Foreign Relations of the United States: Diplomatic Papers, 1943, The American Republics, Volume V

824.6354/403

Memorandum of Conversation, by the Assistant Chief of the Division of the American Republics (Dawson)

[Washington,] September 25, 1943.

Participants:	Luis F. Guachalla, Ambassador of Bolivia
	Mr. Bonsai
	Mr. Dawson

The Bolivian Ambassador called this morning at his own request to discuss the Department’s memorandum of September 22, 1943⁹⁴ setting forth a proposal for a new amendatory tin contract between the Metals Reserve Company and the Bolivian producers of tin. The Ambassador said that he wished to comment upon the following points in the proposal:

1. He felt that the term for the new price should be for two years instead of one as suggested in the Department’s proposal. In this connection he referred to the fact that a period of two years had been mentioned by Mr. Welles and officers of the OEW in earlier conversations;

2. His most recent instructions from La Paz were that the Bolivian Government would be willing to accept a minimum price of 67 cents but he would recommend acceptance of a 65–cent price. He pointed out that the increased treatment charges and taxation would absorb part of the proposed 3–cent increase and that a rise in wage scales would be inevitable regardless of what price increase was decided upon so that a 3–cent price increase would in reality in his opinion be canceled by these burdens;

3. The Ambassador expressed the opinion that the price should be retroactive to July 1, 1943, instead of taking effect October 1, 1943. Were this granted, the extension of the term of the contract might be to June 30, 1948 instead of September 30, 1948 so as to keep the yearly contract periods on a fiscal year basis;

4. He felt that the provisions in the proposal for exclusive deliveries of tin to the United States and the United Kingdom should be modified to provide for the existing exemption for 25 tons of fine tin a month to Chile and for possible sales to other countries in the future, should the tin situation improve following the termination of the war and prior to the end of the extended contract;

5. In this connection he made the added suggestion that the provision for a minimum delivery of 18,000 tons per year should be made subject to quotas which might be established by the International Tin Committee when it resumes active operations. He pointed out that the tin cartel arrangements are intergovernmental ones. If there were not such a provision in the tin contract and the Bolivian tin quota were reduced, the Bolivian producers might be placed in a position of having promised to make deliveries, guaranteed by the Bolivian Government, which would be contrary to a direct commitment of the latter;

6. The Ambassador expressed some doubts as to the propriety of including in an exchange of notes a statement to the effect that the Bolivian Government would devote the taxes on the increase in the tin price to social welfare. He made the point that in conversations with Mr. Welles he had received the impression that we wanted to keep a tin procurement contract completely separate from social features. Mr. Bonsai suggested that the mention of the point in the Bolivian Ambassador’s proposed note might take the form of expressing appreciation of the fact that the increased tin price would enable the Bolivian Government to implement its social welfare program;

7. The Ambassador pointed out that the Department’s proposal did not indicate how the price for later years was to be established. He suggested that it might be provided that the price would be adequate to maintain normal production. Mr. Dawson remarked that the production angle was covered by other provisions of the proposed contract. He said that the thought of the Department and the OEW was that price would be mutually agreed upon between the parties to the contract on an equitable basis. The Ambassador agreed that this might be satisfactory but suggested that the hiatus in the Department’s memorandum might be closed;

8. The Ambassador remarked that disputes occasionally arose between the Metals Reserve Company and the suppliers as to the interpretation of the present contract and suggested that an arbitration clause might consequently be inserted in the amendatory contract.

The Ambassador mentioned that the memorandum of September 22, 1943 had been handed to him by Mr. Bonsai in a provisional manner with the thought that amendments in it might be made. It was pointed out to him that the memorandum contained a general proposal from this Government. Most of the points raised by him were suggestions for changes desired by the Bolivians which the Department and the OEW would be glad to consider but might better be covered in a memorandum from the Bolivian Embassy or in its discussions with the OEW rather than by amendment of the Department’s memorandum. He was, however, informed that the matter would be discussed with the OEW and that no objection was seen to a further memorandum from the Department making it clear that it was proposed that the prices for later years be established by mutual agreement.

Allan Dawson

94. For the substance of this memorandum, see supra.