolivians that their economy was on the verge of collapse. We were somewhat surprised thereafter when the Bolivians dragged their heels on accepting the offer even on an [Page 1165] interim basis2 and especially when Ormachea3 told me in October that they had accepted the offer as a favor to the United States.

The discussions between the Bolivians and the RFC were resumed in December4 during the pendency of the interim contract and the Department felt that it should not get in between the Bolivian negotiators (who, after all, have been representatives of private producing interests) and the RFC. At least we felt that a bona fide effort should be made on both sides to reach an agreement on economic grounds without injecting political considerations into the discussions. I felt it important that we be scrupulous about this, not only because of the tendency of the RFC to engage in demagogic maneuvers against us with Senator Johnson,5 but because I was seriously alarmed when both Guachalla6 and Ormachea called on me after their arrival here and asked me virtually the same question, namely, what would the State Department do for Bolivia if the RFC did not treat them justly. I felt it important from the outset to make it clear that the Department was hot going to act as advocate for Bolivia and I hoped by making our position clear at the outset to make the Bolivians negotiate in good faith. I also felt it important that we discourage any idea on the part of the Bolivians that they could play us off against the RFC regardless of what action we might take vis-à-vis the RFC, if and when the time would come for us to take a position.

Two months have passed and there is no progress to date. I agree with you that the RFC has acted as if there were only commercial considerations involved and with little, if any, regard for the sensibilities of the Bolivians or for the strategic considerations involved. On the other hand, the Bolivian producers have not been helpful either in sticking to the impossible figure of $1.50 or intending to fight Symington through the press.7

Nevertheless, I have now reached the conclusion that it would be best for the Department to try to cut through this new impasse.8 Yesterday [Page 1166] at the Under Secretary’s meeting9 I raised with Webb and Thorp10 the desirability of our making a move, and we all agreed that it would be bad if we should do it as the State Department alone in view of our greater vulnerability. Mr. Webb and Thorp thought the time had come for us to take some action and Mr. Thorp was requested to approach Defense and Agriculture as well as Interior for the purpose of trying to come to a governmental position on what would be a fair solution to the present tin dilemma. It is not an easy case at all and Mr. Symington is perfectly right in his contention that we simply cannot accept the right of Bolivia to impose a constant series of new taxes on the tin industry and to require us to treat those taxes as legitimate cost items. This is the point on which the Bolivians have been least successful in their discussions.

I do not know where we will end up on this or what the time element may be. One ray of hope is that in a telephone conversation Monday Mr. Symington volunteered that he would be willing to “shade the price” of $1.12 with the possibility of some escalator feature, provided, however, that we give him a directive. Now perhaps some such idea may form the basis for the discussions which Mr. Thorp is to have.

In any case we will keep you informed of developments and keep up the great work you have been doing in a tough situation. We all have you in mind constantly and you have our complete confidence.11

With kindest regards,

Sincerely yours,

Edward G. Miller, Jr.
  1. In his letter, Mr. Maleady had assessed the degree of Bolivian resentment over the impasse in the negotiations for a long-term tin contract. He had stated that he could not “stress too greatly how badly people feel here,” and he had noted his concern that the situation might generate undesirable political repercussions (824.2544/10–2951).
  2. On September 5, 1951, a 30-day interim contract between Bolivian tin producers and the RFC was signed, providing for the payment of $1.12 per pound for tin concentrates, with smelter charges as specified in the 1950 contract.
  3. Hector Ormachea Zalles, Bolivian Special Ambassador to the United States.
  4. These discussions had been resumed on September 24, and suspended on October 25, 1951 (824.2544/10–2951).
  5. Lyndon B. Johnson, Chairman of the Johnson Committee.
  6. Luis Fernando Guachalla, Bolivian Permanent Representative to the Organization of American States.
  7. In a memorandum dated October 23, 1951, Mr. Brown stated, in part, that the Bolivians “are in no hurry [to sign a tin contract] since they are shipping their tin to [other] ports and getting substantial loans on it.” (824.2544/10–2351)
  8. In a memorandum dated November 2, 1951, Mr. Hudson stated, in part: “We have been assuming in ARA that the deadlock in the Bolivian tin negotiations would be broken soon by the approaching exhaustion of our supplies of tin for commercial consumption, which will occur within two or three months. However, E is now certain that the RFC is counting on being able to go into the tin stockpile to take care of commercial requirements.” (711.6/11–251)
  9. The Under Secretary’s meeting met weekly; it was customarily attended by the Deputy Under Secretaries of State, Assistant Secretaries of State, and office directors. The meetings were held at the Department of State, and Under Secretary of State Webb presided. A copy of the minutes of the meeting referred to by Mr. Miller, held November 7, 1951, is in Under Secretary’s Meetings, Lot 53 D 250.
  10. Willard L. Thorp, Assistant Secretary of State for Economic Affairs.
  11. Despite the efforts of the Department, which included bringing the Bolivian tin situation to the attention of President Truman and opposing any use of the tin stockpile as an economic weapon in tin negotiations, no agreement on a long-term tin contract between the Bolivians and the RFC proved possible during 1951 or 1952. Pertinent documents are in decimal files 398.2544, 711.63, and 824.2544.