the State Department was obligated to intervene on his behalf. Sidestepping his argument, the Truman administration countered that, because the Bolivian tin industry had been more productive under Villarroel than ever before, there was no basis for a U.S. protest.48
Ignoring Hochschild’s appeals, the State Department initially left negotiations to the Foreign Economic Administration. According to Ambassador Andrade, FEA representative Alan Bateman told the Bolivians that he had set up three chairs outside for those who “wished to dispute” his terms. He then assured them that “I will not occupy one of those chairs.” When Hochschild claimed that Bolivia could obtain a higher price in an open market, Bateman made three counterarguments. The third and most compelling was simply that the U.S. and British governments had no intention of easing their controls over tin purchases, so further discussion was pointless. The Bolivians still did not understand the lengths that the Truman administration was willing to go to guarantee tin imports to the United States and its stockpile. At the same time the FEA’s Bateman was browbeating Ambassador Andrade, State Department officers were using a proposed loan to quietly blackmail the Dutch government into giving the Reconstruction Finance Corporation a ten-year option to purchase East Indian production despite its negative impact on Dutch interests.49
Bateman did, however, take up and support Hochschild’s complaints regarding Villarroel’s tax and labor policies. Dismayed State Department officers were stunned by the FEA’s willingness to place “our Government, before the public both at home and abroad, in the position of protesting wage increases to Bolivia’s impoverished workers.” When Ambassador Andrade and the State Department lodged protests against Bateman’s “brusque” approach, Bateman had, according to Andrade, “disappeared suddenly from the Washington scene.” The FEA then reversed course and agreed on a schedule that would reduce the price of Bolivian tin concentrates to only 58½¢ per pound. Although the State Department was “very happy” with how the matter had been resolved and Andrade later boasted that his efforts had held the price steady against heavy odds, U.S. diplomats warned that Bolivia had nine months to prepare “to meet the situation whereby the best price she could hope to get for tin would be 52 cents.”50
The signing of the tin contract, however, was only the prelude to further developments. In January 1946, Foreign Minister Pinto, believing rumors that the British were paying the Malaysians 72¢ per pound, informed U.S. chargé Adam that he desired a revision of the contract. Adam responded, without consulting his superiors, that his government was hesitant to pay more because the profits from “increased prices would be frittered away in further salary increases and social benefits.” Though crassly put, this was a real concern in Washington and one that the State Department had shared for years. The Bolivian export taxes on tin were the highest in the world and further impeded tin firms already handicapped by unfavorable geography. Moreover, it fell hardest on small and medium-sized companies, which would have much preferred a tax on profits that would have targeted the Big Three. Because the tin contracts imposed a flat price on all producers in the nation, owners with particularly rich veins (like Patiño) could reap exceptional profits at prices that would bankrupt smaller or less efficient ones. Finally, the government’s reliance on the export tax permitted the agricultural elite to pay almost no taxes whatsoever because tin quite literally sustained the Bolivian economy.51
The solution was for the Bolivian government to join with U.S. officials and private experts in a “technical commission” to examine and rewrite the tax codes in a way that would more equitably distribute the tax burden, encourage tin production, and permit Bolivian tin to compete with Malay Straits tin in the long term. This, Undersecretary Clayton and Ambassador Andrade agreed, would result in replacing the production tax with one on profits that would, at the very least, shift the burden onto the shoulders of the tin barons and assist the small and medium producers.52 Although Hochschild also agreed, at least in the abstract, he and the tin barons were, in fact, the major impediment to what could have been a productive and effective cooperation. Indeed, the export tax system existed primarily because the Big Three refused to grant government officials access to financial records that would permit them to even guess at the tin barons’ profits. “If the government is able to obtain actual cost figures from the producers,” Thurston argued, “a valuable advance will have been made.” Paz Estenssoro and Villarroel could push the rosca only so far, however, and they never requested the technical commission that Ambassador Andrade sought and the State Department very much hoped to send.53
Nonetheless, before the Bolivians could renegotiate the tin contract, they had to first present evidence that a price adjustment was necessary. Having smoothed the way with numerous U.S. officials, Andrade asked the tin producers to draft a memorandum that emphasized “the injustice of the present contract” and its “effects . . . on Bolivian mining,” as well as those of postwar inflation and rumored British offers of 64 to 66¢ per pound to Malaya.54 Whereas Hochschild had, up to this point, quietly complained to the State Department about Bolivian tax policies, he now took this opportunity to openly assail the Villarroel regime. The memorandum he and his fellow “political enemies of the Government” sent to Washington focused almost exclusively on the Bolivian tax structure and clearly aimed to draw the Truman administration into their struggle against Villarroel. Although the Bolivians did, with State Department support, receive permission to renegotiate, internal Bolivian policies would be on the table, and Andrade would stand almost alone against the combined might of Hochschild, his government’s “mortal enemy,” and the U.S. technocrats.55
When negotiations began in earnest in March 1946, the RFC’s George Jewett and Jesse Johnson, standing in for the Foreign Economic Administration, immediately asserted that their agency would be willing to hold the price at 60½¢ per pound, but only if the Bolivians would “make concessions” of their own through a reduction of export taxes. Still claiming to be operating at a loss, Hochschild demanded a price of 68¢ from the RFC and a tax cut from Andrade, retroactive to 1945. Although the State Department, using data that Hochschild had provided earlier, was able to expose this claim as a lie, his complaints about significantly higher labor costs may have had some merit.56 The tin barons asserted that their labor costs had increased by more than 20¢ per pound during the war, and even Patiño had been forced to close a mine that could not produce a profit at less than 72¢ per pound. Doing so had, under Villarroel’s revised labor codes, cost the “Rey del Estaño” more than four hundred thousand dollars in indemnification payments to the workers he had laid off. Moreover, the tin barons were unable to understand why tin was apparently the only product on the planet whose price had declined in the previous year.57
By April, the RFC’s Jewett had increased his offer twice, but now it was
“up to the Bolivian Government” to also “lend a hand” by reducing taxes and exchange restrictions. Paz Estenssoro’s representative in Washington claimed that this would amount to “political suicide for his government,” which would be “immediately accused of selling out to the rosca.” When Jewett, following State Department recommendations, did present an offer of 63½¢ per pound, Hochschild refused to budge from 67¢. Bolivian chargé German Rovira then suggested an adjournment for the producers to prepare a counterproposal; Hochschild replied that he “had just finished making one” and Jewett should consider his offer rejected.58
The State Department apparently did at one point briefly take up the tin barons’ cause. At one of the sessions, Braden’s assistant, James Wright, took the floor and proposed that the RFC pay 63½¢ per pound and that the Bolivians “modify their tax schedules and exchange rates” to essentially grant the tin producers another 4¢ per pound of pure profit. Although Ambassador Andrade’s superiors were apparently “ready to make some concessions in taxation” and to “express the sacrifices that we are willing to make,” Andrade was not. Stunned that the State Department was now openly endorsing Hochschild’s position, Andrade immediately sought out Senators Arthur Vandenberg and Tom Connally, leaders of the Senate Foreign Relations Committee, who had long been critical of Braden’s penchant for intervention. With the senators’ support, he approached Braden and politely but firmly threatened to publicize this most recent “intervention.” Because
