266. Memorandum of a Conversation, Embassy Residence, Panama City, July 23, 19561

PRESENT

  • The President2
  • The Secretary of State
  • Asst. Secy Holland
  • Mr. Maurice Bernbaum (OSA)
  • President-elect Hernan Siles Zuazo
  • Foreign Minister Barrau
  • Ambassador to the United States Victor Andrade

President-elect Siles Zuazo expressed the gratitude of the Bolivian Government and people for the aid that Bolivia has received from the United States. He pointed in this regard to the great advances [Page 545] made as the result of United States assistance in education, the eradication of disease, particularly infant mortality, and in the diversification of agriculture and industry. Bolivia does not want to depend indefinitely on the United States taxpayer, he continued, stating that he believed that if the United States could increase the amount of its annual contribution during this time of crisis it would result in an over-all shortening of the period during which Bolivia would have to depend upon the United States.

The aid which Bolivia receives from the United States is of two kinds—for the assurance of at least the subsistence of its population during a period of severe economic difficulty and for the simultaneous diversification of the Bolivian economy, Siles said. It would be better if this fact were clearly recognized and announced, he added.

President-elect Siles pointed out that the aid which the United States has extended to Bolivia has established certain well-defined advantages. One such advantage has been the refutation of thirty years of propaganda to the effect that effective cooperation cannot be brought about between a “progressive” government such as Bolivia’s and a government like that of the United States, he said. The demonstration of democratic processes in the recent Bolivian election, where all people voted for the first time, including illiterates, must also be considered a concrete product of our aid program, according to Mr. Siles. The result of the voting, he said, showed overwhelming support for the Government. Moreover, he continued, the Communist Party produced such an infinitesimal vote as to make it certain that it will be unable to exert any effective influence on the Government of Bolivia.

Mr. Siles added that United States aid to Bolivia is demonstrating that through such programs real and measurable results may be achieved in raising the living standards of the country’s three million people, who live in one million square kilometers of national territory.

President-elect Siles then referred to Bolivia’s difficult problems, noting that the country is overwhelmingly a mining country, depending on the sale of tin for most of its foreign exchange. The recent downward fluctuations in the price of tin have had serious consequences, and an added depressing factor has been the decision of the United States to terminate the operation of the Texas City smelter, leaving Bolivia with only one market for its tin, i.e. England, he continued. Mr. Siles said that in this situation British buyers would be able to contract for Bolivian tin at less favorable prices than heretofore, because of the cessation of United States purchases.

He was also concerned about the recent termination of a GSA contract for the purchase of wolframite, and the imminent expiration [Page 546] of the remaining such contracts for United States Government purchases of this ore. This will mean a loss of some $3,000,000 annually to Bolivia, as well as serious unemployment, he said.

President Eisenhower expressed his appreciation for President-elect Siles’ statements on the importance of United States assistance to Bolivia. Addressing himself to Mr. Siles’ specific points, President Eisenhower said that it would not be feasible for the United States to continue purchases of Bolivian tin and tungsten because stockpile requirements for both metals have already been exceeded. As to the Texas City smelter, the President pointed out that it is an inefficient smelter whose operation on a commercial basis would be impractical. He expressed doubt that Bolivia’s future best interests lie in continued reliance on tin and tungsten, and said that it would be best for both countries to look for other ways to find solutions of Bolivia’s problems. He assured Mr. Siles of our continuing and keen interest in the welfare of the Bolivian people. With respect to the development of other means whereby the United States might assist effectively, the President referred to the proposal which he had made in his speech to the other Chiefs of State in which he had recommended that each President name a special representative to study the operations of the Organization of American States and to submit concrete recommendations as to how that organization might be made a more effective one in coordinating the various economies of the different countries to produce over-all progress in the hemisphere.

President-elect Siles responded that he would like to make one concrete proposal. It was that the United States consider issuing a declaration to the effect that it would stand ready to support and implement recommendations which might be made by the Financial Mission recently established in Bolivia by agreement between the two governments and at the suggestion of the Department of State. This Mission is headed by Mr. George J. Eder,3 he continued. Mr. Siles explained that Bolivia is now in the midst of a serious inflationary spiral, one which is so rapid that it is necessary to consider salary adjustments almost every month. The Financial Mission is of the opinion that this inflationary spiral cannot be brought under control before the end of this year, he said. He expressed hope that a declaration of the kind that he recommended might produce a halt, or at least a pause in the inflationary spiral during [Page 547] the remainder of this year, thus affording some relief to the Bolivian economy until steps could be taken to bring the inflation under control.

President Eisenhower stated that he could not give a prompt answer to President-elect Siles’ request, but that he could readily see what the latter wishes to achieve with such a statement. He added that to be effective, any statement contemplated would have to be made promptly. The President said that this matter would receive prompt and sympathetic consideration in Washington. He assured the President-elect that the United States would not relax in its interest in Bolivia and its problems, concluding with a statement to the effect that this interest in Bolivia will not be diminished by the pressure of problems elsewhere in the world.

  1. Source: Eisenhower Library, Whitman File, International File. Confidential. Drafted by Bernbaum.
  2. President Eisenhower was in Panama City for a Meeting of the Presidents of the American Republics, July 21–22, 1956; see vol. vi, Documents 109 ff.
  3. A lawyer on leave from the International Telephone and Telegraph Company, Eder was temporarily employed by the ICA. He was assigned to assist and advise the Government of Bolivia in the formulation of overall economic, fiscal, and budgetary policy. For a detailed analysis of his work, see George Jackson Eder, Inflation and Development in Latin America, A Case History of Inflation and Stabilization in Bolivia (Ann Arbor, Michigan, Graduate School of Business Administration, 1968).