1940: Bolivia

The war in Europe has given the United States a particular interest in Bolivia as a source of two essential raw materials, one actual, the other potential. The United States Department of Agriculture is investigating the possibility of growing rubber in northeastern Bolivia in order to reduce North American dependence on the Far East for this commodity (see COSTA RICA). So far as the other raw material lack, tin, is concerned, Bolivia is at present the world's third producer and the United States the leading consumer. Again to lessen the difficulties that would result from loss of access to British Malaya and other Far Eastern sources, an agreement was concluded in the fall between the Metal Reserves Company, a subsidiary of the Reconstruction Finance Corporation, and a number of Bolivian producers for the purchase annually, over a five-year period, of sufficient tin concentrate to smelt 18,000 tons of fine tin, in smelters to be established in the United States by the RFC. Medium-sized producers or small miners with limited outside contacts are included in the contract but not the large Patiño interests, which are under contract with the British for most of their output. Bolivian tin ores have normally been smelted in England or Continental Europe. Two major smelters were operated in the United States during the first World War, but high wage rates in the United States and the complex structure of the Bolivian ores, which improved smelting methods now make less of an obstacle, made domestic smelting impractical on a commercial basis. The direct United States market which this agreement provides will give Bolivia a new source of dollar exchange, which is much needed since the bulk of Bolivian imports come from the United States. The country has been seriously affected by the depreciation of £ sterling and the recent British practice of conducting Latin American trade in 'blocked' sterling. The budget for 1940 provided for balanced receipts and expenditures estimated at 627,000,000 Bolivianos.

Tin normally accounts for over 70 per cent of Bolivia's export values and supplies, directly or indirectly, over 60 per cent of government revenues. The output in recent years has been restricted because of high production costs and excessive taxation and, although the quota plan established ten years ago by the International Tin Committee, to run until June 1941, was beneficial to Bolivian tin interests, production has lagged behind the allotted quotas in all years except 1938. Foreign mine-owners, who operated under the disadvantageous mining law of June 1930, are now finding the government more conciliatory toward foreign capital. For example, a decree of the Peñaranda government removes all limits from the amount of dividends which can be paid in foreign currencies, restricted by the above law to five per cent. This modification, combined with the European war, points in all probability to a period of increased exploitation not only of tin but of certain other Bolivian minerals, such as tungsten, wolfram and antimony.

The newly-installed President, General Enrique Peñaranda del Castillo, in his inaugural address of April 15, pledged an adjustment of the Republic's long-term dollar debt, and in October the government recommended to Congress the appropriation of funds for resumption of debt service. When President Peñaranda took office, following elections March 15 favorable to the moderates and rightists, his was the first government to assume control by constitutional methods since 1931. He has granted freedom of the press and has issued a decree of amnesty for all Bolivians accused or convicted of political offenses, including those implicated in the short-lived revolt on March 26 of some left-wing elements, which again in July caused minor political disturbances. The present Chief Executive has stressed faith in democracy and Pan-Americanism. A bill barring Jewish immigration has been passed in the face of an influx of over 10,000 Jews since the Nazi anti-Semitic drive began in Europe, but the measure reflects workmen's protests against Jewish competition rather than Nazi influence. Two United States Army engineers are studying problems of constructing the Bolivian sector of the transcontinental railway from Arica, Chile to Santos, Brazil, whose military importance was noted in a resolution of the Havana Conference (see CUBA). On April 2 a treaty was signed in Buenos Aires, whereby Argentina will finance construction of a 62-mile railway from its frontier to the Bolivian oilfields and accept Bolivian oil in exchange. This guarantees Bolivia an outlet for its petroleum and will provide rail connection between eastern Bolivia and the altiplano. Bolivia already has a similar treaty with Brazil.

At the invitation of the government in January two International Labour Office technicians made a survey of conditions regarding social security, wages and hours, miners' pensions, etc., and presented a report recommending certain permanent labor legislation.