The Secretary of State to the Minister in Paraguay (Mooney)

No. 150

Sir: During the conference of March 9, Mr. John MacArthur and Mr. Henry L. Janes, on behalf of the Construction and Engineering Finance Company, set forth their case to the Department with regard to the reinstatement of the concession of the port works at Asunción, Mr. Gondra, the Paraguayan Minister, was present at the conference. At the conclusion of the conference it was understood that Messrs. Gondra, MacArthur and Janes were to confer and devise ways and means by which the terms of the concession might be changed so as to be acceptable, both to the Company and to the Paraguayan Government. Mr. Gondra stated that he did not believe that the Paraguayan [Page 342] Government would consent to a direct reinstatement of the concession. It was the opinion of Messrs. MacArthur and Janes that these changes could be effected in such a way as to leave intact the original financial bases of the concession.

The representatives of the Company felt that by certain modifications of the original concession, some formula could be arrived at which would give the Paraguayan Government ground for reopening negotiations. In view of Mr. Gondra’s statement that he felt absolutely certain that the Paraguayan Government would not grant a direct reinstatement of the concession, Messrs. MacArthur and Janes thought that mutual concessions on the part of the Company and of the Paraguayan Government would lead to a satisfactory solution. If no such solution could be found, the entire case should be submitted to arbitration under the arbitration clause of the concession. The Department believes that it has gone as far in the notes of February 14, and February 20, 1919,19 as is advisable, pending further arrangements in the settlement of the port concession to be made directly by the Company and the Paraguayan Government. Under date of March 18, Mr. Janes states that he had been in conference with Mr. Gondra before he sailed for Asunción and “that Mr. Gondra did not wish during his stay in New York to discuss the changes in the contract which he believed would furnish grounds upon which the Executive might act; but preferred, first, to put himself in contact with his Government on the basis of strong recommendation for an immediate settlement and then proceed to a consideration of ways and means with a clear knowledge of requirements.”

I am [etc.]

For the Secretary of State:
Breckinridge Long
  1. The documents referred to are instructions of Feb. 14 and Feb. 20, 1919, to the Minister in Paraguay (neither printed), enclosing copies of the notes of Feb. 7 and Feb. 26, 1919, to the Paraguayan Minister, pp. 328 and 330, respectively. The instruction dated Feb. 20 appears to have been mailed Feb. 26.