824.2544/6–2253
Memorandum of Conversation, by the Assistant Secretary of State for Inter-American Affairs (Cabot)
Subject:
- Bolivian Tin
- Participants: The President
- The Secretary of State
- The Secretary of the Treasury
- Mr. Arthur S. Flemming, Director, Office of Defense Mobilization
- Dr. Milton S. Eisenhower
- Mr. John M. Cabot, Assistant Secretary of State
After a preliminary exchange of pleasantries, the President told Mr. Cabot to explain the problem which the latter briefly did. The President said that in his opinion the question of raw materials was vital since increasing quantities were being used everywhere while supplies were getting scarcer. It would be much better to have tin in Fort Knox than gold. The President also alluded to the security aspects of Bolivian tin. He mentioned that the Congressman from the Texas City district had first brought the matter to his attention and that it had then been further underlined by Dr. Milton Eisenhower.
Secretary Humphrey pointed out that the stockpile of 245,000 tons would be filled under existing contracts by August. The RFC was already obligated under existing contracts to take large quantities of tin at a price far above the present world market and, moreover, the average price of the stockpile tin was very high. Purchase of further tin at present contract prices would be very expensive and could not be justified. The Texas City Smelter was losing $15 million annually.
The President expressed chagrin at the heavy losses involved but again emphasized his views regarding the desirability of having raw materials.
Secretary Dulles pointed out that we tended to buy everything Latin America could produce at very high prices when we were at war and to tell them of our eternal friendship for them. Then at the end of the war, we would stop our contracts, let their economies slide, wreck the war-built production and wait until the next war before we again started to buy Latin American products at fancy prices. Someday we would [Page 533] find that Latin America was not willing to sell them at any price because the countries would have become unfriendly.
A general discussion then followed of prices, amounts in tonnage, the liability of an ore stockpile to deteriorate, etc. Secretary Humphrey said it would be better simply to stockpile tin ore than to continue to operate the Texas City Smelter. If we ever needed to use our ore we could build a new smelter before we used up our stockpile. Mr. Cabot brought out through a question that of the Texas City Smelter’s annual loss only $2 million was due to operation and the other $13 million to the drop in prices of tin.
The President referred to the low quality of the ore and suggested that some bargaining might be done about prices. He referred tentatively to buying say 10,000 tons per annum with a two-year contract.
Mr. Cabot hurriedly sketched the Department’s plan. The President thought that we could move ahead immediately on the Point IV aid and spoke of the possibility of using a tin contract as a lien to guarantee the proposed $10 million loan for agricultural development.
Secretary Humphrey pointed out that there were many areas in the U.S. which had been hit when war production ended. He mentioned particularly the coal mines. The President said that it would have been helpful if we had big coal stocks above ground; it was very difficult to explain to the soldiers in 1943 why John L. Lewis could call a coal strike.
Secretary Humphrey suggested that the matter be placed in the hands of tin experts who could come up with a really good technical solution. Dr. Milton Eisenhower emphasized the importance of doing something before his party reached La Paz and Mr. Cabot pointed out that no one could say how long the situation in Bolivia would hold together. It was generally agreed that the matter should be referred as quickly as possible to tin experts and, at Mr. Cabot’s suggestion, that a representative would thereafter be sent to La Paz to negotiate a tin contract. It was felt that the announcement that such an expert would be sent would in itself be sufficient to put a fair wind behind the party’s visit.
On going out, Mr. Cabot suggested that some announcement of the subject discussed might be made to the press as a means of indicating the interest in the Bolivian problem in the higher quarters. Dr. Milton Eisenhower took this up and the announcement was subsequently made.