refused to sign the ITC renewal. What he apparently did not consider was that by spurning the ITC, he was removing the only impediment to the creation of an Anglo-American alliance based on their mutual interest in suppressing the price of the tin they consumed. Whitehall, now demonstrating “exceptional bitterness,” proposed a “common policy” to Washington to “prevent any attempt at blackmailing tactics.” Although Patiño eventually did sign the renewal (only to see it voided soon thereafter by the Japanese invasion of Malaya and the Dutch East Indies), the damage had been done, and the cartel would never again exert the authority it once had. In the view of political scientist Laurence Whitehead, by facilitating an alliance between Great Britain and the United States, Patiño and the tin barons had, however inadvertently, “shifted” market control “decisively” from the “rosca to the U.S. government.”59
This was not immediately apparent, however. Peñaranda, Aramayo, and Hochschild wasted no time in requesting that the 1942 base price for tin concentrates be set at 65¢ per pound. Hochschild, whom U.S. diplomats described as “no shrinking violet in negotiations,” claimed that all of his mines except Colquiri were operating at a loss at the 1941 price and noted that the RFC had more than doubled its purchase price for lead imports.60 Nonetheless, the British, who were committed to pay Patiño whatever rate Washington agreed to pay Aramayo and Hochschild, could not “see why Americans or we should submit to Bolivian blackmail” since “the Bolivians are entirely dependent on U.S. and UK markets for their one vital export.” Whitehall urged the Roosevelt administration not to increase the price at all. Ultimately, the tin barons agreed to accept 60¢ per pound until the middle of 1943, and Peñaranda agreed not to place new taxes or restrictions on the tin barons.61
When the tin contract came up for renewal in June 1943, the Bolivians demanded no less than 70¢ per pound but found their U.S. counterparts intransigent. Not only had the “shortsighted and avaricious” Peñaranda, in clear violation of the old contract, imposed new taxes on the tin producers and demanded a higher percentage of their foreign exchange, but the producers themselves had also violated the contract, by shipping the United States excessive amounts of low-grade ores and concentrates. U.S. planners therefore insisted on maintaining the current price for another year. The stalemate dragged on until December 1943, when Villarroel ousted Peñaranda from power. Because the United States now possessed a tin stockpile “adequate” for the next two years of war and the army was “not greatly concerned [about the supply of tin] at this time,” the Department of State recommended that negotiations be suspended.62
Villarroel and the tin barons had to live with the 60¢ price until December 1944, when Washington agreed to a 2½¢ increase. Any benefit to the tin barons was then quickly negated, however, when Villarroel mandated a series of wage increases for workers and Paz Estenssoro, reinstalled in the cabinet, this time as minister of finance, decreed that 60 percent of all foreign exchange would be retained by the government. When Washington resumed negotiations for a new tin contract in July 1945, it again insisted that the Bolivian government enact no new restrictions on the tin barons and that the barons pay severe penalties for shipping exceptionally low-grade tin. Although the tin price did increase several cents per pound, the new contract called for it to decrease over the next year. With Japan nearing defeat and U.S. planners envisioning the return of the Malay Straits to the colonial powers, whatever leverage Patiño and Peñaranda may have had in 1940 was rapidly disappearing.
Still, there would be inevitable tin shortages until Malay Straits production became available again. Thanks to the Longhorn smelter, aggressive recycling campaigns, and the Bolivian contract, the War Production Board had been able to meet the needs of the U.S. war effort, but with the end of the war in Europe, “the situation materially changed for the worse.” The navy still demanded massive amounts of tin, liberated nations also demanded it for reconstruction, and domestic industries embarking on reconversion clamored for their share. These factors were only accentuated when, even after the Japanese surrender in August 1945, Malay Straits tin was still unavailable to meet the new demand; Director Erwin Vogelsang of the War Production Board’s Tin, Lead, and Zinc Division speculated that it might forever remain so.63
After a British scorched-earth retreat at the onset of the war, four years of fighting, and intense anti-Japanese guerrilla campaigns, no dredges and only forty-five mines remained in operation in Malaya. Hundreds of small European and Chinese mining companies there and in China might not ever be able to finance a full restoration of the facilities destroyed during the war. Moreover, imperial policy and the lack of foreign exchange made it unlikely that the British would request U.S. assistance to help restore tin productivity in Malaya. And, even though the Dutch government and Billiton Mastschappij (in which the government held five-eighths control) had at war’s end immediately ordered replacement equipment for their tin operations in the Dutch East Indies, it did not matter, Director Vogelsang argued, because production would ultimately be determined by a restored ITC, which would “not be enthusiastic about undertaking prompt and effective, yet costly, action” to restore tin mining in Southeast Asia that might lead to overproduction.64
For U.S. planners, it was therefore imperative that the ITC never be allowed to reconstitute. World War II had struck a decisive blow against the tin cartel; the International Trade Organization (ITO) and the United States would now finish it off. Chapter VI of the ITO Charter mandated that producers and consumers have an equal voice in any international commodity agreement, in effect banning price-fixing, government-ordered production restrictions, quota systems, or other stabilization schemes. That being the case, State Department functionary Donald Kennedy proclaimed that the ITC no longer served any “valid function.” Not surprisingly, Bolivian diplomats argued that the ITC should be restored and “revitalized with the goodwill and concurrence of the consumers to secure the harmonious development of the industry beneficial to all nations.” They soon learned, however, that Malayan producers, under pressure from the British government (itself coerced by Washington), were opting out. Although delegates from Bolivia and the Dutch East Indies desperately sought a formula that would salvage the ITC, they had to tread lightly “at all times,” so as “to not antagonize” the Anglo-American alliance.65 When the Bolivian ambassador asked for leeway to continue the ITC until the postwar transition was completed, the U.S. response was an “unequivocal” no. In November 1946, at the “suggestion of the United States” (although Bolivian ambassador Ricardo Martínez Vargas believed “the term ‘pressure’ would be more appropriate”), the only institution that had permitted long-term Bolivian competitiveness was formally dissolved.66
In the place of the ITC, Anglo-American planners formed the Tin Study Group and the Combined Tin Board as an “experimental” “first stage” in achieving an ITO-compliant commodity agreement in what they hoped would be an “atmosphere of mutual goodwill.” It quickly became clear that the study group was “not concerned with the arrangements governing the immediate supplies of tin” but was instead a toothless “opportunity” for “a broad exchange of views and information” and “purely routine” statistical compilations. The RFC considered it little more than a pointless and “continuous round of secret meetings, veiled threats, and open accusations of bad faith.”67
The true authority over tin production and pricing was vested in the Combined Tin Committee (CTC) in Washington. One of many emergency planning measures designed to efficiently allocate scarce resources during and after the war, the CTC exercised almost complete control over the commodity it monitored through firm national quotas. The Anglo-American technocrats of the CTC determined that all Bolivian tin, other than Patiño’s, which was committed to Great Britain was to be sold to the United States. For the RFC, the CTC represented nothing less than a unique opportunity to acquire for the United States and Great Britain the leverage the ITC had once wielded. Once either nation negotiated a price with its suppliers, usually after months of brutal negotiations, that price became the “world price,” which other producers would be obligated to accept. The ITC producers’ cartel was thus replaced by an “Anglo-American purchasing cartel” so domineering that some Bolivian tin producers found it preferable to negotiate with the potentially “gigantic market” of the Soviet Union.68
The
