811.20 Defense (M) Bolivia/155: Telegram

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

286. Department’s 242, April 28, 9 p.m. Price and terms which Metals Reserve hinted might be offered seem to satisfy us and we feel from conversations with major producers that they would be satisfied with them. Bolivian Government as usual is trying for its own purposes to get maximum concessions exceeding miners’ hopes. We strongly urge Department and Metals Reserve not to raise proposed offer as we think it is eminently fair.

None of the Department’s telegrams contain any reference to our repeated suggestions that commitments be obtained from the Bolivian Government as to its taxation and exchange policies. Our support of the above price is not based on any idea of generosity but on our reasoned estimate of what is necessary to restore profit margin for producers and thus maintain and stimulate production. If Bolivian Government cuts profits by increasing tax rates or adds to costs by strengthening boliviano part of these effects will be lost as was the case at the time of the tungsten contract. … We trust that the Department and Metals Reserve have these possibilities fully in mind and will take proper safeguards.

If effective export price ceilings are to be in effect we see no objection to fixed price until December 31, 1943, although a yearly price adjusted to a cost margin seems more satisfactory to us.

It is inferred from next to last paragraph of Department’s 238, April 27, 8 p.m.,63 that tungsten price adjustment is still under consideration. [Page 545] We can see utterly no justification for an increase at present for this mineral. Taxes are far higher than on tin having been increased at the time of tungsten contract. We feel strongly that taxes should be reduced rather than price increased.

Dawson
  1. Post, p. 564.