824.054/9–2452:Telegram
The Secretary of State to the Embassy in Bolivia 1
86. From Miller. Ur conversations with Bol officials (urtel 97) seem to have been helpful in clearing air and establishing basis further discussion.
When you see Paz again you may confirm that our position re nationalization is not due primarily to US investment in Bol but also to other factors incl undesirability of precedent of confiscation. You might inform him we fully recognize Bol right take over mines. However, we are concerned about principles, about our responsibility protect interests US cits, and about harm which confiscatory nationalization might do to present good US-Bol relations. Moreover we are much concerned over effect of nationalization upon Bol economy because of (1) probable adverse effect upon operations (2) litigation [Page 507] that cld ensue, with concomitant tying up of funds, and (3) danger to Bol credit standing in general and discouragement to sound foreign private investment if no agreement is reached as to compensation. Under circumstances it seems better avoid any further discussion long-term contract. If Paz shld raise question as to our purchasing policy after nationalization without agreement as to compensation, you shld avoid discussing this but without giving impression either that we wld make a contract or that we wld refrain from any ore purchases. FYI we have not crossed this bridge and Dept policy would depend in part on consideration of Iranian problem. Your views this point wld be welcome.
Former Sen Millard Tydings2 conferred with Dept officials today in capacity lawyer for Hochschild and Aramayo. He requested we approach Bol Govt with proposal from him along fol lines which you are authorized in ur discretion to pass on to appropriate Bol officials. Hochschild and Aramayo accept fact nationalization inevitable and Tydings is sympathetic to Bol Govt aspirations and wishes be cooperative. He considers that from standpoint of all concerned principal issue is how to compensate cos and he believes, on basis of his experience with similar situation in another country, that he cld work out an arrangement that wld be generous to Bol and at same time wld prevent stigma on Bol Govt of outright confiscation. Apparently Tydings thinking of some apportionment of ores, which might be reconciled with Paz idea expressed to you. Tydings suggested Bol Govt might send someone up here to meet with him and explore preliminary outline of compensation agreement. He considers Wash best place for preliminary talks since RFC here, altho FYI we do not believe RFC wld want to be in position of refereeing dispute as to what is fair compensation. Also FYI, Tydings seemed to imply that cos wld recognize some claims to back taxes by Bol Govt. We do not necessarily endorse Tydings proposal but it is not inconsistent with our hope that a formula for nationalization cld be found under which our tin procurement cld go on without involving us in possible disputes with original mine owners. Consequently, if you see fit to pass on Tydings suggestion to Bol Govt, you might suggest that it occurs to us that advantage cld be taken of forthcoming visit to US of Vice Pres Siles to effect he cld be authorized talk with Tydings informally and without publicity or any prior commitment. This wld have merit from standpoint of Bol public opinion that there wld be no suggestion that negots are being carried on under duress or that Bol Govt sending emissaries to cos rather than vice versa. If you take Tydings proposal up with Bols report reaction earliest, since Tydings now planning go abroad Oct 3.
[Page 508]Rovensky,3 Patiño Board Chairman, also, called at Dept today4 to say Mariaca5 wld present new Patiño proposal to Paz this week end (which he will show to you). We understand Bowers of Aramayo likewise presenting proposal and Hochschild has already done so. It might be helpful if you indicated to Paz that while US takes no position on details of these proposals it hopes they will serve as basis amicable examination of compensation problem.
As to legal questions raised by FonMin, these seem hypothetical at this stage and it appears best avoid discussion of them at this time. Re US stockholder interest in Patiño, we have no documentary proof whatever about this, and we believe it preferable for you to discuss question of compensation for all of the cos in the light of Bol own long-term interests rather than in light of compensating any specific US individuals. As to Paz query whether we can lend Bol money to cover cost compensation, there is obviously no possibility whatever of this and in your discretion you may disabuse Paz categorically of any such notion.
- Drafted by Mr. Miller; cleared in draft with Mr. Evans.↩
- From Maryland (1926–1950).↩
- Joseph C. Rovensky.↩
- A memorandum of conversation between Mr. Rovensky and officers of the Department of State, dated Sept. 25, 1952, is in file 824.2544/9–2552.↩
- Alberto Mariaca Pando, Patiño representative at La Paz.↩