824.51/11–2349
Memorandum by the Director of the Office of North and West Coast Affairs (Mills) to the Assistant Secretary of State for Inter-American Affairs (Miller)
There is attached despatch no. 672, from the Embassy in La Paz, dated November 23, 1949 and entitled “Comment on Bolivian Memorandum1 to Assistant Secretary Miller”.
As you will recall, the Government of Bolivia, in the memorandum handed you by the Minister of Economy on October 29, requested four loans: 1) a short-term balance of payments loan; 2) a loan for agricultural development; 3) a petroleum loan; and 4) a loan for a tin processing plant.
In the attached despatch, Messrs. Espy and Hudson2 state that the Embassy cannot recommend the granting of the first three loans. They are non-committal on the tin plant loan, apparently not realizing that the application was withdrawn from the Export-Import Bank and that the matter is now in abeyance.
The Embassy has established three criteria for use in evaluating the Bolivian requests: 1) Bolivia’s balance of payments prospects; 2) the desirability of development by foreign and domestic private capital; and 3) the existence, or lack, of an up-to-date over-all economic development [Page 545] plan and indications that the Government would carry out such a plan, abandoning uneconomic projects. On the basis of these, the first three loans appear undesirable.
In continuation, the Embassy concurs in the views expressed by Mr. Johnson, the Commercial Attaché, who prepared a memorandum3 commenting on the Bolivian requests for you in Lima. (A copy of this memorandum is attached to the despatch.) Several contentions and implications of the Bolivians are refuted. Among other things, Mr. Johnson states, and the Embassy by implication concurs, that unemployment is not a serious problem in Bolivia and that miners unemployed through a contraction of the tin industry will quickly revert to subsistence agriculture without causing major social disturbances.
NWC does not accept this last statement in full. It is true that Bolivia has a shortage of labor and that the unemployed Indians can avoid starvation by turning to agriculture. However, recent experiences have demonstrated that the Bolivian miners are now well-organized into radical syndicates, led by fanatical demogogues who can easily fan the workers’ latent resentments into bloody violence against management, American citizens and the Government. Any large-scale layoffs of mine workers can be expected to bring on a wave of violence, which, by the way, the Government would be unable to control in spite of its good intentions, resulting in possible injuries and fatalities among management personnel, conceivably extending to foreigners in general, and a successful revolutionary effort. (It is realized that the latter, at least, may happen anyway.)
An instruction to Embassy La Paz, enclosing a note to be presented to the Government of Bolivia in reply to the memorandum handed you on October 29, is now under preparation and will be submitted for your approval when appropriate clearances have been obtained.4
- Neither despatch No. 672 nor the Bolivian memorandum are printed. The memorandum was transmitted to the Department under cover of despatch No. 650, November 10, from La Paz (also not printed) which reported on Assistant Secretary Miller’s visit to Bolivia, October 29–November 1, 1949. Despatch No. 650 stated that Mr. Miller had not had time to study the Bolivian memorandum during his stay in Bolivia (111.12 Miller, Edward G., Jr. 11–1049).↩
- William P. Hudson, Second Secretary at the Embassy in La Paz.↩
- Not printed.↩
- No reply was made to the Bolivian Government prior to the end of the year 1949.↩