1941: Bolivia

Loss of access to Far Eastern sources of tin, from which, in the last two years, the United States has drawn 90 per cent of its supply, testifies to the prudent foresight of the United States in concluding an agreement last year for Bolivian tin concentrate. In accordance with the terms of that agreement, a smelter, built at Texas City, Tex., with funds advanced by the Reconstruction Finance Corporation, will process 25,000 tons a year, thus supplying about one-quarter of the nation's requirements. A later agreement to purchase the entire Bolivian tungsten output for the next three years, with an option on the following two years, represented a triumph over a Japanese bid at a considerably higher price. Hitherto nearly three-fifths of the United States' imports of tungsten were supplied by the Far East. Further evidence of the piece-meal procedure followed in the case of Bolivia's strategic minerals, which contrasts with the inclusive agreement for the purchase of Brazil's and Mexico's critical raw materials, is seen in the deals in October for Bolivian lead and zinc. Antimony and copper have not yet been covered by agreement with the United States. As late as October, Japan was still taking a share of the Republic's copper and was bidding up the price on other Bolivian minerals.

The United States Economic Defense Board has allocated some 218,600 metric tons of tin plate to the nations south of the Rio Grande in the year starting Dec. 15, 1941, which represents a decrease of only ten per cent in total Latin American tinplate imports in 1940. Tin is, thus, the first commodity to be put under an export allocations plan which will attempt to lessen the inconveniences to the southern republics incidental to the United States' priority system. Such measures are recognized as necessary to bolster the internal economies of the Latin American nations and cement Western Hemisphere solidarity. The International Tin Committee, a cartel controlled by British and Dutch interests, on Dec. 1 signed a five-year extension of the quota plan for tin production. The agreement was accepted by Bolivia, the Belgian Congo, the Netherlands East Indies, Nigeria and Malaya, but Thailand, the fourth largest tin producer, refused to sign.

The foreign policy of the Peñaranda administration has been firmly pro-United States and the President, Enrique Peñaranda del Castillo, in his message to the Bolivian people at the close of the year, asked for nation-wide cooperation in upholding the principles of democracy. Bolivia has been one of the chief targets of Nazi propaganda. An alleged Nazi plot for a coup d'état in July, revealed in a letter of the Military Attaché in Berlin, Major Elías Belmonte, to the German Minister to Bolivia, Ernst Wendler, led to the declaration of a 'state of siege,' since suspended. Although the German Government denounced the letter as a forgery, Bolivia declared the German Minister persona non grata for engaging in subversive activities; suspended several publications; and arrested a number of suspects, among them high ranking Bolivian military officers. The United States Government firmly indicated that it would support Bolivia if expulsion of Herr Wendler led to international complications. Since the United States entry into the War, the Minister of the Interior has reported the Bolivian police as taking measures to prevent a methodical plan by the Axis powers to sabotage the mining industry.

The expropriation, in May, of the Lloyd Aéreo Boliviano, a Lufthansa line which had had an exclusive franchise for air service within Bolivia, removed one of the three links in a chain of German lines running across the southern continent. One-half of the enterprise has been assigned to a reorganized Lloyd Aéreo Boliviano, under control of the Bolivian Government; the other half went to Panagra (Pan American Grace Airways).

Closer relations with the United States during the year are indicated in the dispatch of a United States army aviation mission to Bolivia, significant because Bolivia was the last of the Latin American countries to retain Axis military advisers; in the technical assistance offered in connection with agricultural development, mining and highway construction; and in negotiations for an Export-Import Bank loan, not yet concluded. A lend-lease agreement was signed Dec. 6, of undetermined amount, the funds to be used for road construction and to assist agricultural and small mining enterprises.

The transportation issue revolves around the choice between a highway connecting Cochabamba with Corumbá on the Brazilian frontier or a railway, which would constitute the Bolivian link in a transcontinental railway project. The survey of United States Army engineers indicated the impracticability of a railway, estimated to cost between $33,000,000 and $40,000,000, whereas the highway would cost only $8,000,000. Hence financial cooperation from the United States for the railway seems unlikely. The Bolivian Government has declared it will continue the construction of the Cochabamba-Santa Cruz Railway with its own funds (Bs. 14,000,000 have been allocated in the 1942 budget to this end and a gift tax of Bs. 35,000,000 from the distribution of the Patiño properties is to be diverted to such a purpose).

For the second time in recent years Bolivian gold and foreign exchange holdings have been revalued and the official par value of the boliviano fixed at 46 to the U.S. dollar (or 0.0217 cents). This is a preliminary move towards ultimate stabilization of the national currency. The outstanding dollar debt of $59,422,000 is in total default.

A non-aggression pact was signed on Jan. 16 between Bolivia and Chile and adherence to Pan American principles of peace, conciliation and friendship reiterated. A mixed commission to study a trade pact was agreed upon at the same time.

The Government took drastic measures in October to suppress a threatened railway strike (which would block tin transport), called as a result of the Senate's refusal to approve a special bonus for railway workers designed to meet the sharply increased living costs. On Oct. 31 the Chamber of Deputies gave the administration a vote of confidence on its handling of the strike. See also PAN-AMERICAN AFFAIRS.