824.50/144

The Secretary of State to the Bolivian Minister of Finance (Espada) and the Bolivian Minister of National Economy (Crespo Gutiérrez)

Excellencies: It has been deeply gratifying to discuss with Your Excellencies the many aspects of economic and financial cooperation between Bolivia and the United States. I believe that the arrangements resulting from these discussions should be of great economic benefit to our two countries, and that these measures of cooperation should at the same time contribute to the strengthening of inter-American solidarity.

The Government of the United States has given careful consideration to the recommendations of the United States Economic Mission [Page 604] which has recently completed its studies in Bolivia, and this Government now believes that the recommendations of the Economic Mission comprise a practicable plan for systematic specific developments in Bolivia which will result in general improvement in the Bolivian national economy.

The Economic Mission has outlined a long-term program totaling approximately $88,000,000 for improved communications, increased production of agricultural, livestock and other basic industries, for irrigation projects to contribute to these agricultural developments, for the further stimulation of the mining industry, and for the further development of the Bolivian petroleum industry. The Economic Mission has assisted Your Excellencies in the arrangements for establishing a Bolivian Development Corporation which would act as a central agency for the carrying out of these developments and for the provision of expert assistance in studying additional projects.

In view of the decision of the Government of the United States that the recommendations of the Economic Mission constitute a practicable working plan, this Government is prepared to extend promptly through the agency of the Export-Import Bank of Washington the credits which were the subject of conversations at Rio de Janeiro between the representatives of the Governments of Bolivia and the United States. As contemplated in these conversations, these credits will be extended under a loan agreement to be signed between the Bolivian Government, the Bolivian Development Corporation and the Export-Import Bank of Washington, as soon as the Bolivian Development Corporation is legally constituted.

The first stage of the $88,000,000 long-term program recommended by the Economic Mission includes developments which it is estimated will involve the utilization of $26,125,000, of which $12,000,000 is allotted to roads; $6,625,000 to agriculture; $5,500,000 to petroleum; $1,000,000 to mining; and $1,000,000 to health and sanitation. Of the funds required for these developments, the credits to be extended by the Export-Import Bank will comprise $15,500,000. It is understood that the Bolivian Government would provide funds in the amount of $9,000,000 to the Bolivian Development Corporation for the program of economic development, by three annual appropriations of $3,000,000 per annum, in addition to which the Bolivian Government would provide a special fund of $1,500,000 for highway developments. Additional funds for the $26,125,000 first stage of the program would be provided by the amount of $2,125,000 established by the Rubber Reserve Corporation of the Government of the United States (in accordance with the terms of the agreement signed with the Bolivian Government on July 15, 194281), with a view to the [Page 605] further development of rubber production in Bolivia; and by the grant of $1,000,000 made by the Government of the United States through the Office of the Coordinator of Inter-American Affairs for the development of health and sanitation projects in Bolivia.

Of the total financial resources of $29,125,000 involved in the first stage in the program, the Government of the United States would accordingly provide $18,625,000 and the Government of Bolivia would provide $10,500,000. The apparent margin of $3,000,000 is considered the minimum amount necessary for working capital and to assure funds for the systematic amortization of the obligations of the Corporation.

The recommendations of the Economic Mission with respect to the number, nature and size of the projects to be included in the first stage of the program were based in considerable part upon considered estimates of the availability of necessary materials and supplies. The machinery, materials and supplies that it would be necessary to import into Bolivia to complete the projects in the first stage of the program are becoming increasingly scarce, and it will of course be recognized that progress in carrying out the projects will be contingent upon the availability of specific materials and equipment when applications are received for priorities and export licenses that may be required. The Government of the United States will of course make every effort to facilitate the exportation to Bolivia of such equipment and materials.

The Government of the United States will be glad to enter into conversations with the Government of Bolivia with respect to additional cooperative financing of highway work in the event it is found that the $12,000,000 allotted for highway developments in the first stage of the program is not sufficient to complete the projects which are approved. Likewise, the Government of the United States will be glad to enter into similar conversations with respect to cooperative financing of the Villamontes irrigation project when plans are prepared for that project. These conversations will of course be dependent upon (1) the economic justification of the projects which have not as yet been thoroughly studied, (2) the availability of the materials which it may be necessary to import from the United States, and (3) the availability of sufficient labor in Bolivia to carry out the projects without affecting mining production or the completion of projects that have been previously approved.

In accordance with the recommendations of the Economic Mission, the Government of the United States will at the appropriate time give favorable consideration to the practicability, under conditions then existing, of extending through the appropriate credit institution up to $15,000,000 in credits for the financing of the second stage of [Page 606] the long-term program, which stage the Economic Mission has estimated should comprise approximately $20,000,000 in expenditures. It is believed, however, that before such action is taken, completion of the first stage of the program should be assured.

I believe that the additional measures of cooperation between Bolivia and the United States which have been arranged concurrently with the visit of Your Excellencies are a further outstanding indication of the close relationship that has been developed between the economies of our two countries. These measures include the offer of the Treasury Department of the United States to enter into a monetary stabilization arrangement involving up to $2,000,000 for the stabilization of the dollar–boliviano exchange relationship, and the agreement of the Export-Import Bank of Washington to establish special short-term credits of up to $2,000,000 for the Banco Central of Bolivia.

The arrangements which have been made for the purchase from Bolivia by the Rubber Reserve Corporation of the United States of all rubber produced in Bolivia (with the exception of not exceeding 250 tons annually) should, I believe, prove to be of great practical benefit to our two countries.

Likewise, the revision of the agreement which provides for the purchase by the Metals Reserve Company of the United States of a specific part of Bolivian tin production82 should, I believe, contribute markedly to the attainment of the mutual objectives of our two governments. I am confident that the $1,300,000 so far extended in credits by the Metals Reserve Company and the Export-Import Bank of Washington for the development of further mineral production in Bolivia will be found of practical utility in effecting increased production and recovery of those minerals.

The arrangements that are now being made for revision of the agreement by which the Metals Reserve Company of the United States purchases Bolivian tungsten should likewise redound to the benefit of Bolivia while providing the United States with continued assurance of increasing supplies of this vital strategic material.

I am firmly convinced that the independence of all of the American republics depends upon the victory of the United Nations, and the actions of the Bolivian Government in facilitating in every way the supplying of strategic minerals and eliminating Axis activities within the frontiers of Bolivia are practical and effective indications that the Bolivian Government shares this view. I have been gratified by the arrangements which have been made with Your Excellencies for extension of control over commercial and financial operations of persons and entities whose activities are inimical to the security of the [Page 607] hemisphere. The cooperation of Bolivia in measures of mutual security such as these has been deeply encouraging to the Government of the United States in the prosecution of the war.

Accept [etc.]

Cordell Hull
  1. Ante, p. 576.
  2. For correspondence on negotiations for the purchase by the United States of Bolivian strategic materials, see pp. 536 ff.