724.3415/3973: Telegram

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

33. There has been much hostile comment in the press with respect to the action of the United States in making exceptions to the embargo [Page 297] in order to allow some war materials to be shipped to Bolivia. The more extreme newspapers refer to the United States and Chile as equally unneutral and ask if the Paraguayan Government is going to continue to maintain friendly relations with them. Standard Oil Company influence is charged with responsibility for the exceptions. A statement published as coming from the Minister for Foreign Affairs says that the decision of the American Government to make exceptions to the arms embargo has caused painful surprise in Paraguay and that such action, in spite of the technical legal reasons for it, appears destined to stimulate a continuation of the war and to favor one of the belligerents.

The local press also publishes news despatches from Washington to the effect that new peace proposals are to be made by Brazil and that they probably will have the support of the United States. These despatches state that it is inferred from Secretary of State Hull’s observations that he favors mediation of continental scope instead of by a small group. Ayala also has asked me about this point. I shall be glad to learn any information that the Department can give me with respect to the present state of peace negotiations.