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

Secretary’s Memoranda, lot 53 D 444, “August 1952—February 1953”

Memorandum of Conversation, by the Secretary of State¹

restricted

[Washington,] October 7, 1952.

Subject:

• Call of the Vice President of Bolivia

• Participants: Sr. Hernán Siles Zuazo, Vice President of Bolivia
• Sr. Víctor Andrade, Ambassador of Bolivia
• The Secretary
• Mr. Bennett, OSA

The Vice President of Bolivia, accompanied by the Bolivian Ambassador, came in for a courtesy call during the Vice President’s private visit to Washington en route to the United Nations, where he will serve as head of the Bolivian delegation to the forthcoming General Assembly.

After an exchange of amenities Sr. Siles said that he wanted to assure me that his Government was desirous of extending the fullest cooperation to the United States at the General Assembly. I thanked him for his statement and emphasized the importance of our collaboration on the issues to come before the Assembly.

I then told the Vice President that I was interested in the reported plans of his Government for the nationalization of mining activities in Bolivia but that I was not cognizant of the most recent details of the matter; I said that I would appreciate his informing me of the current status of the matter. Sr. Siles began by stating that the decision in favor of nationalization was one that had been made by the Government and the people of Bolivia and that it could be described as irrevocable. He said that the Government had appointed a study commission to make recommendations regarding the most practicable ways of implementing this nationalization decision. He indicated that what the Bolivian Government has in mind is a number of mixed companies to operate the several installations; the Government would hold 51 percent of the stock of these companies and the remainder of the stock would be open, as he put it, for acquisition by private investors. The Vice President remarked that his Government intended to use this method of operation both for existing mining activities and for any new ones, such as the exploitation of columbite which had recently been discovered. Sr. Siles stated that it was his Government’s intention that the interests of American stockholders in the mining companies be fully compensated, and he said that he wanted to make it clear that the Bolivian Government did not regard the American portion of the ownership of the companies as in any way responsible for their past policies and activities. He indicated that the Government would have claims of back taxes and other charges against the companies, but he stated again that the American stockholders would receive full compensation. He went on to say that the Bolivian Government was anxious not to disturb production and the orderly flow of tin and other metals in their normal sales patterns. In that connection, he said that the Government had turned down a number of purchase offers for tin from European interests since they were not sure of the ultimate destination of the tin.

I explained to Sr. Siles that the United States Government had two principal interests in the problem: (1) that American stockholders be treated justly and equitably, and (2) that, as a friend of Bolivia, the United States is interested in that country’s development and progress. I said to the Vice President that a decision whether or not to nationalize was, of course, entirely the prerogative of Bolivia and that decisions as to implementation of nationalization were similarly Bolivia’s alone. I reiterated that our interests lay in ensuring that the legitimate rights of foreign investors be protected.

I went on to comment to the Vice President that, with respect to nationalization, I believed his Government has some trouble ahead. I expressed the view that the operation of mining activities would be much more complicated than the Government now apparently considers it. I continued that in my opinion one of the greatest needs of the countries of this Hemisphere at this time is for foreign investment for the development of their great resources. I said that, unfortunately, Bolivia will not get foreign investment through measures of this type.

Ambassador Andrade remarked that he would like to make a few comments on that point. He declared that the “big three” mining companies had been building up very large reserves and profits over a period of more than fifty years. He said that, despite the fact that these companies and other foreign investment had been given most liberal treatment by successive Bolivian governments, very little foreign investment had actually been attracted to Bolivia. He asserted that there is a general feeling in the Bolivian Government today that these measures of control over mining activities should have been taken twenty to thirty years ago and the resultant revenues devoted to the development of Bolivia through the construction of highways, schools, stadia and so on.

I concluded the conversation by stating once again the United States has only good will for Bolivia and that, so long as the rights of American citizens are protected, we recognize fully the right of the Bolivian Government to make its own decisions regarding the future operations of mining activities in Bolivia. We then adjourned for the taking of photographs.

1. Drafted by Deputy Director of the Office of South American Affairs Bennett.