811.20 Defense (M) Bolivia/7–1145: Telegram
The Ambassador in Bolivia (Thurston) to the Secretary of State
[Received July 12—5:01 a.m.]
714. Urtel 460, July 7.55 On assumption that Dept. and FEA have carefully analyzed tin stockpile position in adopting price schedules which might reasonably be expected cause suspension of production in certain marginal mines, following comment submitted:
2. Preliminary recommendations are offered:
- That no new contract regardless of price schedules be signed until satisfactory assurances received that Americans in mining districts shall be given fullest protection.
- That negotiation of contract be utilized to obtain some quid pro quo. Bolivians might reasonably be expected agree fulfill certain long standing obligations, such as curtailing rubber smuggling and implementing [Page 583] commitments concerning replacement Axis firms and enemy owned trademarks. See des. 1145, July 3.56
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Embassy’s conclusions are that adoption of FEA schedule would probably launch Government on intervention program and seriously disturb precarious balance in which economic and social stability of country now rest. It might leave United States open to charge that once war was over we were willing disrupt Bolivian economy. Conservation elements of country would blame us for permitting what they regard as undemocratic government increase hold over country. It would furthermore not necessarily cause present Government to fall but might temporarily strengthen it until a time when country’s essential industry would probably be in condition approximating chaos.
It is possible, however, that internal economy might make readjustment to Department’s suggested schedule and is believed desirable make reductions from former prices in order prepare way for post war conditions. As compared with FEA schedule it is recognized this adjustment merely one of degree but is safe predict that process would be attended with fewer repercussions. If such adjustment were made a further adjustment to world price of tin would be easier to accomplish at later date and would go far to relieve us from charge of abandoning Bolivians instead of guiding them through difficult adjustment is [in] gradual stages. It should, however, be pointed out that the more stabilizing effects of higher prices of Department’s proposed schedule might be nullified if they were to be utilized by Bolivians to impose additional production costs on tin industry to meet increased wages, additional social programs, or higher taxes. It is belief of Embassy that this trend continues despite fact that Bolivian Government agreed during last tin negotiations not to increase production costs. In this connection it might be advisable inform Bolivians frankly regarding our stockpile position and our tin requirements as official attitude here is that we need tin badly and will continue to for at least 2 more years.
Urtel 369, May 31 and A–210, June 18.57 Since understood Ramsey58 will be ordered Department for consultation September, he might advantageously be called for consultation now in connection with tin negotiations. As Minerals Reporting Officer he possesses intimate knowledge of situation and is conversant general political and economic situation. Scott and Renick59 of FEA concur.