Office of the Historian

Holland files, lot 52 D 295

Memorandum of Conversation With Bolivian President Paz Estenssoro and Members of His Cabinet, by the Assistant Secretary of State for Inter-American Affairs (Holland)1

La Paz, September 30, 1954.

The President brought up the following problems:

1.
Bolivia’s exchange deficit. He asked for $9 million of trade to go to capital goods, machinery, and equipment and $7 million of agricultural surpluses including wheat, cotton, lard and milk. He presented a memorandum2 showing how the $9 million would be spent, but prepared on the assumption they would receive only $7 million.
2.
Export–Import Bank loans to cover paving the Cochabamba Highway, the construction of the Puncu highway, a construction of a bridge over the river Piraí (?).3
3.
He discussed Bolivia’s desire to build an oil line from Cochabamba to Santa Cruz, with extensions from that point to La Paz and Arica.
4.
His desire to build a tin smelter in Bolivia to reduce freight rates and to eliminate the cost of importing sacking.
When the conference broke up, I told him privately that I thought he should be able to get private financing for the oil line and the tin smelter.
5.
Bolivia’s desire for a three-year tin contract to enable it to do long-term planning.
6.
Bolivia’s desire to extend the Wolfram contract.
7.
Bolivia’s negotiations with respect to the amount of final payment for the appropriated mines.
8.
Bolivia’s attitude toward private enterprise. The Government wants to retain control of the tin smelter, if built, and its traditional monopoly on the manufacture of matches. However, it will welcome private capital in any other enterprise, including the oil and gas industries.
9.
Bolivia’s default of foreign debt. The Government proposes to submit an offer to the bondholders calling for terms or a scale tied to the price of tin.

At the end of the conference, I drew the President aside and told him: [Page 567]

1.
Made the statement regarding the financing of the oil line and tin smelter which was stated above.
2.
Asked him if he felt that his Government could adopt fiscal revisions suggested by either the IBRD or the Exim Bank and designed to increase Bolivia’s borrowing capacity. He assured me that he would try to follow any suggestions.
3.
I asked him if he felt confident of his ability to control the Communist problem in Bolivia. He said that he did.

  1. This memorandum is unsigned.

    Mr. Holland visited Bolivia, Sept. 26–30, 1954, as part of a tour of the countries of South America undertaken Sept. 5–Oct. 10, 1954, for the purpose of explaining to the leaders of those countries positions adopted by the United States in preparation for the forthcoming Rio Economic Conference. For documentation on the conference, see pp. 313 ff.

    ↩
  2. Not found in Department of State files.↩
  3. Question mark in the source text.↩