740.24112A/11–1447

The Chargé in Bolivia (Galbraith) to the Secretary of State

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No. 1854

Sir: I have the honor to refer to this Embassy’s despatch no. 1787, of October 9, 1947, entitled “Transmitting Copy of Embassy’s no. 444 of October 8, 1947, Seeking Bolivian Compliance with Replacement Program”, and to report on developments since that date in so far as the Replacement Program is concerned.

An acknowledgement of this Embassy’s note no. 444 was received on October 14, under date of October 11. However, this merely stated that the Minister of Economy was being informed of the views of the United States government.

On Thursday, November 6, the Chargé d’Affaires and the reporting officer were asked to call on Dr. Julio Alvarado, Sub-Secretary for Foreign Affairs. He wished to ask specifically if the Blue Book79 had any bearing on Bolivia’s international obligations concerning a Replacement Program. He was informed that it did not, but that Bolivia had undertaken definite obligations, not only at Chapultepec, but also at the Washington Conference in 194280 and the Rio de Janeiro Conference in 1943 [1942].81 He then stated that the Cabinet was to consider the matter that afternoon and that he was attempting to gather together all possible information on the subject. An interesting sidelight was his request that the Embassy let him know the date upon which the Resolution of the Economic Defense Board, dated March 3, 1947, was published in the local press, since his office was unable to find [Page 382] it. He was later notified that publication occurred on March 28, in La Razon.

Unofficial information obtained from a member of the Foreign Office indicated that, although the Cabinet session that day did discuss the problem of a Replacement Program, no definite action was taken. The entire matter was referred to the Economic Defense Board for study. This, of course, has been done repeatedly in the past. It is doubted that any concrete action will be taken by the Economic Defense Board since representatives and friends of the spearhead firms to be considered reportedly have much influence with the Board’s members. In this connection, it might be noted that many local businessmen believe that President Hertzog depends almost entirely upon his brother, Carlos Hertzog, for economic and commercial information upon which to base decisions in these fields. Carlos Hertzog is the manager of the firm Terminal, successor of C. F. Gundlach & Cia., and was included on the Proclaimed List of Certain Blocked Nationals. Although he and his firm were removed from the list early this year, largely for political considerations, it is safe to assume that he would hesitate to furnish the President with advice contrary to the interests of his long-time friends, the influences in the spearhead firms to which this Embassy objects.

As was noted in despatch no. 1787, the Embassy has discussed the Replacement Program with the British Embassy and has worked together with it, although the United States has obviously born the major burden in the matter. A copy of note no. 444 was supplied the British Ambassador.82 The British Commercial Secretary83 informed the reporting officer, on November 6, that instructions had been received from London to submit a note supporting this Embassy’s note no. 444. He was advised that the Cabinet was to discuss the entire problem that very afternoon and he therefore agreed to telephone the Sub-Secretary for Foreign Affairs to notify him of the intention of the British Embassy to transmit a strong note on the subject. A copy of the British note, dated November 7, was supplied to this Embassy and is transmitted herewith84 (see enclosure). This note closely follows the tenor of this Embassy’s note no. 444 and, in several instances, seems to have been copied verbatim.

On November 12, the Commercial Attaché and the reporting officer called on the Minister of National Economy85 in order to orient him regarding the views of the United States. He was supplied with a brief history of the negotiations which have been undertaken from [Page 383] time to time and was informed that it is our sincere desire that Bolivia carry out some type of program which would not whitewash those who acted contrary to the interests of the United Nations during the recent war. He stated that he had been absent from the meeting of the Cabinet which considered the question, but that he intended to call a session of the Economic Defense Board in the near future to settle the matter. He promised to keep the Embassy informed of developments.

The Embassy is not overly optimistic that the Bolivian government will take effective steps against the spearhead firms in question, but feels that it must continue to press the matter in order to prevent a blanket clearance of Axis elements within the country.

Respectfully yours,

For the Chargé d’Affaires, ad interim:
John A. E. Orloski

Commercial Attaché
  1. Department of State, Consultation Among the American Republics With Respect to the Argentine Situation (Washington, 1946). For documentation on its issuance, see Foreign Relations, 1946, vol. xi, pp. 182 ff.
  2. See Pan American Union, Final Act of the Inter-American Conference on Systems of Economic and Financial Control (Washington, 1942). For documentation on the Conference, see Foreign Relations, 1942, vol. v, pp. 58 ff.
  3. The Third Meeting of the Foreign Ministers of the American Republics held in Rio de Janeiro in January 1942. See Pan American Union, Report on the Third Meeting of the Ministers of Foreign Affairs of the American Republics, Rio de Janeiro, January 15–28, 1942 (Washington, 1942); and for documentation, see Foreign Relations, 1942, vol. v, pp. 6 ff.
  4. Thomas Ifor Rees.
  5. F. B. Hutchinson.
  6. Not printed.
  7. Raul Laguna Lozada.