Foreign Relations of the United States, 1952–1954, The American Republics, Volume IV

824.2544/9–852:Telegram

The Secretary of State to the Embassy in Bolivia ¹

secret

Washington, September 8, 1952—7:28 p.m.

70. Amb² from Miller. Re urlet Mann Aug 18³ we have been reviewing in Dept position we have been maintaining that RFC shd sign no long term tin contract so long as uncertainty exists re nationalization of mines. Depts position has been based on fear that signing long term contract cld be considered by Bol Govt as green light to confiscatory nationalization and that this wld have bad effect in other countries where US property rights are at stake. Statements from Chile since recent election re possible nationalization copper mines give us new cause for concern this score.

On other hand representatives of Mercantile Metal and Ore argued last week that signing of long term contract with them wld help Paz pursue more moderate course in dealing with tin mines and that our continued refusal to sign contract wld play into hands of Lechín. This argument does not appear convincing since there is no reason why Lechín cld not take credit for contract. Furthermore since Mercantile discussions with Paz latter has issued another public affirmation of intention to take over mines immed. Also we are hesitant about beginning discussions of contract while producing cos are still negotiating with Govt.

We wld appreciate ur comments on foregoing particularly on question whether immed sig long term contract with escape clause wld tend be moderating influence in re to Bol Govts tin policy or whether on other hand continued refusal to sign contract wld play into hands of Lechín. Pls bear in mind that in view of doubts as to Bol ability to pay prompt, adequate and effective compensation upon nationalization, contract wld probably have to contain broad escape clause giving RFC right to terminate contract or stop purchases upon nationalization. In this connection we have in mind possibility of extensive litigation which wld arise as to title to ores.

We realize it is difficult for you to express view on foregoing questions except in context of package deal involving econ assistance, but situation seems so confused in Bol both with regard to nationalization and otherwise that we hesitate to use even implied promise of such assistance as bargaining point at this stage. However, we wld appreciate receiving your opinion as to whether you cld effectively approach Paz at this stage to explain fully our point of view re tin. In such a conversation you might stress our willingness continue buy tin on day-to-day basis pending clarification of situation. You cld also say that once ultimate disposition of tin mines has been made either through agreement with owners or through payment of adequate and effective compensation we wld be willing work out with them a broader program of econ coop.⁴

Acheson

1. Drafted by Assistant Secretary Miller.
2. Edward J. Sparks was appointed Ambassador to Bolivia on Jan. 18, 1952; he arrived in La Paz on June 3 and presented his credentials on June 13, 1952.
3. Not found in Department of State files.
4. In telegram 80, from La Paz, dated Sept. 9, 1952, addressed to Assistant Secretary Miller, Ambassador Sparks stated that both the Bolivian Government and the tin producing companies were convinced that nationalization was an imperative political necessity. He stated further that the signing of a long-term tin contract, coupled with an offer of a broad program of economic cooperation, would be a moderating influence, but that he was uncertain whether he could effectively approach President Paz Estenssoro at the present time. (824.2544/9–952)