Tin Truce

Like two opposing field commanders discussing a truce, Bolivian Ambassador Ricardo Martinez Vargas and RFC Administrator W. Stuart Symington held an important conference in Washington last week. After four weeks of polite parleying, they came to terms: Bolivia agreed in principle to sign a 30-day contract to sell her tin to the U.S. at $1.12 a lb., subject to the approval of the big Bolivian tin producers. The terms added up to a notable victory for Symington, who has been fighting a two-front war for lower prices for tin and other raw materials. One front is against Bolivia and other raw-material producers who have been egregiously gouging the U.S. The other is against some U.S. State Department career men who want the U.S. to pay high prices rather than do anything that would offend the selling nations.

War Declared. Symington declared war two months ago when he stopped buying Bolivia's tin, at $1.39 a lb., some 79% higher than pre-Korean prices. He began selling tin to U.S. consumers from the stockpile, in 18 days hammered the world price down to $1.06. Since Bolivia gets 83% of its foreign exchange from sales of tin, chiefly to the U.S., its economy began to shake. State Department officials feared that a depression might cause a revolution in Bolivia that would at least result in sweeping anti-U.S. forces into power.

In a series of blunt sessions with the State Department, Symington stuck to one principle: if the State Department wanted to bolster the Bolivian economy, it should get a foreign aid appropriation from Congress. It had no right to expect him to exact an artificial subsidy from U.S. consumers.

Hazy Figures. To find a fair price, Symington and State sent a joint commission to Bolivia last month. The commission discovered that the Bolivian government had only hazy figures on tin production costs. In effect, the producers started out with a selling price, such as $1.50 a lb., then "justified" it by arbitrarily setting their costs, e.g., labor and equipment, 53-c-; taxes, 54-c- dividends, 18-c-. Since labor costs were only 23% of the selling price, Symington argued that the tin barons and not the workers got the benefits of high prices. (Average Bolivian income is 1/40th of average U.S. income.) Furthermore, the higher the price of tin, the less the Bolivians produced. Like the rest of the tin producers, the cartel-minded Bolivians are primarily concerned with avoiding overproduction. From 42,290 tons of tin concentrates in 1945, Bolivian production fell to 31,000 tons last year.

Symington thinks the new price fair until the joint commission unscrambles the tin producers' arithmetic and discovers the true cost of producing tin. Symington's tough policy has been felt in the world tin market; this week tin hit $1.02 in Malaya. In a year, Symington thinks that, under the RFC's tough price policy, the U.S. will save $500 million on tin alone. The fight also served notice on all the raw-material-producing countries of the world that the U.S. is willing to pay a fair price for materials, but that it won't be cheated, even by its friends.

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