834.156/116
The Minister in Paraguay (Mooney) to the Acting Secretary of State
[Received February 27.]
Sir: I have the honor to refer to Department’s cabled instruction No. 2 dated January 6, 1921 and the cabled despatch of this Legation No. 4, dated January 19, 1921,2 both on the subject of the construction and operation of a river port at the city of Asunción under [Page 624] a concession heretofore granted by the Paraguayan Congress to the Construction and Engineering Finance Company of New York.
As stated in my cablegram I had a personal conference with Doctor Manuel Gondra, the President of Paraguay, deeming that from such source I could learn most reliably the attitude of the Paraguayan Government in regard to the project. If, as represented to the Department by the concessionaire, Doctor Gondra favors a resumption of this activity, he probably wants it to take place under some new grant or arrangement between the port company and the Paraguayan Government, as he was quite vigorous in his defense of the decree of President Franco revoking the concession on account of default,3 as by him alleged, committed by the concessionaire company, and, while he did not commit himself positively, it is my opinion that he will be very reluctant to revoke that decree. He did not appear to be unfriendly to the port company, expressed much friendship for the Mr. Barnett now connected therewith, and seemed to recognize a base equity abiding in the company on account of its previous connection with the project, but, at the same time, contends that it has been guilty of such laches as to entirely lose its rights, and thinks that it should treat now de novo for the construction of the port. In such new negotiation I believe that he would be disposed to consider the port company as occupying a position of some vantage. It is bearly [sic] possible, though I consider it most highly improbable, that sufficient pressure may be brought to bear to induce him to restore the port company to its original rights by a revocation of the Franco decree, but, if so, it is quite certain he would want to forestall public criticism by some modification of the original terms of the franchise.
The Paraguayan public seems to have lost all interest in the improvement of the Asunción port, the reason being that the river traffic has been practically suspended for the past year on account of labor troubles. No passenger boats, which are also the boats carrying the mails, express, and light freight, have plied between Asunción and Buenos Aires since February 1920, and no prediction is made as to when they will resume service. The present port is of adequate capacity to accommodate the small number of cargo boats now using the same, and the activity of river transportation is now so negligible that it engages very small public attention. However it is likely that an affirmative effort to rehabilitate the port concession would probably call forth violent public protest as it did when the last attempt was made. It is my opinion that a new port in Asunción operated under American management and capital, of fairly liberal policy, imposing no unduly onerous conditions on [Page 625] traffic, … would make for the advancement of American commercial interests in Paraguay, and that such a company should receive the informal assistance of the Department, and, under instructions of this Department, of the American Diplomatic and Consular officers located in Paraguay. I also believe that a serious, business-like advocate, of impressive qualities, confining himself to the merits of the proposition, might be able to redeem the Construction and Engineering Finance Company from its present position, generally believed by the Paraguayan public to be one of discredit, and secure for it satisfactory rights either in the nature of a new grant, or the rehabilitation of the old concession, but the latter would probably be in a more or less amended form.
The local manager of the International Products Company, an American concern reincorporated in Paraguay, makes no secret of the fact that his company will, to the utmost degree it can, resist the revival of the Construction and Engineering Finance Company’s port concession unless it excludes, not by separate contract but by a stipulation actually amended into the instrument of concession, the property of the company and particularly a port it has already constructed at San Antonio, within the zone of the original Construction and Engineering Finance Company’s Concession, both for private and public service. This objecting company has a very ambitious programme for its future activity in Paraguay, operating already a meat plant at San Antonio, a tanina plant at Puerto Pinasco, owning large cattle ranges, soon to establish a boat line, which, aside from serving its own ends, intends to gradually engage in public carriage, and having many other activities in contemplation. Its influence is such that it has secured the location of a branch of the Paraguayan custom house at San Antonio, where it has recently established a port of entry and despatch. It already has an investment of over $12,000,000. gold in its various activities in Paraguay and is seeking further capital for the development of its plans. Doctor Eusebio Ayala, late Minister of Exterior Relations for Paraguay, resigned his post to enter the service of this company to which he is now devoting his entire attention.
I have [etc.]