724.5 MSP/9–253
The Secretary of State to the Director of the Foreign Operations Administration ( Stassen )1
Dear Harold : A situation dangerous to the security of the United States is developing in Bolivia, and urgent action is required to meet it. Because of a sharp drop in the price of Bolivia’s principal export commodity, tin, owing to the imminent cessation of United States tin stockpiling, Bolivia faces economic chaos. Apart from humanitarian considerations, the United States cannot afford to take either of the two risks inherent in such a development: (a) the danger that Bolivia would become a focus of Communist infection in South America, and (b) the threat to the United States position in the Western Hemisphere which would be posed by the spectacle of United States indifference to the fate of another member of the inter-American community.
Various possibilities of assistance to Bolivia (including the payment of a subsidy price for tin and the extension of a balance-of-payments loan) have been examined and rejected as inconsistent with other United States policy objectives or otherwise unsuitable.2 It would appear that the most appropriate means of assistance would be a Mutual Security Act grant for the purchase of basic foodstuffs and other essential import items, with the local currency funds generated by the grant being employed to speed Bolivia’s progress toward a balanced economy which would not be dependent upon fluctuations in the world minerals market. I urge that you make an allotment of $10 to $15 million for this purpose.
I attach a memorandum3 which sets forth this proposal in detail.
If this proposal meets with your approval, officers of the Department of State are prepared to meet with members of your staff on an urgent basis to discuss means of implementation.
Sincerely yours,
- Drafted by Mr. Hudson; cleared with the Acting Special Assistant to the Secretary for Mutual Security Affairs (Nolting) and the Bureau of Economic Affairs.↩
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Assistant Secretary Cabot’s memorandum to the Secretary, dated Aug. 28, 1953, recommending a grant to Bolivia under the Mutual Security Act of 1951, as amended, reads in part as follows: “Treasury and our International Monetary Fund representative strongly opposed our supporting a Bolivian request for a Fund drawing as a partial solution of the problem. A balance-of-payments loan to Bolivia would have no satisfactory prospect of repayment. There is serious question whether the legislative history of the Famine Relief Act would make use of this authority completely appropriate to the immediate circumstances in Bolivia.” (724.5 MSP/8–2853)
For text of the Mutual Security Act of 1951 (Public Law 165), approved Oct. 10, 1951, see 65 Stat. 373.
For text of the Famine Relief Act (Public Law 216), approved Aug. 7, 1953, see 67 Stat. 476.
↩ - Not printed.↩