740.00112A European War 1939/28911: Telegram
The Secretary of State to the Ambassador in Bolivia (Boal)
575. Your 730, April 14,32 and your 737, April 15. We are, of course, desirous of seeing the replacement program in Bolivia put into effect promptly. We understood, however, that you believed it advisable to defer any approach to the Bolivian authorities until you could present a fairly detailed outline of a replacement program for their consideration. We also understood that this attitude was predicated upon the belief that the Bolivians would not be disposed to act unless we were first able to make some concrete suggestions as to how the problem of supplying Bolivian import needs could be handled and that vague references to United States financial assistance would not be sufficient.
Nevertheless, we recognize that the basic question is one of timing in the light of local conditions. You are therefore authorized in your discretion to approach the Bolivian authorities immediately, having in mind the above-mentioned considerations.
We do not believe that the approach should be made jointly with the British. However, in view of the British interest in the transportation problem, we would have no objection to the British taking independent but parallel (as distinguished from joint) action. We do not believe that the Brazilian or Mexican representatives should be brought into the picture.
We believe that at present your approach should be informal and should be directed merely toward exploring the possibilities of obtaining the cooperation of responsible Bolivian officials in working out the details of a replacement program. We do not wish you to present any formal plan or reach any understanding until you have had an opportunity to consider and to report fully your comments on the views expressed in a detailed airgram which has just gone forward.33
While we recognize that a Bolivian Proclaimed List may be a helpful adjunct to an effective local control and replacement program by publicly indicating the firms to be subjected to control, we do not believe you should make it a sina qua non of our assistance in the replacement program. A local List, which generally connotes public stigmatization and public boycott, is usually the last step in the development of effective local controls and is designed to take care of firms which are inherently bad, which are not essential to the local economy and which therefore should be liquidated. The problem in Bolivia is [Page 593] what to do with firms which are essential to the local economy and the solution to this problem appears to lie in effective vesting or forced sale provisions rather than in a local List. Accordingly, in any conversations you may have we believe you should stress the importance of evolving effective controls over essential firms, whether or not they are publicly branded as undesirable, rather than press for the establishment of a local List. Similarly, we believe you should proceed cautiously on the subject of an Alien Property Custodian. Such a Custodian, unless he were clearly the right person, might turn the whole replacement program into a political football and prevent the subsidiary of the Development Corporation from doing an effective job. In this connection, the establishment of an Alien Property Custodianship might result in a decision on the part of the Bolivian Government to operate the Proclaimed List firms as government enterprises for a substantial period of time, which we understood it was not equipped to do and which might delay the taking of effective clean-up measures. While our economic warfare objectives might be better achieved if the Bolivian Government were to adopt a replacement program which left open the question of ultimate compensation for Proclaimed List properties, you will realize that this can be accomplished by appropriate legislation which need not necessarily involve an Alien Property Custodian.